UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-38076
Emerald Holding, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
42-1775077 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
100 Broadway
14th Floor
New York, New York 10005
(Address of principal executive offices, zip code)
(Registrant’s telephone number, including area code): (949) 226-5700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.01 per share |
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EEX |
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New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☒ |
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Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 3, 2024, there were 203,836,641 shares of the Registrant’s common stock, par value $0.01, outstanding.
EMERALD HOLDING, INC.
TABLE OF CONTENTS
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Item 1. |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek” or “should,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about general economic conditions, or more specifically about the markets in which we operate, including growth of our various markets, and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions or future events or performance contained in this report are forward-looking statements.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including the trends and other factors discussed in this report under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, or could affect the trading price of our common stock on the New York Stock Exchange. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to:
1
Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this report are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this report. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements contained in this report, they may not be predictive of results or developments in future periods.
Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this report.
2
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Emerald Holding, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(dollars in millions, share data in thousands, except par value) |
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March 31, |
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December 31, |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
186.8 |
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$ |
204.2 |
|
Trade and other receivables, net of allowances of $1.5 million and $1.4 million |
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123.1 |
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85.2 |
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Prepaid expenses and other current assets |
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16.5 |
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21.5 |
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Total current assets |
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326.4 |
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310.9 |
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Noncurrent assets |
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Property and equipment, net |
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1.6 |
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1.5 |
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Intangible assets, net |
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175.0 |
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175.1 |
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Goodwill, net |
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565.7 |
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553.9 |
|
Right-of-use lease assets |
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8.3 |
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8.8 |
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Other noncurrent assets |
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3.4 |
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3.7 |
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Total assets |
|
$ |
1,080.4 |
|
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$ |
1,053.9 |
|
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ |
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Current liabilities |
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Accounts payable and other current liabilities |
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$ |
61.1 |
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$ |
46.6 |
|
Income tax payable |
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1.9 |
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0.2 |
|
Cancelled event liabilities |
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0.8 |
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0.6 |
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Deferred revenues |
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175.3 |
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174.3 |
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Contingent consideration |
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0.1 |
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0.2 |
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Right-of-use lease liabilities, current portion |
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4.0 |
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4.0 |
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Term loan, current portion |
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4.2 |
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4.2 |
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Total current liabilities |
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247.4 |
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230.1 |
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Noncurrent liabilities |
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Term loan, net of discount and deferred financing fees |
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398.7 |
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398.7 |
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Deferred tax liabilities, net |
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5.5 |
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3.1 |
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Right-of-use lease liabilities, noncurrent portion |
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8.0 |
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8.9 |
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Other noncurrent liabilities |
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12.3 |
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8.5 |
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Total liabilities |
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671.9 |
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649.3 |
|
Commitments and contingencies (Note 13) |
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Redeemable convertible preferred stock |
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7% Series A Redeemable Convertible Participating Preferred stock, $0.01 |
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499.2 |
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497.1 |
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Stockholders’ deficit |
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Common stock, $0.01 par value; authorized shares at March 31, |
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0.6 |
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0.6 |
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Additional paid-in capital |
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550.0 |
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559.2 |
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Accumulated deficit |
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(641.3 |
) |
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(652.3 |
) |
Total stockholders’ deficit |
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(90.7 |
) |
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(92.5 |
) |
Total liabilities, redeemable convertible preferred stock and stockholders’ |
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$ |
1,080.4 |
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$ |
1,053.9 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Emerald Holding, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(unaudited)
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Three Months Ended |
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|||||
(dollars in millions, share data in thousands except earnings per share) |
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March 31, |
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March 31, |
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Revenues |
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$ |
133.4 |
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$ |
122.3 |
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Other income, net |
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1.0 |
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— |
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Cost of revenues |
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47.5 |
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43.2 |
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Selling, general and administrative expense |
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55.5 |
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48.8 |
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Depreciation and amortization expense |
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7.1 |
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13.5 |
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Operating income |
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24.3 |
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16.8 |
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Interest expense |
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12.1 |
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8.0 |
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Interest income |
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2.3 |
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1.1 |
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Other expense |
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— |
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0.1 |
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Income before income taxes |
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14.5 |
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9.8 |
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Provision for income taxes |
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3.5 |
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2.7 |
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Net income and comprehensive |
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$ |
11.0 |
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$ |
7.1 |
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Accretion to redemption value of redeemable |
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|
(10.7 |
) |
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(10.1 |
) |
Participation rights on if-converted basis |
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(0.2 |
) |
|
|
— |
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Net income (loss) and comprehensive income (loss) |
|
$ |
0.1 |
|
|
$ |
(3.0 |
) |
Basic income (loss) per share |
|
$ |
0.00 |
|
|
$ |
(0.04 |
) |
Diluted income (loss) per share |
|
$ |
0.00 |
|
|
$ |
(0.04 |
) |
Basic weighted average common shares |
|
|
63,039 |
|
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|
67,280 |
|
Diluted weighted average common shares |
|
|
65,205 |
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|
67,280 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Emerald Holding, Inc.
(unaudited)
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Three Months Ended March 31, 2024 |
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(shares in thousands; dollars in millions) |
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Total Emerald Holding, Inc. Stockholders’ Deficit |
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Redeemable |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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|||||||||||||
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
|
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Deficit |
|
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Deficit |
|
|||||||
Balances at December 31, 2023 |
|
|
71,403 |
|
|
$ |
497.1 |
|
|
|
62,915 |
|
|
$ |
0.6 |
|
|
$ |
559.2 |
|
|
$ |
(652.3 |
) |
|
$ |
(92.5 |
) |
Stock-based compensation |
|
|
— |
|
|
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— |
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— |
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— |
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2.4 |
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|
|
— |
|
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|
2.4 |
|
Issuance of common stock under |
|
|
— |
|
|
|
— |
|
|
|
433 |
|
|
|
— |
|
|
|
0.9 |
|
|
|
— |
|
|
|
0.9 |
|
Accretion to redemption value of |
|
|
— |
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|
|
10.7 |
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|
|
— |
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|
|
— |
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(10.7 |
) |
|
|
— |
|
|
|
(10.7 |
) |
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
(295 |
) |
|
|
— |
|
|
|
(1.8 |
) |
|
|
— |
|
|
|
(1.8 |
) |
Preferred stock cash dividend |
|
|
— |
|
|
|
(8.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income and comprehensive |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.0 |
|
|
|
11.0 |
|
Balances at March 31, 2024 |
|
|
71,403 |
|
|
$ |
499.2 |
|
|
|
63,053 |
|
|
$ |
0.6 |
|
|
$ |
550.0 |
|
|
$ |
(641.3 |
) |
|
$ |
(90.7 |
) |
|
|
Three Months Ended March 31, 2023 |
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(shares in thousands; dollars in millions) |
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|||||||||||||||||||||||||
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Total Emerald Holding, Inc. Stockholders’ Deficit |
|
|||||||||||||||||||
|
|
Redeemable |
|
|
Common Stock |
|
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Additional |
|
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Accumulated |
|
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Total |
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Deficit |
|
|||||||
Balances at December 31, 2022 |
|
|
71,417 |
|
|
$ |
472.4 |
|
|
|
67,588 |
|
|
$ |
0.7 |
|
|
$ |
610.3 |
|
|
$ |
(644.1 |
) |
|
$ |
(33.1 |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
307 |
|
|
|
— |
|
|
|
2.1 |
|
|
|
— |
|
|
|
2.1 |
|
Issuance of common stock under |
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Accretion to redemption value of |
|
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— |
|
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|
10.1 |
|
|
|
— |
|
|
|
— |
|
|
|
(10.1 |
) |
|
|
— |
|
|
|
(10.1 |
) |
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
(5,064 |
) |
|
|
(0.1 |
) |
|
|
(16.8 |
) |
|
|
— |
|
|
|
(16.9 |
) |
Net income and comprehensive |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7.1 |
|
|
|
7.1 |
|
Balances at March 31, 2023 |
|
|
71,417 |
|
|
$ |
482.5 |
|
|
|
62,845 |
|
|
$ |
0.6 |
|
|
$ |
585.5 |
|
|
$ |
(637.0 |
) |
|
$ |
(50.9 |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Emerald Holding, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in millions) |
|
Three Months |
|
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Three Months |
|
||
Operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
11.0 |
|
|
$ |
7.1 |
|
Adjustments to reconcile net income to net cash |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
2.5 |
|
|
|
2.1 |
|
Allowance for credit losses |
|
|
0.2 |
|
|
|
0.1 |
|
Depreciation and amortization |
|
|
7.1 |
|
|
|
13.5 |
|
Loss on disposal of fixed assets |
|
|
— |
|
|
|
0.2 |
|
Non-cash operating lease expense |
|
|
0.6 |
|
|
|
0.7 |
|
Amortization of deferred financing fees and debt discount |
|
|
1.1 |
|
|
|
0.4 |
|
Deferred income taxes |
|
|
2.4 |
|
|
|
1.0 |
|
Remeasurement of contingent consideration |
|
|
1.5 |
|
|
|
— |
|
Changes in operating assets and liabilities, net of effect of |
|
|
|
|
|
|
||
Trade and other receivables |
|
|
(36.2 |
) |
|
|
(28.1 |
) |
Prepaid expenses and other current assets |
|
|
6.1 |
|
|
|
7.2 |
|
Other noncurrent assets |
|
|
0.1 |
|
|
|
0.1 |
|
Accounts payable and other current liabilities |
|
|
14.0 |
|
|
|
(3.0 |
) |
Cancelled event liabilities |
|
|
0.2 |
|
|
|
(0.4 |
) |
Contingent consideration |
|
|
(0.2 |
) |
|
|
— |
|
Income tax payable |
|
|
1.7 |
|
|
|
1.1 |
|
Deferred revenues |
|
|
(3.7 |
) |
|
|
7.0 |
|
Operating lease liabilities |
|
|
(0.9 |
) |
|
|
(1.1 |
) |
Other noncurrent liabilities |
|
|
(0.2 |
) |
|
|
1.0 |
|
Net cash provided by operating activities |
|
|
7.3 |
|
|
|
8.9 |
|
Investing activities |
|
|
|
|
|
|
||
Acquisition of businesses, net of cash acquired |
|
|
(11.6 |
) |
|
|
(9.5 |
) |
Purchases of property and equipment |
|
|
(0.3 |
) |
|
|
(0.3 |
) |
Purchases of intangible assets |
|
|
(2.2 |
) |
|
|
(3.4 |
) |
Net cash used in investing activities |
|
|
(14.1 |
) |
|
|
(13.2 |
) |
Financing activities |
|
|
|
|
|
|
||
Repayment of principal on Extended Term Loan Facility |
|
|
(1.1 |
) |
|
|
— |
|
Fees paid for debt issuance |
|
|
— |
|
|
|
(0.6 |
) |
Repurchase of common stock |
|
|
(1.8 |
) |
|
|
(16.9 |
) |
Preferred stock cash dividend |
|
|
(8.6 |
) |
|
|
— |
|
Proceeds from issuance of common stock under equity plans |
|
|
0.9 |
|
|
|
— |
|
Net cash used in financing activities |
|
|
(10.6 |
) |
|
|
(17.5 |
) |
Net decrease in cash and cash equivalents |
|
|
(17.4 |
) |
|
|
(21.8 |
) |
Cash and cash equivalents |
|
|
|
|
|
|
||
Beginning of period |
|
|
204.2 |
|
|
|
239.1 |
|
End of period |
|
$ |
186.8 |
|
|
$ |
217.3 |
|
|
|
|
|
|
|
|
||
Supplemental disclosure of non-cash investing activities: |
|
|
|
|
|
|
||
Unpaid purchases of property and equipment and intangible assets |
|
$ |
0.5 |
|
|
$ |
— |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Emerald Holding, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The unaudited condensed consolidated financial statements include the operations of Emerald Holding, Inc. (the “Company” or “Emerald”) and its wholly-owned subsidiaries. These unaudited condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC for Interim Reporting. All intercompany transactions, accounts and profits/losses, if any, have been eliminated in the unaudited condensed consolidated financial statements. In the opinion of management, all recurring adjustments considered necessary for a fair statement of results for the interim period have been included.
These unaudited condensed consolidated financial statements do not include all disclosures required by GAAP, and therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the more detailed audited consolidated financial statements for the year ended December 31, 2023. The December 31, 2023 condensed consolidated balance sheet was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2023.
The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for a full year, any other interim periods or any future year or period.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. The standard is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact the adoption will have on the disclosures within the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disclosure of disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The standard should be applied on a prospective basis although retrospective application is permitted. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact the adoption will have on the disclosures within the Company’s consolidated financial statements.
There have been no other new accounting pronouncements that are expected to have a significant impact on the Company’s condensed consolidated financial statements or notes thereto.
Revenue Recognition and Deferred Revenue
Revenue is recognized as the customer receives the benefit of the promised services and performance obligations are satisfied. Revenue is recognized at an amount that reflects the consideration the Company expects to receive in exchange for those services. Customers generally receive the benefit of the Company’s services upon the staging of each trade show or conference event and over the subscription period for access to the Company’s subscription software and services. Fees are typically invoiced and collected in-full prior to the trade show or event.
7
A significant portion of the Company’s annual revenue is generated from the Connections segment, primarily related to the production of trade shows and conference events (collectively, “trade shows”), including booth space sales, registration fees and sponsorship fees. The Company recognizes revenue in the period the trade show occurs. Trade show and other events revenues represented approximately 92.5% and 91.7% of total revenues for the three months ended March 31, 2024 and 2023, respectively.
Content revenues primarily consist of advertising sales for digital products and industry publications that complement the event properties, custom content agency revenues and subscription fees for educational and e-learning services. Advertising sales and custom content revenues are recognized in the period in which the custom content and digital products are provided or publications are issued. Subscription fees for educational and e-learning services are billed and collected at the subscription date. Typically, the fees charged are collected after the custom content and digital products are delivered or publications are issued.
Commerce revenues primarily consist of software-as-a-service subscription revenue, implementation fees and professional services. Fees associated with implementation are deferred and recognized over the expected customer life, which is four years. Subscription revenue is generally recognized over the term of the contract.
Deferred revenues generally consist of booth space sales, registration fees and sponsorship fees that are invoiced prior to a trade show, as well as upfront payments for software subscription fees, professional services and implementation fees for the Company’s subscription software and services. Current deferred revenues were $175.3 million as of March 31, 2024 and are reported as deferred revenues on the condensed consolidated balance sheets. Long-term deferred revenues as of March 31, 2024 were $0.7 million and are reported as other noncurrent liabilities on the condensed consolidated balance sheets. Current and long-term deferred revenues as of December 31, 2023 were $174.3 million and $0.9 million, respectively. During the three months ended March 31, 2024, the Company recognized revenues of $95.2 million from amounts included in deferred revenue at the beginning of the respective period.
The accounts receivable and deferred revenue balances related to cancelled events are classified as cancelled event liabilities in the condensed consolidated balance sheets as the total amount represents balances which are expected to be refunded to customers. As of March 31, 2024, cancelled event liabilities of $0.8 million represents $0.5 million of deferred revenues for cancelled trade shows and $0.3 million of related accounts receivable credits reclassified to cancelled event liabilities in the condensed consolidated balance sheets. As of December 31, 2023, cancelled event liabilities of $0.6 million represented $0.5 million of deferred revenues for cancelled trade shows and $0.1 million of related accounts receivable credits reclassified to cancelled event liabilities in the condensed consolidated balance sheets.
Performance Obligations
For the Company’s trade shows and other events, sales are deferred and recognized when performance obligations under the terms of a contract with the Company’s customers are satisfied, which is typically at the completion of a show or event. Revenue is measured as the amount of consideration the Company earns upon completion of its performance obligations.
For the Company’s subscription software and services, the Company may enter into contracts with customers that include multiple performance obligations, which are generally capable of being distinct. Fees associated with implementation and related professional services are deferred and recognized over the expected customer life, which is four years. Subscription revenue is recognized over the term of the contract. The Company’s contracts associated with the subscription software and services are generally three-year terms with one-year renewals following the initial three-year term.
For the Company’s other marketing services, revenues are deferred and recognized when performance obligations under the terms of a contract with the Company’s customers are satisfied. This generally occurs in the period in which the publications are issued. Revenue is measured as the amount of consideration the Company earns upon completion of its performance obligations.
The Company applies a practical expedient which allows the exclusion of disclosure information regarding remaining performance obligations if the performance obligation is part of a contract that has an expected duration of one year or less. The Company’s performance obligations greater than one year were $0.7 million as of March 31, 2024.
8
Disaggregation of Revenue
The following table represents revenues disaggregated by type:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Revenues |
|
(in millions) |
|
|||||
Connections |
|
$ |
123.4 |
|
|
$ |
112.2 |
|
Content |
|
|
4.7 |
|
|
|
5.5 |
|
Commerce |
|
|
5.3 |
|
|
|
4.6 |
|
Total revenues |
|
$ |
133.4 |
|
|
$ |
122.3 |
|
Contract Balances
The Company’s contract assets are primarily sales commissions incurred in connection with the Company’s subscription software and services, which are expensed over the expected customer relationship period. As of March 31, 2024, the Company does not have material contract assets.
Contract liabilities generally consist of booth space sales, registration fees, sponsorship fees that are collected prior to the trade show or other event and subscription revenue, implementation fees and professional services associated with the Company’s subscription software and services. Contract liabilities less than one year from the date of the performance obligation are reported on the condensed consolidated balance sheets as deferred revenues. Contract liabilities greater than one year from the date of the performance obligation are reported on the condensed consolidated balance sheets in other noncurrent liabilities.
The Company’s sales commission costs incurred in connection with sales of booth space, registration fees and sponsorship fees at the Company’s trade shows and other events and with sales of advertising for industry publications are generally short term, as sales typically begin up to one year prior to the date of the trade shows and other events. The Company expects the period benefited by each commission to be less than one year, and as a result, the Company expenses sales commissions associated with trade shows, other events and other marketing services as incurred. Sales commissions are reported on the condensed consolidated statements of income and comprehensive income as selling, general and administrative expense.
Accounts Receivable
The Company monitors collections and payments from its customers and maintains an allowance based upon applying an expected credit loss rate to receivables based on the historical loss rate from similar higher risk customers adjusted for current conditions, including any specific customer collection issues identified, and forecasts of economic conditions. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. The activities in this account, including the current-period provision for expected credit losses for the three months ended March 31, 2024 and 2023, were $0.2 million and $0.1 million, respectively. Account balances written off during the three months ended March 31, 2024 and 2023, were $0.1 million and $0.2 million, respectively.
2024 Acquisition
Hotel Interactive
In furtherance of the Company’s portfolio optimization strategy to enhance its best-in-class hosted buyer platform, the Company executed an asset purchase agreement on January 19, 2024 to acquire all the assets and assume certain liabilities of the business known as Hotel Interactive. Hotel Interactive produces hosted buyer events in the hotel, hospitality, food service and healthcare and senior living space sectors. The total estimated purchase price of $13.5 million included an initial cash payment of $11.6 million and contingent consideration with an estimated fair value of $2.7 million, as well as a $0.8 million post close working capital adjustment receivable from the seller. The acquisition was financed with cash from operations.
9
The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, royalty rate and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable, however, actual results may differ from these estimates.
External acquisition costs of $0.2 million were expensed as incurred and included in selling, general and administrative expenses in the condensed consolidated statements of income and comprehensive income. During the three months ended March 31, 2024, the acquisition of Hotel Interactive generated revenue of $2.8 million and net income of $0.6 million. Goodwill was calculated as the excess of the purchase price over the estimated fair values of acquired assets and intangible assets offset by liabilities acquired, and is primarily attributable to the future economic benefits from synergies expected to arise due to certain cost savings, operating efficiencies and other strategic benefits. Substantially all of the goodwill recorded is expected to be deductible for income tax purposes.
The primary tasks that are required to be completed to finalize the valuation of assets and liabilities acquired include validation of business level forecasts, customer attrition rates and acquired working capital balances.
The contingent consideration liability related to the acquisition of Hotel Interactive consists of two potential payments, the interim payment and the final payment. The interim payment is based on a range of multiples, which are dependent upon the acquisition’s compounded annual EBITDA growth rate from 2023 to 2024, being applied to the 2024 EBITDA growth from a specified EBITDA target. The interim payment will be settled in the second quarter of 2025. The final payment is based on a range of multiples, which are dependent upon the acquisition’s 3-year compounded annual EBITDA growth rate from 2023 to 2026, being applied to the average annual EBITDA growth in calendar years 2025 and 2026, from a specified EBITDA target, less the interim payment. The final payment will be settled in the second quarter of 2027.
Identified intangible assets associated with Hotel Interactive included trade name and customer relationship intangible assets of $1.6 million and $2.5 million, respectively. The weighted-average amortization period of the trade name intangible assets acquired was 10.0 years. The weighted-average amortization period of the customer relationship intangible assets acquired was 4.0 years. There is no assumed residual value for the acquired trade name and customer relationship intangible assets.
The following table summarizes the preliminary fair value of the acquired assets and liabilities on the acquisition date:
(in millions) |
|
January 19, |
|
|
Trade and other receivables |
|
$ |
1.2 |
|
Prepaid expenses and other current assets |
|
|
1.1 |
|
Goodwill |
|
|
11.8 |
|
Intangible assets |
|
|
4.1 |
|
Deferred revenues |
|
|
(4.7 |
) |
Purchase price, including working capital adjustment |
|
$ |
13.5 |
|
Supplemental Pro-Forma Information
Supplemental information on an unaudited pro-forma basis is reflected as if the 2023 and 2024 acquisitions had occurred at the beginning of 2023, after giving effect to certain pro-forma adjustments primarily related to the amortization of acquired intangible assets and interest expense. The unaudited pro-forma supplemental information is based on estimates and assumptions that the Company believes are reasonable and reflects amortization of intangible assets as a result of the acquisition. The supplemental unaudited pro-forma financial information is presented for comparative purposes only. It is not necessarily indicative of what the Company’s financial position or results of operations actually would have been had the Company completed the acquisition at the dates indicated, nor is it intended to project the future financial position or operating results of the combined Company. Further, the supplemental pro-forma information has not been adjusted for show timing differences or discontinued events.
10
|
|
Three Months Ended |
|
|
|
|
2023 |
|
|
(in millions) |
|
(Unaudited) |
|
|
Pro-forma revenues(1) |
|
|
|
|
Hotel Interactive |
|
$ |
2.1 |
|
Emerald revenue |
|
|
122.3 |
|
Total pro-forma revenues |
|
$ |
124.4 |
|
|
|
|
|
|
Pro-forma net income (loss) |
|
|
|
|
Hotel Interactive |
|
$ |
0.2 |
|
Lodestone |
|
|
(0.3 |
) |
Emerald net income |
|
|
7.1 |
|
Total pro-forma net income |
|
$ |
7.0 |
|
(1) Pro-forma revenues from the Lodestone acquisition were not material to the three months ended March 31, 2023. |
|
Property and equipment, net, consisted of the following:
(in millions) |
|
March 31, |
|
|
December 31, |
|
||
Furniture, equipment and other |
|
$ |
5.3 |
|
|
$ |
5.2 |
|
Leasehold improvements |
|
|
1.2 |
|
|
|
1.0 |
|
|
|
|
6.5 |
|
|
|
6.2 |
|
Less: Accumulated depreciation |
|
|
(4.9 |
) |
|
|
(4.7 |
) |
Property and equipment, net |
|
$ |
1.6 |
|
|
$ |
1.5 |
|
Depreciation expense related to property and equipment for the three months ended March 31, 2024 and 2023 was $0.2 million and $0.3 million, respectively. Loss on disposal of fixed assets was zero and $0.2 million, respectively, for the three months ended March 31, 2024 and 2023.
Intangible Assets, Net
Intangible assets, net consisted of the following:
(in millions) |
|
Indefinite- |
|
|
Customer |
|
|
Definite- |
|
|
Acquired |
|
|
Acquired |
|
|
Computer |
|
|
Capitalized |
|
|
Total |
|
||||||||
Gross carrying |
|
$ |
52.6 |
|
|
$ |
367.9 |
|
|
$ |
92.7 |
|
|
$ |
8.4 |
|
|
$ |
2.6 |
|
|
$ |
38.9 |
|
|
$ |
2.3 |
|
|
$ |
565.4 |
|
Accumulated amortization |
|
|
— |
|
|
|
(340.3 |
) |
|
|
(24.0 |
) |
|
|
(4.9 |
) |
|
|
(1.1 |
) |
|
|
(20.1 |
) |
|
|
— |
|
|
|
(390.4 |
) |
Net carrying |
|
$ |
52.6 |
|
|
$ |
27.6 |
|
|
$ |
68.7 |
|
|
$ |
3.5 |
|
|
$ |
1.5 |
|
|
$ |
18.8 |
|
|
$ |
2.3 |
|
|
$ |
175.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross carrying |
|
$ |
52.6 |
|
|
$ |
365.4 |
|
|
$ |
91.1 |
|
|
$ |
8.4 |
|
|
$ |
2.6 |
|
|
$ |
36.9 |
|
|
$ |
1.6 |
|
|
$ |
558.6 |
|
Accumulated amortization |
|
|
— |
|
|
|
(336.7 |
) |
|
|
(22.6 |
) |
|
|
(4.7 |
) |
|
|
(1.0 |
) |
|
|
(18.5 |
) |
|
|
— |
|
|
|
(383.5 |
) |
Net carrying |
|
$ |
52.6 |
|
|
$ |
28.7 |
|
|
$ |
68.5 |
|
|
$ |
3.7 |
|
|
$ |
1.6 |
|
|
$ |
18.4 |
|
|
$ |
1.6 |
|
|
$ |
175.1 |
|
11
Amortization expense for the three months ended March 31, 2024 and 2023 was $6.9 million and $13.2 million, respectively.
Impairment of Indefinite-Lived Intangible Assets
During the three months ended March 31, 2024 and 2023, there were no triggering events or changes in circumstances that would indicate the carrying value of the Company’s indefinite-lived intangible assets was impaired. As such, no quantitative assessment for impairment was required during the first quarters of 2024 and 2023.
Impairment of Long-Lived Assets Other than Goodwill and Indefinite-Lived Intangible Assets
During the three months ended March 31, 2024 and 2023, there were no triggering events or changes in circumstances that would indicate the carrying value of the Company’s long-lived assets other than goodwill are not recoverable. As such, no quantitative assessment for impairment was required during the first quarters of 2024 and 2023.
Goodwill
The table below summarizes the changes in the carrying amount of goodwill for each reportable segment:
|
|
Reportable Segment |
|
|
|
|
|
|
|
|||
(in millions) |
|
Connections |
|
|
All Other |
|
|
Total |
|
|||
Balance at December 31, 2023 |
|
$ |
518.3 |
|
|
$ |
35.6 |
|
|
$ |
553.9 |
|
Acquired goodwill |
|
|
11.8 |
|
|
|
— |
|
|
|
11.8 |
|
Balance at March 31, 2024 |
|
$ |
530.1 |
|
|
$ |
35.6 |
|
|
$ |
565.7 |
|
Impairment of Goodwill
During the three months ended March 31, 2024 and 2023, management determined there were no triggering events or changes in circumstances that would indicate the carrying value of the Company’s goodwill is not recoverable. As such, no quantitative assessment for impairment was required during the first quarters of 2024 and 2023. No goodwill impairment charges were recorded during each of the three months ended March 31, 2024 and 2023.
Debt is comprised of the following indebtedness to various lenders:
(in millions) |
|
March 31, |
|
|
December 31, |
|
||
Extended Term Loan Facility, with |
|
$ |
402.9 |
|
|
$ |
402.9 |
|
Less: Current maturities |
|
|
4.2 |
|
|
|
4.2 |
|
Long-term debt, net of current maturities, debt |
|
$ |
398.7 |
|
|
$ |
398.7 |
|
12
Term Loan Facility
On June 12, 2023, (the “Term Loan Amendment Effective Date”) Emerald X, Inc. (“Emerald X”), a wholly-owned subsidiary of the Company, entered into a Sixth Amendment (the “Term Loan Amendment”) to its Amended and Restated Credit Agreement by and among Emerald X, as Borrower, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, which amends that certain Amended and Restated Credit Agreement, dated as of May 22, 2017 (as amended from time to time, the “Amended and Restated Credit Agreement”). The Term Loan Amendment extended the maturity of the term loans outstanding under the Amended and Restated Credit Agreement (such term loan facility, as effect prior to the Term Loan Amendment Effective Date, the “Amended and Restated Term Loan Facility”, and as extended by the Term Loan Amendment, the “Extended Term Loan Facility”) from May 22, 2024 to May 22, 2026. The aggregate outstanding principal amount of the Extended Term Loan Facility was approximately $415.3 million as of the Term Loan Amendment Effective Date.
The Term Loan Amendment replaced the interest rate applicable to the term loans with a rate equal to, at the option of Emerald X, (i) the Term Secured Overnight Financing Rate (“Term SOFR”) plus 5.00% per annum plus a credit spread adjustment of 0.10% per annum or (ii) an alternate base rate (“ABR”) plus 4.00% per annum. Prior to the Term Loan Amendment, the interest rate applicable to the term loans was a rate equal to, at the option of Emerald X, (i) LIBOR plus 2.75% or 2.50% per annum, depending on Emerald X’s first lien net leverage ratio or (ii) ABR plus 1.75% or 1.50% per annum, depending on Emerald X’s first lien net leverage ratio. The effective interest rate at March 31, 2024 and December 31, 2023 was 11.63% and 11.66%, respectively.
Revolving Credit Facility
On February 2, 2023, Emerald X entered into a Fifth Amendment (the “RCF Amendment”) to its Amended and Restated Credit Agreement. The RCF Amendment increased the aggregate amount of all revolving commitments under the Amended and Restated Credit Agreement from $100.4 million to $110.0 million (such facility, as amended by the RCF Amendment, the “Extended Revolving Credit Facility”). The increased revolving commitments have the same terms as the previously existing revolving commitments. The RCF Amendment did not change any other material terms of the Amended and Restated Credit Agreement. Emerald X paid $0.6 million in financing fees related to the RCF Amendment during the first quarter of 2023.
Emerald X had no outstanding borrowings under the revolving portion of its Amended and Restated Credit Agreement as of March 31, 2024 and December 31, 2023. Emerald X had $1.0 million in stand-by letters of credit outstanding under the revolving portion of its Amended and Restated Credit Agreement as of March 31, 2024 and December 31, 2023. During the three months ended March 31, 2024 and 2023, revolving borrowings under the Amended and Restated Credit Agreement were subject to an interest rate equal to Term SOFR plus 2.25% or ABR plus 1.25%.
Interest Expense
Interest expense reported in the condensed consolidated statements of income and comprehensive income consists of the following:
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Extended Term Loan Facility |
|
$ |
10.9 |
|
|
$ |
— |
|
Amended and Restated Term Loan Facility |
|
|
— |
|
|
|
7.5 |
|
Non-cash interest for amortization of debt discount |
|
|
1.1 |
|
|
|
0.4 |
|
Revolving credit facility interest and commitment fees |
|
|
0.1 |
|
|
|
0.1 |
|
Total interest expense |
|
$ |
12.1 |
|
|
$ |
8.0 |
|
13
Covenants
The Extended Revolving Credit Facility contains a financial covenant requiring Emerald X to comply with a 5.50 to 1.00 Total First Lien Net Leverage Ratio, which is defined as the ratio of Consolidated Total Debt (as defined in the Amended Credit Agreement and Amended and Restated Credit Agreement, collectively known as the “Amended and Restated Senior Secured Credit Facilities”) secured on a first lien basis, net of unrestricted cash and cash equivalents to trailing four-quarter Consolidated EBITDA (as defined in the Amended and Restated Senior Secured Credit Facilities). This financial covenant is tested on the last day of each quarter only if the aggregate amount of revolving loans, swingline loans and letters of credit outstanding under the Extended Revolving Credit Facility (net of up to $10.0 million of outstanding letters of credit) exceeds 35% of the total revolving commitments thereunder. As of March 31, 2024, the Company was not required to test this financial covenant and Emerald X was in compliance with all covenants under the Amended and Restated Senior Secured Credit Facilities.
As of March 31, 2024, the Company’s assets and liabilities measured at fair value on a recurring basis are categorized in the table below:
(in millions) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
19.6 |
|
|
$ |
19.6 |
|
|
$ |
— |
|
|
$ |
— |
|
Money market mutual funds(a) |
|
|
167.2 |
|
|
|
167.2 |
|
|
|
— |
|
|
|
— |
|
Total assets at fair value |
|
$ |
186.8 |
|
|
$ |
186.8 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market-based share awards liability(b) |
|
$ |
0.8 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.8 |
|
Contingent consideration(b) |
|
|
10.9 |
|
|
|
— |
|
|
|
— |
|
|
|
10.9 |
|
Total liabilities at fair value |
|
$ |
11.7 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11.7 |
|
As of December 31, 2023, the Company’s assets and liabilities measured at fair value on a recurring basis are categorized in the table below:
(in millions) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
27.2 |
|
|
$ |
27.2 |
|
|
$ |
— |
|
|
$ |
— |
|
Money market mutual funds(a) |
|
|
177.0 |
|
|
|
177.0 |
|
|
|
— |
|
|
|
— |
|
Total assets at fair value |
|
$ |
204.2 |
|
|
$ |
204.2 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market-based share awards liability(b) |
|
$ |
0.8 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.8 |
|
Contingent consideration(b) |
|
|
6.9 |
|
|
|
— |
|
|
|
— |
|
|
|
6.9 |
|
Total liabilities at fair value |
|
$ |
7.7 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
7.7 |
|
14
Market-based Share Awards
The market-based share awards liability of $0.8 million as of March 31, 2024 and December 31, 2023, entitles the grantees of these awards the right to receive shares of common stock equal to a maximum cash value of $9.8 million, in the aggregate, upon achievement of specified targeted share prices measured over sixty days within a ninety-day trading period. The liability is measured at fair value and is re-measured to an updated fair value at each reporting period. The Company recognizes stock-based compensation expense for awards subject to market-based vesting conditions regardless of whether it becomes probable that these conditions will be achieved. The stock-based compensation expense is included in selling, general and administrative expense in the condensed consolidated statements of income and comprehensive income. Refer to Note 10, Stock-Based Compensation, under the heading Market-based Share Awards for unobservable inputs for the market-based share award liability.
Contingent Consideration
As of December 31, 2023, the Company had $6.9 million in contingent consideration liabilities measured at fair value related to the Company’s acquisitions of AV-IQ, Advertising Week, Bulletin and Lodestone. As of March 31, 2024, the Company had $10.9 million in contingent consideration liabilities measured at fair value related to the Company’s acquisitions of AV-IQ, Advertising Week, Bulletin, Lodestone and Hotel Interactive. The contingent consideration liability of $10.9 million as of March 31, 2024 consists of liabilities of $0.6 million and $10.3 million that are expected to be settled in 2025 and 2027, respectively. Refer to Note 4, Business Acquisitions, for further information related to the contingent consideration related to the acquisition of Hotel Interactive, which had an initial estimated fair value of $2.7 million.
The contingent consideration paid during the first quarter of 2024 in relation to the Company’s acquisition of AV-IQ was $0.2 million. Contingent consideration liabilities are re-measured to fair value each reporting period. As a result of the Company’s remeasurements during the first quarter of 2024, the Company recorded a $1.5 million increase in fair value of contingent consideration, which is included in selling, general and administrative expense in the condensed consolidated statements of income and comprehensive income. The change in fair value of the Company’s contingent consideration liabilities consists of the following activity:
|
|
Three Months Ended |
|
|
(in millions) |
|
2024 |
|
|
Balance at December 31, 2023 |
|
$ |
6.9 |
|
Payment of contingent consideration |
|
|
(0.2 |
) |
Fair value remeasurement adjustments |
|
|
1.5 |
|
Business acquisition |
|
|
2.7 |
|
Balance at March 31, 2024 |
|
$ |
10.9 |
|
The determination of the fair value of the contingent consideration liabilities could change in future periods. Any such changes in fair value will be reported in selling, general and administrative expense in the condensed consolidated statements of income and comprehensive income.
Financial Risk
The Company’s condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amount of assets and liabilities.
15
Redeemable Convertible Preferred Stock
On June 10, 2020, the Company entered into an investment agreement (the “Investment Agreement”) with Onex Partners V LP (“Onex”), pursuant to which the Company agreed to (i) issue to an affiliate of Onex, in a private placement transaction (the “Initial Private Placement”), 47,058,332 shares of redeemable convertible preferred stock for a purchase price of $5.60 per share and (ii) effect a rights offering (“Rights Offering”) to holders of its outstanding common stock of one non-transferable subscription right for each share of the Company’s common stock held, with each right entitling the holder to purchase one share of redeemable convertible preferred stock at the Series A Price per share. Onex agreed to purchase (the “Onex Backstop”) any and all redeemable convertible preferred stock not subscribed for in the Rights Offering by stockholders other than affiliates of Onex at the Series A Price per share. As a result of the Initial Private Placement and the Onex Backstop, the Company sold 69,718,919 shares of redeemable convertible preferred stock to Onex in exchange for $373.3 million, net of fees and expenses of $17.2 million. As a result of the Rights Offering, the Company issued 1,727,427 shares of redeemable convertible preferred stock in exchange for $9.7 million.
Liquidation Preference
Upon liquidation or dissolution of the Company, the holders of redeemable convertible preferred stock are entitled to receive the greater of (a) the accreted liquidation preference, and (b) the amount the holders of redeemable convertible preferred stock would have received if they had converted their redeemable convertible preferred stock into common stock immediately prior to such liquidation or dissolution.
Dividends
Each share of redeemable convertible preferred stock will accumulate dividends at a rate per annum equal to 7% of the accreted liquidation preference, compounding quarterly, by adding to the accreted liquidation preference until July 1, 2023, and thereafter, at the Company’s option, paid either in cash or by adding to the accreted liquidation preference. During the three months ended March 31, 2024, the Company recorded accretion of zero with respect to the redeemable convertible preferred stock, leaving the aggregate liquidation preference at $492.6 million as of March 31, 2024. During the three months ended March 31, 2023, the Company recorded accretion of $8.3 million with respect to the redeemable convertible preferred stock, bringing the aggregate liquidation preference to $484.2 million as of March 31, 2023.
On March 12, 2024, the Company’s Board of Directors approved the payment in cash of a dividend on the Company’s redeemable convertible preferred stock (such dividend, the “Preferred Stock Cash Dividend”) for the period ending March 31, 2024 to holders of record of the redeemable convertible preferred stock as of March 26, 2024. On March 28, 2024, the Company paid the Preferred Stock Cash Dividend for a total of $8.6 million, or $0.12 per share.
There were no cash dividends declared or paid in the first quarter of 2023. Holders of redeemable convertible preferred stock are also entitled to participate in and receive any dividends declared or paid on the Company’s common stock on an as-converted basis, and no dividends may be paid to holders of common stock unless the aggregate accreted liquidation preference on the redeemable convertible preferred stock has been paid or holders of a majority of the outstanding redeemable convertible preferred stock have consented to such dividends.
Conversion Features
Shares of the redeemable convertible preferred stock may be converted at the option of the holder into a number of shares of common stock equal to (a) the amount of the accreted liquidation preference, divided by (b) the applicable conversion price. Each share of redeemable convertible preferred stock had an initial liquidation preference of $5.60 and were initially convertible into approximately 1.59 shares of common stock, which is equivalent to the initial liquidation preference per share of $5.60 divided by the initial conversion price of $3.52 per share. The conversion price is subject to customary anti-dilution adjustments upon the occurrence of certain events, including downward adjustment in the event the Company issues securities, subject to exceptions, at a price that is lower than the fair market value of such securities.
16
If, at any time following the third anniversary of the First Closing Date the closing price per share of the Company’s common stock exceeds 175% of the then-applicable conversion price for at least 20 consecutive trading days, the Company may, at its option, and subject to certain liquidity conditions, cause any or all of the then-outstanding shares of redeemable convertible preferred stock to be converted automatically into common stock at the then-applicable conversion price (the “Mandatory Conversion Right”).
On February 13, 2024, the Company received from Onex Partners V a waiver letter (the “Waiver”), effective for six months from the date thereof, pursuant to which Onex Partners V waived the requirement that each share of common stock of the Company issuable upon conversion of the shares of the Company’s redeemable convertible preferred stock held by Onex Partners V be freely tradeable upon any issuance thereof related to a mandatory conversion in the redeemable convertible preferred stock. Pursuant to the Waiver, Onex Partners V agreed that the Company may cause a Mandatory Conversion Right without such a registration statement. This Waiver is effective until August 13, 2024, unless extended by Onex Partners V in its sole discretion. On February 12, 2024, members of the Company’s Board representing a majority of the directors who are not employed by the Company and who are unaffiliated with, and otherwise independent of, Onex Partners V and its affiliates, voted to authorize management to effect the Mandatory Conversion of all outstanding shares of the redeemable convertible preferred stock.
Mandatory Conversion
On April 18, 2024, the Company announced it had delivered a notice informing holders of its redeemable convertible preferred stock that it had exercised its right to mandate that all shares of the redeemable convertible preferred stock will be converted to shares of the Company’s common stock. The notice was triggered by the fact that the closing share price of the Company’s common stock on the NYSE had exceeded 175% of the conversion price for a period of 20 consecutive trading days ending with April 17, 2024. On May 2, 2024 (the “Conversion Date”), each holder of redeemable convertible preferred stock will be entitled to receive 1.97165806 shares of common stock for each share of redeemable convertible preferred stock held as of the Conversion Date. Cash will be paid in lieu of fractional shares of common stock. Following the Conversion Date, no redeemable convertible preferred stock will remain outstanding, and all rights of the former holders of the redeemable convertible preferred stock will have been terminated. Refer to Note 17, Subsequent Event.
Redemption Features
The Company has the right to redeem all, but not less than all, of the redeemable convertible preferred stock on or after June 29, 2026 for a cash purchase price equal to (a) on or after the six-year anniversary of June 29, 2020 (the “First Closing Date”), 105% of the accreted liquidation preference, (b) on or after the seven-year anniversary of the First Closing Date, 103% of the accreted liquidation preference or (c) on or after the eight-year anniversary of the First Closing Date, the accreted liquidation preference. In addition, if there is a change of control transaction involving the Company prior to the six-year anniversary of the First Closing Date, the Company has the right to redeem all, but not less than all, of the redeemable convertible preferred stock for a cash purchase price equal to the accreted liquidation preference plus the net present value of the additional amount by which the accreted liquidation preference would have otherwise increased from the date of such redemption through the sixth anniversary of the First Closing Date. If, after the Company ceases to have a controlling stockholder group, there is a change of control transaction involving the Company, holders of redeemable convertible preferred stock may elect to (x) convert their redeemable convertible preferred stock into shares of common stock at the then-current conversion price or (y) require the Company to redeem the redeemable convertible preferred stock for cash, at a price per share equal to the then-unpaid accreted liquidation preference. Although only Unaffiliated Directors (as defined below) can be involved in any decisions with respect to the Company’s rights to exercise the redemption features, the holders of the redeemable convertible preferred stock control the majority of the votes through representation on the board of directors. Therefore, the redeemable convertible preferred stock is required to be accreted to its redemption price on the date the redemption option first becomes exercisable. For the three months ended March 31, 2024 and 2023, the Company recorded $10.7 million and $10.1 million in deemed dividends, respectively, representing the accretion of the redeemable convertible preferred stock to the redemption value.
17
Voting Rights
Certain matters will require the approval of holders of a majority of the redeemable convertible preferred stock, including (i) amendments to the Company’s organizational documents in a manner adverse to the redeemable convertible preferred stock, (ii) the creation or issuance of senior or parity equity securities or (iii) the issuance of any convertible indebtedness, other class of redeemable convertible preferred stock or other equity securities in each case with rights to payments or distributions in which the redeemable convertible preferred stock would not participate on a pro-rata, as-converted basis.
In addition, for so long as the redeemable convertible preferred stock represents more than 30% of the outstanding common stock on an as-converted basis, without the approval of a majority of the directors elected by the holders of the redeemable convertible preferred stock, the Company may not (i) incur new indebtedness to the extent certain financial metrics are not satisfied, (ii) redeem or repurchase any equity securities junior to the redeemable convertible preferred stock, (iii) enter into any agreement for the acquisition or disposition of assets or businesses involving a purchase price in excess of $100 million, (iv) hire or terminate the chief executive officer of the Company or (v) make a voluntary filing for bankruptcy or commence a dissolution of the Company.
For so long as the redeemable convertible preferred stock represents a minimum percentage of the outstanding shares of common stock on an as-converted basis as set forth in the Certificate of Designations relating to the redeemable convertible preferred stock, the holders of the redeemable convertible preferred stock shall have the right to appoint up to five members of the Company’s Board of Directors (the “Board”).
All decisions of the Company’s Board with respect to the exercise or waiver of the Company’s rights relating to the redeemable convertible preferred stock shall be determined by a majority of the Company’s directors that are not employees of the Company or affiliated with Onex (“Unaffiliated Directors”), or a committee of Unaffiliated Directors.
As part of the transactions contemplated by the Investment Agreement, the Company and Onex entered into a Registration Rights Agreement whereby Onex is entitled to certain demand and piggyback registration rights in respect of the redeemable convertible preferred stock and the shares of common stock issuable upon conversion thereof.
Dividends
There were no dividends paid or declared with respect to the Company’s common stock during the first quarters of 2024 and 2023, respectively.
Share Repurchases
October 2022 Share Repurchase Program Extension and Expansion (“October 2022 Share Repurchase Program”)
On October 26, 2022, the Company’s Board approved an extension and expansion of its share repurchase program, which allowed for the repurchase of $20.0 million of the Company’s common stock through December 31, 2023, subject to early termination or extension by the Board. The Company repurchased 5,064,140 shares for $16.9 million during the three months ended March 31, 2023 under this repurchase program.
November 2023 Share Repurchase Program Extension and Expansion (“November 2023 Share Repurchase Program”)
In November 2023, the Company’s Board approved an extension and expansion of its share repurchase program, which allows for the repurchase of $25.0 million of the Company’s common stock through December 31, 2024, subject to early termination or extension by the Board. The Company repurchased 295,650 shares for $1.8 million during the three months ended March 31, 2024 under this repurchase program. There was $23.2 million remaining available for share repurchases under the November 2023 Share Repurchase Program as of March 31, 2024. The share repurchase program may be suspended or discontinued at any time without notice.
18
The Company recognizes cumulative stock-based compensation expense for the portion of the awards for which the service period is probable of being satisfied. Stock-based compensation expense is included in selling, general and administrative expense in the condensed consolidated statements of income and comprehensive income. The related deferred tax benefit for stock-based compensation recognized was $0.6 million and $0.5 million for the three months ended March 31, 2024 and 2023, respectively.
2019 Employee Stock Purchase Plan (the “ESPP”)
In January 2019, the Board approved the ESPP, which was approved by the Company’s stockholders in May 2019. The ESPP requires that participating employees must be employed for at least 20 hours per week, have completed at least 6 months of service, and have compensation (as defined in the ESPP) not greater than $150,000 in the 12-month period before the enrollment date to be eligible to participate in the ESPP. Under the ESPP, eligible employees will receive a 10% discount from the lesser of the closing price on the first day of the offering period and the closing price on the purchase date. The Company reserved 500,000 shares of its common stock for issuance under the ESPP. The ESPP expense recognized by the Company was not material for the three months ended March 31, 2024 and 2023.
Stock Options
The Company recognized stock-based compensation expense relating to stock option activity of $2.0 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively.
Stock option activity for the three months ended March 31, 2024, was as follows:
|
|
|
|
|
Weighted-Average |
|
|
|
|
|||||||
|
|
Number of |
|
|
Exercise Price |
|
|
Remaining |
|
|
Aggregate |
|
||||
|
|
(thousands) |
|
|
|
|
|
(years) |
|
|
(millions) |
|
||||
Outstanding at December 31, 2023 |
|
|
19,791 |
|
|
$ |
6.25 |
|
|
|
7.4 |
|
|
$ |
15.7 |
|
Granted |
|
|
70 |
|
|
|
6.59 |
|
|
|
|
|
|
|
||
Exercised |
|
|
(166 |
) |
|
|
5.31 |
|
|
|
|
|
|
|
||
Forfeited/Expired |
|
|
(556 |
) |
|
|
7.94 |
|
|
|
|
|
|
|
||
Outstanding at March 31, 2024 |
|
|
19,139 |
|
|
$ |
6.21 |
|
|
|
7.2 |
|
|
$ |
29.5 |
|
Exercisable at March 31, 2024 |
|
|
9,201 |
|
|
$ |
7.58 |
|
|
|
6.2 |
|
|
$ |
9.3 |
|
There was a total of $10.3 million unrecognized stock-based compensation expense at March 31, 2024 related to unvested stock options expected to be recognized over a weighted-average period of 2.46 years.
Restricted Stock Units (“RSUs”)
The Company grants RSUs that contain service conditions to certain executives and employees. The Company recognizes cumulative stock-based compensation expense for the portion of the awards for which the service period is probable of being satisfied. Stock-based compensation expense relating to RSU activity recognized in the three months ended March 31, 2024 and 2023 was $0.4 million and $0.5 million, respectively. There was a total of $1.0 million of unrecognized stock-based compensation expense at March 31, 2024 related to unvested RSUs expected to be recognized over a weighted-average period of 1.5 years.
RSU activity for the three months ended March 31, 2024, was as follows:
(share data in thousands, except per share data) |
|
Number of |
|
|
Weighted |
|
||
Unvested balance, December 31, 2023 |
|
|
541 |
|
|
$ |
5.95 |
|
Granted |
|
|
91 |
|
|
|
6.59 |
|
Vested |
|
|
(334 |
) |
|
|
6.37 |
|
Unvested balance, March 31, 2024 |
|
|
298 |
|
|
$ |
5.67 |
|
19
Market-based Share Awards
In January 2020, the Company granted performance-based market condition share awards to one senior executive under the 2017 Omnibus Equity Plan, which entitle this employee the right to receive shares of common stock equal to a maximum value of $4.9 million in the aggregate, upon achievement of specified targeted share prices measured over sixty days within a ninety-day trading period. In June 2019, the Company granted performance-based market condition share awards to one senior executive under the 2017 Omnibus Equity Plan, which entitle this employee the right to receive shares of common stock equal to a maximum value of $4.9 million, in the aggregate, upon achievement of specified targeted share prices measured over sixty days within a ninety-day trading period. As of March 31, 2024, all outstanding performance-based market condition share awards remain unvested with an estimated weighted average conversion threshold of $21.08 per share, which would result in an estimated 78,041 shares of common stock to be issued upon vesting. Each of the estimated 78,041 shares of common stock have a weighted-average grant date fair value of $24.77 per share.
As of March 31, 2024 and December 31, 2023, the liability for these awards was $0.8 million and is reported on the condensed consolidated balance sheets in other noncurrent liabilities. The fair value of performance-based market condition share awards is estimated on the grant date using a risk-neutral Monte Carlo simulation model. The grant date fair value of the remaining outstanding awards granted in 2019 was $0.8 million. The grant date fair value of the 2020 awards was $1.1 million. The Company recognized stock-based compensation expense relating to performance-based market condition share awards of zero for each of the three months ended March 31, 2024 and 2023.
The assumptions used in determining the fair value for the performance-based market condition share awards outstanding at March 31, 2024 were as follows:
|
|
March 31, |
Expected volatility |
|
67.1% |
Dividend yield |
|
0.0% |
Risk-free interest rate |
|
4.2% |
Weighted-average expected term (in years) |
|
9.2 |
The weighted-average expected term of the Company’s performance-based market condition share awards is the weighted-average of the derived service periods for the share awards.
Basic earnings per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding options, using the treasury stock method and the average market price of the Company’s common stock during the applicable period. Certain shares related to some of the Company’s outstanding employee share awards were excluded from the computation of diluted earnings per share because they were antidilutive in the periods presented but could be dilutive in the future. Performance-based market condition share awards are considered contingently issuable shares, which would be included in the denominator for earnings per share if the applicable market conditions have been achieved, and the inclusion of any performance-based market condition share awards is dilutive for the respective reporting periods. For both the three months ended March 31, 2024 and 2023, unvested performance-based market condition share awards were excluded from the calculation of diluted earnings per share because the market conditions had not been met. There were 71,402,607 7% Series A Redeemable Convertible Participating Preferred Stock shares outstanding which were convertible into 139,938,883 shares of common stock at March 31, 2024. These preferred stock shares were anti-dilutive for the three months ended March 31, 2024 and are therefore excluded from the diluted income (loss) per common share calculation.
20
The details of the computation of basic and diluted earnings per common share are as follows:
|
|
Three Months Ended |
|
|||||
(dollars in millions, share data in thousands except earnings per share) |
|
2024 |
|
|
2023 |
|
||
Net income and comprehensive income |
|
$ |
11.0 |
|
|
$ |
7.1 |
|
Accretion to redemption value of redeemable |
|
|
(10.7 |
) |
|
|
(10.1 |
) |
Participation rights on if-converted basis |
|
|
(0.2 |
) |
|
|
— |
|
Net income (loss) and comprehensive income (loss) |
|
$ |
0.1 |
|
|
$ |
(3.0 |
) |
Weighted average common shares outstanding |
|
|
63,039 |
|
|
|
67,280 |
|
Basic income (loss) per share |
|
$ |
0.00 |
|
|
$ |
(0.04 |
) |
Net income (loss) and comprehensive income (loss) |
|
$ |
0.1 |
|
|
$ |
(3.0 |
) |
Dilutive effect of stock options |
|
|
2,166 |
|
|
|
— |
|
Diluted weighted average common shares |
|
|
65,205 |
|
|
|
67,280 |
|
Diluted income (loss) per share |
|
$ |
0.00 |
|
|
$ |
(0.04 |
) |
Anti-dilutive employee share awards excluded |
|
|
8,667 |
|
|
|
21,169 |
|
The Company determines its interim income tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to the income before income taxes for the period. In determining the full year effective tax rate estimate, the Company does not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the expected relationship between income tax expense (benefit) and pre-tax income (loss). Significant judgment is exercised in determining the income tax provision due to transactions, credits and estimates where the ultimate tax determination is uncertain.
The Company’s U.S. federal statutory corporate income tax rate was 21% as of March 31, 2024. For the three months ended March 31, 2024 and 2023, the Company recorded a provision for income taxes of $3.5 million and $2.7 million, respectively, which resulted in an effective tax rate of 24.1% and 27.6%, respectively. The differences between the U.S. federal statutory and effective tax rates before discrete items are primarily attributable to changes in valuation allowances and state taxes.
Liabilities for unrecognized tax benefits and associated interest and penalties were not significant as of March 31, 2024 and December 31, 2023.
Leases and Other Contractual Arrangements
The Company has entered into operating leases for office space and office equipment and other contractual obligations primarily to secure venues for the Company’s trade shows and events. These agreements are not unilaterally cancellable by the Company, are legally enforceable and specify fixed or minimum amounts or quantities of goods or services at fixed or minimum prices.
Legal Proceedings and Contingencies
The Company is subject to litigation and other claims in the ordinary course of business. In the opinion of management, the Company’s liability, if any, arising from regulatory matters and legal proceedings related to these matters is not expected to have a material adverse impact on the Company’s condensed consolidated balance sheets, results of operations or cash flows.
21
In the opinion of management, there are no claims, commitments or guarantees pending to which the Company is party that would have a material adverse effect on the condensed consolidated financial statements.
Accounts payable and other current liabilities consisted of the following:
(in millions) |
|
March 31, |
|
|
December 31, |
|
||
Trade payables |
|
$ |
14.2 |
|
|
$ |
24.1 |
|
Other current liabilities |
|
|
10.5 |
|
|
|
9.3 |
|
Accrued event costs |
|
|
20.3 |
|
|
|
6.7 |
|
Accrued personnel costs |
|
|
16.1 |
|
|
|
6.5 |
|
Total accounts payable and other current liabilities |
|
$ |
61.1 |
|
|
$ |
46.6 |
|
The Company routinely evaluates whether its operating and reportable segments continue to reflect the way the CODM evaluates the business. The determination is based on: (1) how the Company’s CODM evaluates the performance of the business, including resource allocation decisions, and (2) whether discrete financial information for each operating segment is available. The Company considers its Chief Executive Officer to be its CODM.
The CODM evaluates performance based on the results of three business lines, which represent the Company’s three operating segments. The Connections segment is the only operating segment which meets the criteria to be classified as a reportable segment. The Connections reportable segment includes all of Emerald’s trade shows and other live events. The other two operating segments, which provide diverse media services and e-commerce software solutions, did not meet the quantitative thresholds of a reportable segment and did not meet the aggregation criteria set forth in Accounting Standards Codification 280 (“ASC 280”), Segment Reporting and as such are referred to as “All Other.”
Operating segment performance is evaluated by the Company’s CODM based on Adjusted EBITDA, a non-GAAP measure, defined as EBITDA exclusive of general corporate expenses, stock-based compensation expense, impairments and other items. These adjustments are primarily related to items that are managed on a consolidated basis at the corporate level. The exclusion of such charges from each segment is consistent with how the CODM evaluates segment performance.
The following table presents a reconciliation of reportable segment revenues, other income, net, and Adjusted EBITDA to net income:
22
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Revenues |
|
|
|
|
|
|
||
Connections |
|
$ |
123.4 |
|
|
$ |
112.2 |
|
All Other |
|
|
10.0 |
|
|
|
10.1 |
|
Total revenues |
|
$ |
133.4 |
|
|
$ |
122.3 |
|
|
|
|
|
|
|
|
||
Other income, net |
|
|
|
|
|
|
||
Connections |
|
$ |
1.0 |
|
|
$ |
— |
|
All Other |
|
|
— |
|
|
|
— |
|
Total other income, net |
|
$ |
1.0 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
||
Adjusted EBITDA |
|
|
|
|
|
|
||
Connections |
|
$ |
56.1 |
|
|
$ |
49.4 |
|
All Other |
|
|
0.2 |
|
|
|
(0.3 |
) |
Subtotal Adjusted EBITDA |
|
$ |
56.3 |
|
|
$ |
49.1 |
|
|
|
|
|
|
|
|
||
General corporate and other expenses |
|
$ |
(15.5 |
) |
|
$ |
(12.6 |
) |
Interest expense, net |
|
|
(9.8 |
) |
|
|
(6.9 |
) |
Depreciation and amortization expense |
|
|
(7.1 |
) |
|
|
(13.5 |
) |
Stock-based compensation expense |
|
|
(2.5 |
) |
|
|
(2.1 |
) |
Other items |
|
|
(6.9 |
) |
|
|
(4.2 |
) |
Income before income taxes |
|
$ |
14.5 |
|
|
$ |
9.8 |
|
The Company’s CODM does not receive information with a measure of total assets or capital expenditures for each operating segment as this information is not used for the evaluation of operating segment performance as the Company’s operations are not capital intensive. Capital expenditure information is provided to the CODM on a consolidated basis. Therefore, the Company has not provided asset and capital expenditure information by reportable segment. Intersegment revenues were immaterial for the three months ended March 31, 2024 and 2023. For the three months ended March 31, 2024 and 2023, substantially all revenues were derived from transactions in the United States.
Investment funds affiliated with Onex Corporation owned approximately 90.5% of the Company’s common stock on an as-converted basis as of March 31, 2024. Affiliates of Onex Corporation held a 48.0% ownership position in ASM Global (“ASM”), including SMG Food & Beverage, LLC, a wholly-owned subsidiary of ASM, which the Company has contracted with for catering services at certain of the Company’s trade shows and events, and a 96.0% ownership position in Convex Group Ltd. (“Convex”), which is one of the insurers in the syndicate that provides the Company’s insurance coverage. Additionally, certain of the Company’s future tradeshows and other events may be held at facilities managed by ASM. During the three months ended March 31, 2024 and 2023, two and four events were staged at ASM-managed venues, respectively. The Company paid to ASM aggregate fees, inclusive of certain concessions, equal to $0.4 million and $0.3 million during the three months ended March 31, 2024 and 2023, respectively. The Company had $0.1 million and $0.3 million fees due to ASM as of March 31, 2024 and December 31, 2023, respectively. The Company made no payments to Convex during each of the three months ended March 31, 2024 and 2023. The Company had $0.4 million and $0.3 million due to Convex as of March 31, 2024 and December 31, 2023, respectively.
23
On April 18, 2024, the Company announced it had delivered a notice informing holders of its redeemable convertible preferred stock that it had exercised its right to mandate that all shares of the redeemable convertible preferred stock will be converted to shares of the Company’s common stock. The notice was triggered by the fact that the closing share price of the Company’s common stock on the NYSE had exceeded 175% of the conversion price for a period of 20 consecutive trading days ending with April 17, 2024. On the Conversion Date of May 2, 2024, each holder of redeemable convertible preferred stock received 1.97165806 shares of common stock for each share of redeemable convertible preferred stock held as of the Conversion Date. As a result, 71,402,607 shares of redeemable convertible preferred stock were converted into 140,781,525 shares of common stock on the Conversion Date. Following the Conversion Date, no redeemable convertible preferred stock remain outstanding, and all rights of the former holders of the redeemable convertible preferred stock have been terminated. The Company is currently in process of assessing the accounting treatment for the preferred stock conversion. As such, an estimate of the impact on future financial statements cannot be made at this point in time.
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion and analysis of the financial condition and results of our operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes of Emerald Holding, Inc. included in Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and the related notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”), as filed with the SEC. You should review the disclosures under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors” in the Annual Report, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. All references to the “Company”, “us,” “we,” “our,” and all similar expressions are references to Emerald Holding, Inc., together with its consolidated subsidiaries, unless otherwise expressly stated or the context otherwise requires.
Recent Events
Mandatory Conversion
On April 18, 2024, the Company announced it had delivered a notice informing holders of its redeemable convertible preferred stock that it had exercised its right to mandate that all shares of the redeemable convertible preferred stock will be converted to shares of the Company’s common stock. The notice was triggered by the fact that the closing share price of the Company’s common stock on the NYSE had exceeded 175% of the conversion price for a period of 20 consecutive trading days ending with April 17, 2024. On the Conversion Date of May 2, 2024, each holder of redeemable convertible preferred stock received 1.97165806 shares of common stock for each share of redeemable convertible preferred stock held as of the Conversion Date. As a result, 71,402,607 shares of redeemable convertible preferred stock were converted into 140,781,525 shares of common stock on the Conversion Date. Following the Conversion Date, no redeemable convertible preferred stock remain outstanding, and all rights of the former holders of the redeemable convertible preferred stock have been terminated.
Overview
Emerald is a leading operator of business-to-business trade shows in the United States. Leveraging our shows as key market-driven platforms, we combine our events with effective industry insights, digital tools, and data-focused solutions to create uniquely rich experiences. Emerald strives to build its customers’ businesses by creating opportunities that deliver tangible results.
All of our trade show franchises typically hold market-leading positions within their respective industry verticals, with significant brand value established over a long period of time. Each of our shows is scheduled to stage at least annually, with certain franchises offering multiple editions per year. As our shows are frequently the largest and most well attended in their respective industry, we are able to attract high-quality attendees, including those who have the authority to make purchasing decisions on the spot or subsequent to the show. The participation of these attendees makes our trade shows “must-attend” events for our exhibitors, further reinforcing the leading positions of our trade shows within their respective industry verticals. Our attendees use our shows to fulfill procurement needs, source new suppliers, reconnect with existing suppliers, identify trends, learn about new products and network with industry peers, which we believe are factors that make our shows difficult to replace with non-face-to-face events. Our portfolio of trade shows is well-balanced and diversified across both industry sectors and customers.
In addition to organizing our trade shows, conferences and other events, we also operate content and content-marketing websites, related digital products, and produce publications, each of which is aligned with a specific sector for which we organize an event. We also offer business-to-business commerce and digital merchandising solutions, serving the needs of manufacturers and retailers, through our Elastic Suite platform. In addition to their respective revenues, these products complement our live events and provide us year-round channels of customer acquisition and development.
Reportable Segments
As described in Note 15, Segment Information, our business is organized into one reportable segment, consistent with the information provided to our Chief Executive Officer, who is considered the chief operating decision-maker (“CODM”). The CODM evaluates performance based on the results of our Connections, Content and Commerce business lines (collectively, the “three C’s”), which represent our three operating segments. The Connections segment is primarily comprised of Emerald’s trade shows and other live events. The remaining two operating segments do not meet the quantitative thresholds to be considered reportable segments and are included in the “All Other” category. In addition, we have a “Corporate-Level Activities” category consisting of finance, legal, information technology and administrative functions. Prior year disclosures below have been updated to reflect the new reportable segment structure described in Note 15, Segment Information.
25
The following discussion provides additional detailed disclosure for the one reportable segment, the “All Other” category and the “Corporate-Level Activity” category:
Connections: This segment includes all of Emerald’s trade shows and other live events that provide exhibitors opportunities to influence their market, engage with significant buyers, generate incremental sales and expand their brand’s awareness in their industry.
All Other: This category consists of Emerald’s remaining operating segments, which provide diverse media platforms and services and e-commerce software solutions, but are not aggregated with the reportable segment. Each of the operating segments in the All Other category do not meet the criteria to be a separate reportable segment.
Corporate-Level Activity: This category consists of Emerald’s finance, legal, information technology and administrative functions.
Organic Growth Drivers
We are primarily focused on generating organic growth by understanding and leveraging the drivers for increased exhibitor and attendee participation at trade shows and providing year-round services that provide incremental value to those customers. Creating new opportunities for exhibitors to influence their market, engage with significant buyers, generate incremental sales and expand their brand’s awareness in their industry builds further demand for exhibit space and strengthens the value proposition of a trade show, which generally allows us to modestly increase booth space pricing annually across our portfolio. At the same time, our trade shows provide attendees with the opportunity to enhance their industry connectivity, develop relationships with targeted suppliers and distributors, discover new products, learn about new industry developments, celebrate their industry’s achievements and, in certain cases, obtain continuing professional education credits, which we believe increases their propensity to return and, consequently, drives high recurring participation among our exhibitors. By investing in and promoting these tangible and return-on-investment linked outcomes, we believe we will be able to continue to enhance the value proposition for our exhibitors and attendees alike, thereby driving strong demand and premium pricing for exhibit space, sponsorship opportunities and attendee registration.
Acquisitions
We are also focused on growing our national footprint through the acquisition of high-quality events that are leaders in their specific industry verticals. Since the Onex Acquisition in June 2013, we have completed 26 strategic acquisitions, with purchase prices, excluding the $335.0 million acquisition of George Little Management in 2014, ranging from approximately $5.0 million to approximately $120.0 million, excluding the $24.0 million of contingent payment which was not earned by the acquired entity, and annual revenues ranging from approximately $1.3 million to approximately $25.6 million. Historically, we have completed acquisitions at earnings before interest, taxes, depreciation, and amortization (“EBITDA”) purchase multiples that are typically in the mid-to-high single digits. Our acquisitions have historically been structured as asset deals that have resulted in the generation of long-lived tax assets, which in turn have reduced our purchase multiples when incorporating the value of the created tax assets. In the future, we intend to look for acquisitions with similarly attractive valuation multiples.
Trends and Other Factors Affecting Our Business
There are a number of existing and developing factors and trends which impact the performance of our business, and the comparability of our results from year to year and from quarter to quarter, including:
26
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are revenues, Organic revenue, cost of revenues, selling, general and administrative expenses, interest expense, depreciation and amortization, income taxes, Adjusted EBITDA and Free Cash Flow.
Revenues
We generate revenues primarily from selling trade show exhibit space to exhibitors on a per square foot basis. Other trade show revenue streams include conferences, sponsorships, ancillary exhibition fees and attendee registration fees. Exhibitors contract for their booth space and sponsorships up to a year in advance of the trade show. Fees are typically invoiced and collected in full prior to the trade show or event. Additionally, we generate revenue through digital media and print publications that complement our trade shows. We also engage third-party sales agents to support our marketing efforts. Other marketing service revenue contracts are invoiced and recognized in the period the advertising services are delivered. Typically, the fees we charge are collected after the publications are issued.
We define “Organic revenue growth” and “Organic revenue decline” as the growth or decline, respectively, in our revenue from one period to the next, adjusted for the revenue impact of: (i) acquisitions and dispositions, (ii) discontinued events and (iii) material show scheduling adjustments. We disclose changes in Organic revenue because we believe it assists investors and analysts in comparing Emerald’s operating performance across reporting periods on a consistent basis by excluding items that we do not believe reflect a true comparison of the trends of the existing event calendar given changes in timing or strategy. Management and our Board of Directors evaluate changes in Organic revenue to understand underlying revenue trends of its events. Organic revenue is not defined under GAAP, and has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations include that Organic revenue reflects certain adjustments that we consider not to be indicative of our ongoing operating performance. Because not all companies use identical calculations, our presentation of Organic revenue may not be comparable to other similarly titled measures used by other companies.
Organic Revenue
Organic revenue is a supplemental non-GAAP financial measure of performance and is not based on any standardized methodology prescribed by GAAP. Organic revenue should not be considered in isolation or as an alternative to revenues or other measures determined in accordance with GAAP. Also, Organic revenue is not necessarily comparable to similarly titled measures used by other companies.
The most directly comparable GAAP measure to Organic revenue is revenues. For a reconciliation of Organic revenue to revenues as reported, see Footnote 4 to the table under the heading “Results of Operations—Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023”.
27
Other Income
We maintain event cancellation insurance to protect against losses due the unavoidable cancellation, postponement, relocation and enforced reduced attendance at events due to certain covered causes, including losses caused by natural disasters such as hurricanes. While these causes included event cancellation caused by the outbreak of communicable diseases, including COVID-19, for the years ended December 31, 2021 and 2020, Emerald’s renewed event cancellation insurance policies beginning with policy year 2022 do not cover losses due to event cancellations caused by the outbreak of communicable diseases, including COVID-19. Our Other Income is primarily comprised of received or confirmed event cancellation insurance claim and insurance litigation settlement proceeds.
Cost of Revenues
Selling, General and Administrative Expenses
Interest Expense
Interest expense principally represents interest payments and certain other fees paid to lenders under our Amended and Restated Senior Secured Credit Facilities (as amended, for the portion of the year ended December 31, 2023 after the Term Loan Amendment Effective Date, by the Term Loan Amendment).
Depreciation and Amortization
We have historically grown our business through acquisitions and, in doing so, have acquired significant intangible assets, the value of some of which is amortized over time. These acquired intangible assets, unless determined to be indefinite-lived, are amortized over extended periods of three to thirty years from the date of each acquisition for reporting under accounting principles generally accepted in the United States of America (“GAAP”) purposes, or fifteen years for tax purposes. This amortization expense reduces our taxable income.
Income Taxes
Income tax expense consists of U.S. federal, state, local and foreign taxes based on income in the jurisdictions in which we operate.
28
We record deferred tax charges or benefits primarily associated with our utilization or generation of net operating loss carryforwards and book-to-tax differences related to amortization of goodwill, amortization of intangible assets, depreciation, stock-based compensation charges, 163(j) interest expense limitation and deferred financing costs.
Adjusted EBITDA
Adjusted EBITDA is a key measure of our performance. We define Adjusted EBITDA as net income before (i) interest expense, net, (ii) provision for income taxes, (iii) goodwill impairments, (iv) intangible asset impairments, (v) depreciation and amortization, (vi) stock-based compensation and (vii) other items that we believe are not part of our core operations. We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
Management and our Board of Directors use Adjusted EBITDA to assess our financial performance and believe it is helpful in highlighting trends because it excludes the results of decisions that are outside the control of management, while other performance metrics can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. We reference Adjusted EBITDA frequently in our decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods.
Adjusted EBITDA is not defined under GAAP and has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations include that Adjusted EBITDA excludes certain normal recurring expenses and one-time cash adjustments that we consider not to be indicative of our ongoing operating performance. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures used by other companies.
The most directly comparable GAAP measure to Adjusted EBITDA is net income. For a reconciliation of Adjusted EBITDA to net income, see Footnote 2 to the table under the heading “Results of Operations—Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023”.
Cash Flow Model
We typically have favorable cash flow characteristics, as described below (see “Liquidity and Capital Resources—Cash Flows”), as a result of our high profit margins, low capital expenditures and consistent negative working capital, excluding cash on hand. Our working capital, excluding cash on hand, is negative due to the fact that our current assets are generally lower than our current liabilities. Current assets primarily include accounts receivable and prepaid expenses, while current liabilities primarily include accounts payable and deferred revenues. Cash received prior to an event is recorded as deferred revenue on our balance sheet and recognized as revenue upon completion of each trade show. The implication of having negative working capital, excluding cash on hand, is that changes in working capital represent a source of cash as our business grows.
The primary driver for our negative working capital, excluding cash on hand, is the sales cycle for a trade show, which typically begins during the twelve months prior to a show. In the interim period between the current show and the following show, we continue to sell to new and past exhibitors and collect payments on contracted exhibit space. Our exhibitors pay in full in advance of each trade show, whereas the bulk of direct expenses are paid close to or after the show. Cash deposits start to be received as early as twelve months prior to a show taking place and the balance of booth space fees are typically received in cash one month prior to a show taking place. This highly efficient cash flow model, where cash is received in advance of expenses to be paid, creates a working capital benefit.
Free Cash Flow
In addition to net cash provided by operating activities presented in accordance with GAAP, we present Free Cash Flow because we believe it is a useful indicator of liquidity that provides information to our management and investors about the amount of cash generated from our core operations that, after capital expenditures, can be used for the repayment of indebtedness, paying of dividends, repurchasing of shares of our common stock and strategic initiatives, including investing in our business and making strategic acquisitions.
Free Cash Flow is a supplemental non-GAAP financial measure of liquidity and is not based on any standardized methodology prescribed by GAAP. Free Cash Flow should not be considered in isolation or as an alternative to net cash provided by operating activities or other measures determined in accordance with GAAP. Also, Free Cash Flow is not necessarily comparable to similarly titled measures used by other companies.
29
The most directly comparable GAAP measure to Free Cash Flow is net cash provided by operating activities. For a reconciliation of Free Cash Flow to net cash provided by operating activities, see Footnote 3 to the table under the heading “Results of Operations—Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023”.
Results of Operations
Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023
The tables in this section summarize key components of our results of operations for the periods indicated.
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
Variance $ |
|
|
Variance % |
|
||||
|
|
(unaudited) |
|
|||||||||||||
Statement of income and comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
$ |
133.4 |
|
|
$ |
122.3 |
|
|
$ |
11.1 |
|
|
|
9.1 |
% |
Other income, net |
|
|
1.0 |
|
|
|
— |
|
|
|
1.0 |
|
|
NM |
|
|
Cost of revenues |
|
|
47.5 |
|
|
|
43.2 |
|
|
|
4.3 |
|
|
|
10.0 |
% |
Selling, general and administrative expenses(1) |
|
|
55.5 |
|
|
|
48.8 |
|
|
|
6.7 |
|
|
|
13.7 |
% |
Depreciation and amortization expense |
|
|
7.1 |
|
|
|
13.5 |
|
|
|
(6.4 |
) |
|
|
(47.4 |
%) |
Operating income |
|
|
24.3 |
|
|
|
16.8 |
|
|
|
7.5 |
|
|
|
44.6 |
% |
Interest expense |
|
|
12.1 |
|
|
|
8.0 |
|
|
|
4.1 |
|
|
|
51.3 |
% |
Interest income |
|
|
2.3 |
|
|
|
1.1 |
|
|
|
1.2 |
|
|
|
109.1 |
% |
Other expense |
|
|
— |
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
NM |
|
|
Income before income taxes |
|
|
14.5 |
|
|
|
9.8 |
|
|
|
4.7 |
|
|
|
48.0 |
% |
Provision for income taxes |
|
|
3.5 |
|
|
|
2.7 |
|
|
|
0.8 |
|
|
|
29.6 |
% |
Net income and comprehensive income |
|
$ |
11.0 |
|
|
$ |
7.1 |
|
|
$ |
3.9 |
|
|
|
54.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other financial data (unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA(2) |
|
$ |
40.8 |
|
|
$ |
36.5 |
|
|
$ |
4.3 |
|
|
|
11.8 |
% |
Free Cash Flow(3) |
|
$ |
4.8 |
|
|
$ |
5.2 |
|
|
$ |
(0.4 |
) |
|
|
(7.7 |
%) |
Organic revenue(4) |
|
$ |
128.6 |
|
|
$ |
115.1 |
|
|
$ |
13.5 |
|
|
|
11.7 |
% |
30
We define Adjusted EBITDA as net income before (i) interest expense, net, (ii) provision for income taxes, (iii) goodwill impairments, (iv) intangible asset impairments, (v) depreciation and amortization, (vi) stock-based compensation and (vii) other items that we believe are not part of our core operations. We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management and our Board of Directors use Adjusted EBITDA to assess our financial performance and believe it is helpful in highlighting trends because it excludes the results of decisions that are outside the control of our management, while other performance metrics can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. We reference Adjusted EBITDA frequently in our decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods. Adjusted EBITDA is not defined under GAAP and has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations include that Adjusted EBITDA excludes certain normal recurring expenses and one-time cash adjustments that we consider not to be indicative of our ongoing operative performance. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures used by other companies.
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(unaudited) |
|
|||||
|
|
(dollars in millions) |
|
|||||
Net income |
|
$ |
11.0 |
|
|
$ |
7.1 |
|
Add: |
|
|
|
|
|
|
||
Interest expense, net |
|
|
9.8 |
|
|
|
6.9 |
|
Provision for income taxes |
|
|
3.5 |
|
|
|
2.7 |
|
Depreciation and amortization expense |
|
|
7.1 |
|
|
|
13.5 |
|
Stock-based compensation expense(a) |
|
|
2.5 |
|
|
|
2.1 |
|
Other items(b) |
|
|
6.9 |
|
|
|
4.2 |
|
Adjusted EBITDA |
|
$ |
40.8 |
|
|
$ |
36.5 |
|
Deduct: |
|
|
|
|
|
|
||
Event cancellation insurance proceeds |
|
|
1.0 |
|
|
|
— |
|
Adjusted EBITDA excluding event cancellation insurance proceeds |
|
$ |
39.8 |
|
|
$ |
36.5 |
|
31
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(unaudited) |
|
|||||
|
|
(dollars in millions) |
|
|||||
Net Cash Provided by Operating Activities |
|
$ |
7.3 |
|
|
$ |
8.9 |
|
Less: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
2.5 |
|
|
|
3.7 |
|
Free Cash Flow |
|
$ |
4.8 |
|
|
$ |
5.2 |
|
Organic revenue is a supplemental non-GAAP financial measure of performance and is not based on any standardized methodology prescribed by GAAP. Organic revenue should not be considered in isolation or as an alternative to revenues or other measures determined in accordance with GAAP. Also, Organic revenue is not necessarily comparable to similarly titled measures used by other companies.
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
Variance $ |
|
|
Variance % |
|
||||
|
|
(unaudited) |
|
|||||||||||||
Revenues |
|
$ |
133.4 |
|
|
$ |
122.3 |
|
|
$ |
11.1 |
|
|
|
9.1 |
% |
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition revenues |
|
|
(2.8 |
) |
|
|
— |
|
|
|
|
|
|
|
||
Discontinued events |
|
|
— |
|
|
|
(3.1 |
) |
|
|
|
|
|
|
||
Scheduling adjustments(1) |
|
|
(2.0 |
) |
|
|
(4.1 |
) |
|
|
|
|
|
|
||
Organic revenue |
|
$ |
128.6 |
|
|
$ |
115.1 |
|
|
$ |
13.5 |
|
|
|
11.7 |
% |
Revenues
Revenues of $133.4 million for the three months ended March 31, 2024 increased $11.1 million, or 9.1%, from $122.3 million for the comparable period in 2023, primarily due to an increase in Organic revenue. See “Connections Segment – Revenues,” and “All Other Category – Revenues” below for a discussion of the factors contributing to the changes in total revenues.
Other Income, net
Other income, net, of $1.0 million for the three months ended March 31, 2024 increased $1.0 million from zero in the comparable period in 2023. See “Connections Segment – Other Income, net,” and “All Other Category – Other Income, net” below for a discussion of other income, net, by segment.
Cost of Revenues
Cost of revenues of $47.5 million for the three months ended March 31, 2024 increased $4.3 million, or 10.0%, from $43.2 million for the comparable period in 2023, primarily due to an increase in Organic revenue. See “Connections Segment – Cost of Revenues,” and “All Other Category – Cost of Revenues” below for a discussion of the factors contributing to the changes in total cost of revenues.
32
Selling, General and Administrative Expense
Total selling, general and administrative expenses consist primarily of compensation and employee-related costs, sales commissions and incentive plans, stock-based compensation expense, marketing expenses, information technology expenses, travel expenses, facilities costs, consulting fees and public reporting costs. Selling, general and administrative expenses of $55.5 million for the three months ended March 31, 2024 increased $6.7 million, or 13.7%, from $48.8 million for the comparable period in 2023. See “Connections Segment – Selling, General and Administrative Expenses”, “All Other category – Selling, General and Administrative Expense” and “Corporate – Selling, General and Administrative Expense” below for a discussion of the factors contributing to the changes in total selling, general and administrative expense.
Depreciation and Amortization Expense
Depreciation and amortization expense of $7.1 million for the three months ended March 31, 2024, decreased $6.4 million, or 47.4%, from $13.5 million for the comparable period in 2023. See “Connections Segment – Depreciation and Amortization Expense,” “All Other Category – Depreciation and Amortization Expense” and “Corporate – Depreciation and Amortization Expense” below for a discussion of the factors contributing to the changes in total depreciation and amortization expense.
Segment Results for the Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023
Connections
The following represents the change in revenue, expenses and operating income in the Connections reportable segment for the three months ended March 31, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
Variance $ |
|
|
Variance % |
|
||||
|
|
(unaudited) |
|
|||||||||||||
Revenues |
|
$ |
123.4 |
|
|
$ |
112.2 |
|
|
$ |
11.2 |
|
|
|
10.0 |
% |
Other income, net |
|
|
1.0 |
|
|
|
— |
|
|
|
1.0 |
|
|
|
100.0 |
% |
Cost of revenues |
|
|
45.3 |
|
|
|
40.9 |
|
|
|
4.4 |
|
|
|
10.8 |
% |
Selling, general and administrative |
|
|
22.4 |
|
|
|
22.1 |
|
|
|
0.3 |
|
|
|
1.4 |
% |
Depreciation and amortization expense |
|
|
4.5 |
|
|
|
11.5 |
|
|
|
(7.0 |
) |
|
|
(60.9 |
%) |
Operating income |
|
$ |
52.2 |
|
|
$ |
37.7 |
|
|
$ |
14.5 |
|
|
|
38.5 |
% |
Revenues
During the three months ended March 31, 2024, revenues for the Connections reportable segment increased $11.2 million, or 10.0%, to $123.4 million from $112.2 million for the comparable period in the prior year. The primary driver was an increase in Organic revenue of $13.6 million, or 13.0%, to $118.6 million from $105.0 million for the comparable period in the prior year, which was nearly all related to recurring revenues. The Connections reportable segment revenues also include incremental revenues of $2.8 million related to the Hotel Interactive acquisition and $2.1 million related to scheduling adjustments in the first quarter of 2024. These increases were offset by $3.1 million of prior year revenues from discontinued events.
Other Income, net
Other income, net, of $1.0 million was recorded for the Connections reportable segment related to business interruption insurance proceeds during the quarter ended March 31, 2024. All of the $1.0 million of other income, net, for the Connections reportable segment was received during the three months ended March 31, 2024.
Cost of Revenues
During the three months ended March 31, 2024, cost of revenues for the Connections reportable segment increased $4.4 million, or 10.8%, to $45.3 million from $40.9 million for the comparable period in the prior year. The primary drivers of the increase were cost of revenues of $5.2 million from recurring events, $0.4 million related to scheduling adjustments and $1.3 million driven by acquisitions. These increases were offset by $2.5 million of prior year cost of revenues from discontinued events.
33
Selling, General and Administrative Expense
During the three months ended March 31, 2024, selling, general and administrative expense for the Connections reportable segment increased $0.3 million, or 1.4%, to $22.4 million from $22.1 million for the comparable period in 2023. The primary driver of the increase was costs associated with the acquisition of Hotel Interactive and higher medical benefits expense during the three months ended March 31, 2024.
Depreciation and Amortization Expense
During the three months ended March 31, 2024, depreciation and amortization expense for the Connections reportable segment decreased $7.0 million, or 60.9%, to $4.5 million from $11.5 million for the comparable period in 2023. The decrease was driven by the full amortization of intangible assets acquired in the formation of Emerald in June 2013 and the full amortization of intangible assets acquired in the acquisition of GLM in January 2014.
All Other Category
The following represents the change in revenue, expenses and operating loss in the All Other category for the three months ended March 31, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
Variance $ |
|
|
Variance % |
|
||||
|
|
(unaudited) |
|
|||||||||||||
Revenues |
|
$ |
10.0 |
|
|
$ |
10.1 |
|
|
$ |
(0.1 |
) |
|
|
(1.0 |
%) |
Cost of revenues |
|
|
2.2 |
|
|
|
2.3 |
|
|
|
(0.1 |
) |
|
|
(4.3 |
%) |
Selling, general and administrative |
|
|
7.6 |
|
|
|
8.1 |
|
|
|
(0.5 |
) |
|
|
(6.2 |
%) |
Depreciation and amortization expense |
|
|
1.8 |
|
|
|
1.3 |
|
|
|
0.5 |
|
|
|
38.5 |
% |
Operating loss |
|
$ |
(1.6 |
) |
|
$ |
(1.6 |
) |
|
$ |
— |
|
|
|
— |
|
Revenues
During the three months ended March 31, 2024, revenues for the All Other category decreased $0.1 million, or 1.0%, to $10.0 million from $10.1 million for the comparable period in 2023. The decrease in revenues was comprised of a $0.8 million, or 14.5%, decrease in content revenues to $4.7 million in the current year from $5.5 million for the comparable period in the prior year, primarily related to lower print and digital advertising. This decline was offset by a $0.7 million, or 15.2%, increase in commerce revenues to $5.3 million in the current year from $4.6 million in the comparable period in the prior year. The increase in commerce revenues was attributable to the continued growth of the Elastic Suite e-commerce business.
Cost of Revenues
During the three months ended March 31, 2024, cost of revenues for the All Other category decreased $0.1 million, or 4.3%, to $2.2 million from $2.3 million for the comparable period in 2023. The primary driver of the decrease was cost savings in the content business.
Selling, General and Administrative Expense
During the three months ended March 31, 2024, selling, general and administrative expense for the All Other category decreased $0.5 million, or 6.2%, to $7.6 million from $8.1 million for the comparable period in 2023. The primary driver of the decrease was lower salary and benefits expense in both the content and commerce businesses.
Depreciation and Amortization Expense
During the three months ended March 31, 2024, depreciation and amortization expense for the All Other category increased $0.5 million, or 38.5%, to $1.8 million from $1.3 million for the comparable period in 2023. The increase was attributable to the continued development of the Company’s Elastic software subscription platform.
34
Corporate Category
The following represents the change in operating expenses in the Corporate category for the three months ended March 31, 2024 and 2023:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
Variance $ |
|
|
Variance % |
|
||||
|
|
(unaudited) |
|
|||||||||||||
Selling, general and administrative |
|
$ |
25.5 |
|
|
$ |
18.6 |
|
|
$ |
6.9 |
|
|
|
37.1 |
% |
Depreciation and amortization expense |
|
|
0.8 |
|
|
|
0.7 |
|
|
|
0.1 |
|
|
|
14.3 |
% |
Total operating expenses |
|
$ |
(26.3 |
) |
|
$ |
(19.3 |
) |
|
$ |
(7.0 |
) |
|
|
36.3 |
% |
Selling, General and Administrative Expense
During the three months ended March 31, 2024, selling, general and administrative expense for the Corporate category increased $6.9 million, or 37.1%, to $25.5 million from $18.6 million for the comparable period in 2023. The increase was primarily attributable to higher non-recurring transition related expenses, including $3.0 million in severance expense, and a $1.5 million increase in contingent consideration remeasurements. Higher bonus and medical benefits expense drove the balance of the increase.
Depreciation and Amortization Expense
During the three months ended March 31, 2024, depreciation and amortization expense for the Corporate category increased $0.1 million, or 14.3%, to $0.8 million from $0.7 million for the comparable period in 2023. The increase is attributable to higher purchased software amortization expense.
Interest Expense
Interest expense of $12.1 million for the three months ended March 31, 2024 increased $4.1 million, or 51.3%, from $8.0 million for the comparable period in 2023. The increase was attributable to a higher effective interest rate of 10.44% on our outstanding indebtedness for the three months ended March 31, 2024 compared to 7.03% for the comparable period in the prior year.
Interest Income
Interest income of $2.3 million for the three months ended March 31, 2024 increased from $1.1 million for the comparable period in 2023. The increase was primarily attributable to an increase in our money market mutual funds balance as well as rising interest rates during fiscal 2023.
Provision for Income Taxes
For the three months ended March 31, 2024, the Company recorded a provision for income taxes of $3.5 million which resulted in an effective tax rate of 24.1% for the three months ended March 31, 2024. The Company recorded a provision for income taxes of $2.7 million and an effective tax rate of 27.6% for the three months ended March 31, 2023. The change in the effective tax rate for the three months ended March 31, 2024 is attributable to changes in valuation allowances and the timing of current period and full year projected results.
Net Income
Net income of $11.0 million for the three months ended March 31, 2024 represented a $3.9 million improvement from net income of $7.1 million for the comparable period in 2023. The key drivers of the increase were higher income from on-going operations and the recognition of other income, net of $1.0 million related to business interruption insurance claim proceeds, offset by higher interest expense, net and a higher provision for income taxes during the first quarter of fiscal 2024.
35
Adjusted EBITDA
Adjusted EBITDA of $40.8 million for the three months ended March 31, 2024 increased by $4.3 million from $36.5 million for the comparable period in 2023. The increase in Adjusted EBITDA was primarily attributable to the increase in net income described above, offset by lower add backs for depreciation and amortization expense.
Liquidity and Capital Resources
As of March 31, 2024, the Company had $412.3 million of borrowings outstanding under the Extended Term Loan Facility and no borrowings outstanding under the Amended and Restated Revolving Credit Facility. In addition, as of March 31, 2024, the Company had cash and cash equivalents of $186.8 million. As of March 31, 2024, the Company was in compliance with the covenants contained in the Amended and Restated Senior Secured Credit Facilities.
The Company’s event cancellation insurance policies for 2023 and 2024 do not cover losses due to event cancellations caused by the outbreak of communicable diseases, including COVID-19. In the event of a future outbreak of communicable disease, including variants or resurgences of COVID-19, forced cancellations or reductions in attendance of our in-person events would negatively impact our financial results and liquidity, and we would not have the benefit of cancellation insurance coverage to mitigate this impact.
Based on our available sources of financing, cash from operations and receipt of insurance recoveries, management believes that the Company’s current financial resources will be sufficient to fund its liquidity requirements for the next twelve months.
Share Repurchases
On October 26, 2022, our Board approved an extension and expansion of the October 2020 share repurchase program, which allowed for the repurchase of $20.0 million of our common stock through December 31, 2023. The share repurchase program may be suspended or discontinued at any time without notice. We settled the repurchase of 5,064,140 shares for $16.9 million during the three months ended March 31, 2023 under this repurchase program.
On November 3, 2023, our Board approved the extension and expansion of the October 2022 share repurchase program, which allows for the repurchase of $25.0 million of our common stock through December 31, 2024, subject to early termination or extension by the Board. We settled the repurchase of 295,650 shares for $1.8 million during the three months ended March 31, 2024 under this repurchase program. There was $23.2 million remaining available for share repurchases under the November 2023 Share Repurchase Program as of March 31, 2024. The share repurchase program may be suspended or discontinued at any time without notice.
Cash Flows
The following table summarizes the changes to our cash flows for the periods presented:
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(unaudited) |
|
|||||
Statement of Cash Flows Data |
|
|
|
|||||
Net cash provided by operating activities |
|
$ |
7.3 |
|
|
$ |
8.9 |
|
Net cash used in investing activities |
|
$ |
(14.1 |
) |
|
$ |
(13.2 |
) |
Net cash used in financing activities |
|
$ |
(10.6 |
) |
|
$ |
(17.5 |
) |
Operating Activities
Operating activities consist primarily of net income adjusted for non-cash items that include goodwill and intangible asset impairments, depreciation and amortization, deferred income taxes, amortization of deferred financing fees and debt discount, share-based compensation, plus the effect of changes during the period in our working capital.
36
Net cash provided by operating activities for the three months ended March 31, 2024 was $7.3 million, as compared to net cash provided by operating activities of $8.9 million for the three months ended March 31, 2023. The decrease in cash provided by operating activities primarily reflects the $3.9 million increase in net income, from net income of $7.1 million for the three months ended March 31, 2023 to net income of $11.0 million for the three months ended March 31, 2024. Net income plus non-cash items provided operating cash flows of $26.4 million and $25.1 million for the three months ended March 31, 2024 and 2023, respectively. Cash provided by operating activities reflects the use of $19.1 million and $16.2 million for working capital in the three months ended March 31, 2024 and 2023, respectively.
Investing Activities
Investing activities generally consist of business acquisitions and purchases of other productive assets, investments in information technology and capital expenditures to furnish or upgrade our offices.
Net cash used in investing activities for the three months ended March 31, 2024 increased $0.9 million to $14.1 million from $13.2 million in the comparable period in the prior year. The increase was primarily attributable to an increase of $2.1 million associated with acquisition of businesses offset by a $1.2 million decrease in purchases of intangible assets.
Financing Activities
Financing activities primarily consist of payment of the preferred stock dividend, borrowing and repayments on our debt, common stock repurchases and proceeds from the issuance of common stock associated with stock option exercises.
Net cash used in financing activities for the three months ended March 31, 2024 decreased $6.9 million to $10.6 million, compared to $17.5 million for the three months ended March 31, 2023. The decrease was primarily due to a $15.1 million decrease in repurchases of common stock, $0.6 million in debt issuance costs and $0.9 million in proceeds from the issuance of common stock under our equity plan, offset by the payment of $8.6 million with respect to the preferred stock dividend and the repayment of $1.1 million of principal on the Extended Term Loan Facility during the three months ended March 31, 2024.
Free Cash Flow
Free Cash Flow for the three months ended March 31, 2024 decreased $0.4 million, to $4.8 million from an inflow of $5.2 million for the comparable period in the prior year.
Free Cash Flow is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Free Cash Flow, see Footnote 3 to the table under the heading “Results of Operations—Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023.”
Contractual Obligations and Commercial Commitments
There have been no material changes to the contractual obligations as disclosed in the Company’s Annual Report on Form 10-K, filed with the SEC on March 5, 2024, which is accessible on the SEC’s website at www.sec.gov, other than those made in the ordinary course of business.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the appropriate application of certain accounting policies, some of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements. Since future events and their impact cannot be determined with absolute certainty, the actual results will inevitably differ from our estimates.
We believe the application of our accounting policies, and the estimates inherently required therein, are reasonable. Our accounting policies and estimates are reevaluated on an ongoing basis and adjustments are made when facts and circumstances dictate a change. We base our estimates and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.
The policies and estimates discussed below involve the selection or application of alternative accounting policies that are material to our consolidated financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations.
37
Our accounting policies are more fully described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the notes to our audited consolidated financial statements included in the Annual Report on Form 10-K. Management has discussed the selection of these critical accounting policies and estimates with members of our Board of Directors. There have been no significant changes in the critical accounting policies and estimates described in the Annual Report on Form 10-K.
Recently Adopted Accounting Pronouncements
See Item 1 of Part I, “Financial Statements—Note 2 – Recent Accounting Pronouncements.”
Recently Issued Accounting Pronouncements
See Item 1 of Part I, “Financial Statements—Note 2 – Recent Accounting Pronouncements.”
38
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential loss arising from adverse changes in market rates and prices. Our primary exposure to market risk is interest rate risk associated with our Amended and Restated Senior Secured Credit Facilities. See Note 7, Debt, in the notes to the condensed consolidated financial statements for further description of our Amended and Restated Senior Secured Credit Facilities.
As of March 31, 2024, we had $412.3 million of variable rate term loan borrowings outstanding under our Amended and Restated Senior Secured Credit Facilities and no variable rate borrowings outstanding under our Amended and Restated Revolving Credit Facility with respect to which we are exposed to interest rate risk. Holding other variables constant and assuming no interest rate hedging, a 0.25% increase in the average interest rate on our variable rate indebtedness would have resulted in a $1.0 million increase in annual interest expense based on the amount of borrowings outstanding as of March 31, 2024.
While interest rates have remained at relatively low levels on a historical basis, beginning in March 2022 and throughout 2023, the Federal Reserve approved multiple rate increases, raising the Federal Funds Rate to between 5.25%-5.50%. During March 2024, the Federal Reserve left the Federal Funds Rate unchanged due to uncertainty about inflationary conditions; however, it also indicated that one or more decreases could occur prior to the end of 2024.
Historically, inflation has not had a material effect on our business, results of operations, or financial condition. Beginning in 2021, inflation began to increase. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. While the Company has strategies to manage and offset these pressures, our inability or failure to do so could harm our business, results of operations and financial condition. For example, inflation influences interest rates, which in turn impact the fair value of our investments and yields on new investments. Operating expenses, including payroll, are impacted to a certain degree by the inflation rate as well. We do not believe that inflation has had a material effect on our results of operations for the periods presented. However, recent economic trends have resulted in inflationary conditions, including pressure on wages, and sustained inflationary conditions in future periods could affect our business.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are designed to provide reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company will be detected.
As of the end of the period covered by this report, management, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2024 the disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the Company’s first fiscal quarter of 2024 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
39
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be involved in general legal disputes arising in the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, financial condition or results of operations.
Item 1A. Risk Factors
Our Annual Report on Form 10-K, filed with the SEC on March 5, 2024 is accessible on the SEC’s website at www.sec.gov, and includes detailed discussions of our risk factors. At the time of this filing, there have been no material changes to the risk factors that were included in our Annual Report on Form 10-K.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
Share Repurchase Program
In November 2023, our Board of Directors approved an extension and expansion of our previously announced share repurchase program, which allows for the repurchase of $25.0 million of our common stock through December 31, 2024, subject to early termination or extension by the Board of Directors. This approval extends and expands the previously authorized $20.0 million share repurchase program that was effective through December 31, 2023. Share repurchases under the extended plan may be made from time to time through and including December 31, 2024, subject to early termination or extension by our Board of Directors. The share repurchase program may be suspended or discontinued at any time without notice. There is no minimum number of shares that we are required to repurchase. Shares may be purchased from time to time in the open market, including pursuant to one or more Rule 10b5-1 purchase plans that we may enter into from time to time, or in privately negotiated transactions. Such purchases will be at times and in amounts as we deem appropriate, based on factors such as market conditions, legal requirements and other business considerations.
The following table presents our purchases of common stock during the first quarter ended March 31, 2024, as part of the publicly announced share repurchase program:
(Dollars in millions, except per share data) |
|
Total Number |
|
|
Average Price |
|
|
Approximate |
|
|||
January 1, 2024 - January 31, 2024 |
|
|
30,613 |
|
|
$ |
6.24 |
|
|
$ |
24.8 |
|
February 1, 2024 - February 29, 2024 |
|
|
178,385 |
|
|
|
6.43 |
|
|
|
23.7 |
|
March 1, 2024 - March 31, 2024 |
|
|
86,652 |
|
|
|
5.88 |
|
|
|
23.2 |
|
Total |
|
|
295,650 |
|
|
|
|
|
|
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the quarterly period ended March 31, 2024, none of the Company’s directors or executive officers have informed us that they have adopted, modified, or terminated a contract, instruction or written plan for the purchase or sale of Company securities intended to satisfy the affirmative defense conditions Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement.
40
Item 6. Exhibits
|
|
|
*+10.43 |
|
|
|
|
|
*+10.44 |
|
|
|
|
|
*+10.45 |
|
|
|
|
|
*+10.46 |
|
|
|
|
|
*+10.47 |
|
|
|
|
|
10.48 |
|
|
|
|
|
*31.1 |
|
|
|
|
|
*31.2 |
|
|
|
|
|
*32.1 |
|
|
|
|
|
*101.INS |
|
Inline XBRL Instance Document |
|
|
|
*101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
*101 |
|
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL included: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income and Comprehensive Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements |
|
|
|
*104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith.
+ Management compensatory plan or arrangement.
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
EMERALD HOLDING, INC. |
|
|
|
|
Date: May 7, 2024 |
By: |
|
/s/ David Doft |
|
|
|
David Doft |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial Officer and Principal Accounting Officer) |
42
EXHIBIT 10.43
Employment Agreement
This Agreement dated this 19 day of April, 2021
BETWEEN: The Staffing Edge ULC operating as The Payroll Edge
(hereinafter called the “Employer”)
On its own behalf and on behalf of Papaya Global Client’s: Emerald Expositions
(hereinafter called the “Client”)
AND: Issa Jouaneh
Newmarket, ON L3X 3K6
(hereinafter called the “Employee”)
Position:
Conditions of Employment: In consideration of employment, the Employee is aware that the Agreement is valid only upon the following conditions:
Compensation: See Schedule “A”.
Vacation Pay:
Canadian Executive Employment Agreement – Salaried |
|
Initials_______ |
1
Statutory Holidays: The Employer provides for paid statutory holidays, as long as the Employee meets the qualifying requirements. The Employee agrees that their entitlement to receive statutory holiday pay will depend upon on the regulations provided for in the provincial employment standards legislation, as amended.
Out of Country Travel:
It is the Employee’s responsibility to understand that they are not covered by the Employer for out of country travel and it is the Employee’s responsibility to purchase coverage where required. In addition, the Employee is responsible to track their time out of the country such that the they are not exceeding the maximum time permitted as to ensure that there is no interruption to the Employee’s provincial health coverage and residency. If at any time during the course of employment a visa is required, it is the Employee’s responsibility to arrange for such documents.
Probationary Period:
It is agreed that the first ninety (90) days of employment shall be a probationary period where the Employee’s suitability for the position will be assessed. Subject to the minimum provisions of the Employment Standards Act, 2000, it is agreed that during the probationary period, this Agreement may be terminated for any reason by the Employer or Employee. The Employer shall not have any further obligation to the Employee at this time other than payment of unpaid but accrued wages and vacation pay, if any. The Employer reserves the right to extend the probationary period by a further ninety (90) days if additional time is required to determine the Employee’s suitability for continued employment. In the event that the probationary period is extended and the Employer determines the Employee is not suitable for the position, the Employee shall be entitled to notice or pay in lieu thereof pursuant to the Termination section of this Agreement and in accordance with the applicable provincial employment standards legislation, as amended.
Termination and Layoffs:
The Employee agrees that the provisions of this Termination clause apply to the current and any future position which the Employee may achieve, regardless of seniority, level of responsibility or level of remuneration, or any change of employment to a related employer, as provided for herein.
Employer may terminate the Employee's employment at any time without cause by providing the Employee with one (1) week of written notice of termination within the Employee’s first year of service and two additional weeks’ notice of termination per completed year thereafter, up to a maximum of thirty-six (36) weeks, or such notice, severance pay, if owing, accrued vacation pay and any other compensation or benefits that may be required to meet the requirements of the Employment Standards Act, 2000, whichever is greater. The Employee understands and agrees that the notice requirements contained in this section constitute a material inducement to the Employer to enter into this Agreement and to employ the Employee, and that the Employer would not enter into this Agreement absent such inducement.
Where an Employee is terminated without cause, all benefits will only be continued during the statutory notice period under the Employment Standards Act, 2000, and, in the case of group benefits, continuance is subject to group insurance coverage being available from the insurer.
The Employee agrees that any entitlement to notice or pay in lieu of notice in excess of the Employee’s statutory entitlements under the Employment Standards Act, 2000, is subject to mitigation and is conditional upon the Employee executing a Full and Final Release in favour of the Employer as prepared by the Employer at the time of the termination of the Employee’s employment.
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It is acknowledged and agreed that the Employer may, at its sole option, elect to pay the Employee's salary over the course of the notice period in lieu of any notice required by this Agreement, or provide any combination of working notice and pay in lieu of notice at the Employer’s discretion.
The Employee acknowledges and agrees that the payments, benefits and other compensation set out in this section shall constitute the Employee’s sole entitlement to notice, pay in lieu of notice, severance or other compensation on termination whether by statute or at common law.
In no event shall the Employee receive less than the minimum entitlements of the Employment Standards Act, 2000, and in the event that any portion of this contract is found in violation of such minimum standards, the minimum standard shall replace the provision and shall apply, but not more.
Notwithstanding the foregoing, the Employee's employment may be terminated for cause (as recognised under applicable statute and at common law) by the Employer at any time without notice, compensation or benefit continuation (except as required by the Employment Standards Act, 2000. Without restricting the generality of the foregoing, the term "cause" shall be deemed to include a material breach of the provisions of this Agreement.
This Agreement and the Employee’s employment hereunder may be terminated at any time by the Employee providing the Employer with not less than thirty (30) days' written notice, provided that the Employer may waive any notice in excess of that required by the Employment Standards Act, 2000, at its sole discretion.
It is acknowledged and agreed that the Employer reserves the right to temporarily layoff the Employee, in accordance with the provisions of the applicable employment standards legislation. If a layoff is deemed necessary by management for any reason whatsoever, then the employees chosen will be at the sole discretion of management, regardless of tenure, title, status, remuneration, or seniority. Such temporary layoff shall not constitute a dismissal or constructive dismissal so long as they layoff is executed in accordance with, and does not exceed the times allowed by, the applicable provincial employment standards legislation.
The Employee agrees that the provisions of this Temporary Layoff provision apply to the current and any future position which the Employee may achieve, regardless of seniority, level of responsibility, level of remuneration, or any change of employment to a related employer, as provided herein.
Employee Covenants:
Works Made for Hire:
The Employee understands, acknowledges, and agrees that all rights to any intellectual property so far as such intellectual property relates to services provided under this Agreement and to any and all inventions, processes and improvements (whether or not protectable under patent laws); techniques, ideas, concepts and programs; works of authorship and information fixed in any tangible medium (whether or not protectable under copyright laws) and all moral rights therein; copyrights, designs, patents, patent applications, patent registrations, trademarks, trade names, and trade secrets covering such intellectual property (collectively referred to as "Innovations") shall belong solely to the Employer, and the Employer’s clients. All such Innovations which constitute works of authorship shall be “"works made in the course of employment " pursuant to the Copyright Act (Canada) and “works made for hire” pursuant to the Copyright Act (U.S.A.). The Employee grants to the Employer, and the Employer’s clients, a royalty-free, non- exclusive, and irrevocable license to reproduce, translate, publish, make derivative works, use and dispose of, and to authorize others so to do, any and all proprietary, copyrighted or copyrightable material and other intellectual property or Innovations created, derived, developed or made in the course of, or otherwise in connection with, the Employee’s employment with the Employer, whether alone or with others, and whether during regular working hours or through the use of facilities and properties of the Employer or otherwise which may in any way relate to the business of the Employer, or the Employer’s clients. The Employee hereby agrees: (a) to assign, and does hereby assign, to the Employer, and the
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Employer’s clients, all of the Employee’s right, title and interest in and to all Innovations and does hereby waive all moral rights that the Employee may have therein in favour of the Employer; and (b) at the Employer’s request, the Employee will provide whatever assistance the Employer, and the Employer’s clients, may require and to do all such things and execute all such documents as may be reasonably necessary or desirable to obtain and maintain the Innovations, the applications, registrations and/or common law rights therefor, as well as all additions, modifications thereto, in any and all countries worldwide, and to vest title thereto in the Employer, and the Employer’s clients. The Employee agrees not to assert any rights or claims based on any intellectual property or other rights for the use of the Innovations by, or on behalf of, the Employer, or the Employer’s clients. The Employee hereby irrevocably appoints and designates the Employer and its duly authorized officers and agents as their agents and attorneys-in-fact to act for, and in the Employee’s behalf, and instead of the Employee, to take such actions as the Employer believes are necessary to effect the foregoing assignment in accordance with applicable laws.
Non-Disclosure of Confidential Information:
The Employee understands and agrees that he will, from time to time, be privy to personal, sensitive, confidential and privileged information concerning the Client, its customers and the business affairs, and the business affairs of the Employer (collectively, herein after referred to as the “Companies”).
As used in this section, the words "confidential information" includes:
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Non-Solicitation:
The Employee agrees that they shall not, without the prior written consent of the Companies, either directly or indirectly, individually or in partnership, jointly or in conjunction with any other natural or legal person, partnership, association, syndicate, employer or corporation, whether as principal, agent, shareholder, director, officer, employee, consultant or in any other capacity, or in any other manner whatsoever, except upon the request and on behalf of the Companies, during the term of the Employee’s employment and for the period of twelve (12) months following the date that the Employee ceases to be an employee, regardless of who initiated the termination or how it should occur, do the following:
Non-Competition:
During the term of this agreement and for a period of twelve (12) months after the cessation of employment of the Employee for any reason, the Employee will not, within the area in which the Client is currently doing business or any new territory in which the Client does business during the period of the Employee’s employment, on the Employee’s own behalf or on behalf of any person, corporation or other entity, whether directly or indirectly, alone or in connection with any person, corporation or other entity, have any financial or other interest in or be employed or engaged by in the same or similar capacity as that in which the Employee serves or served the Client on behalf of the Employer, any business which is the same as, similar to, or otherwise competitive with the Business of the Client.
Enforcement:
The Employee agrees that the Employer and/or the Client would suffer irreparable damage in the event that the Employee breaches or threatens to breach this Agreement, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the Employee acknowledges and hereby agrees that in the event of any breach or threatened breach by the Employee of this Agreement, in addition to other available remedies, the Employer shall be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this Agreement by the Employee, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the Employee under this Agreement. The Employee hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this Agreement by the Employee. The Employee hereby waives (i) any defenses in any action for
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specific performance, including the defense that a remedy at law would be adequate and (ii) any requirement to post a bond or other security as a prerequisite to obtaining equitable relief.
Scope of Covenants:
The Parties hereto agree and acknowledge that the covenants against solicitation and competition contained in this Agreement are reasonable and fair in all respects and are necessary to protect the interests of the Employer and/or the Client, as applicable.
Privacy Policy and Disclosure Consent:
Miscellaneous:
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The Staffing Edge ULC o/a The Payroll Edge |
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Employee |
Signature: |
/s/ Anna Lorkovic |
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Signature: |
/s/ Issa Jouaneh |
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Anna Lorkovic Manager, Payroll Service |
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Issa Jouaneh |
Date: |
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Date: |
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Schedule “A”
Details of Employment
Position: EVP, Emerald Xcelerator
Start Date: March 22, 2021
Job Duties:
EVP, Emerald Xcelerator, and the employee will initially report to the Company’s President and Chief Executive Officer. As a Company employee, you will:
Compensation:
Annual base salary of $342,500 CDN paid in twenty-six (26) equal payments (biweekly), subject to an annual review at the discretion of the client.
Vacation:
The Employee will be entitled to unlimited paid time off in excess of the minimum vacation requirements under the Employment Standards Act, 2000 (Ontario).
Annual Discretionary Bonus:
The employee will be eligible for an annual discretionary bonus in a target amount equal to up to $250,000 (the “Annual Bonus Target”). With respect to the Annual Bonus Target: (i) up to $100,000 of the Annual Bonus Target will be based upon the Client’s over financial performance in an applicable year and such other factors as determined by the Client; and (ii) up to $150,000 of the Annual Bonus Target will be based upon specific performance metrics determined by the Client for the successful launch of new trade show events. Whether or not any bonus payment will be made to the employee, and, if so, in what amount, will be determined by the Client in its sole discretion; provided, however, that the amount of your 2021 Annual Bonus will be equal to not less than $100,000.
The Employer reserves the right to either discontinue or amend the terms of this incentive plan at any time during the term of employment at its sole discretion.
Any incentive payment provided by the Employer in any year shall not be construed as a guarantee of or entitlement to any payment in subsequent years or a guarantee of or entitlement to any specific amount of payment.
The incentive payment does not accrue, is not earned and is not payable until the date it is paid out to the Employee.
The Employee must be employed by the Employer at the time of plan payout to receive an incentive payment. For example, if the Employee is employed as at the fiscal year end date but departs from the Employer for any reason before the date the incentive is paid, he/she is not eligible to receive any incentive payment, pro-rated or otherwise. For clarity, the Employee is considered to have “departed” from the Employer on the last day that he/she performs work for the Employer, irrespective of whether she is entitled to termination payments under the terms of her employment agreement. The only exception is where the incentive payment is paid out during the Employee’s statutory
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notice period under the Employment Standards Act, 2000, the Employee will be entitled to receive any incentive earned.
Bonus payout will typically occur in February, following completion of the fiscal year. The payout date is subject to change each year but is anticipated to take place not later than March 15th in the year following the fiscal year end.
During the first year of employment, a pro-rated incentive, if earned, will be paid to the Employee as per the terms of this Agreement.
Expenses: In order to be reimbursed for expenses, the Employee must remit a filled-out expense report outlining the expenses incurred for the previous month. All applicable receipts must be sent along with the expense report. Expenses will be reimbursed on the following pay cycle upon receiving approval.
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/s/ Issa Jouaneh |
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Issa Jouaneh |
Date: |
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Addendum to Employment Agreement
Dated the 17th day of May 2021
Between: The Staffing Edge ULC operating as The Payroll Edge
(hereinafter called the Employer)
AND: Issa Jouaneh
Newmarket, ON L3X 3K6
(hereinafter called the “Employee”)
on behalf of Papaya Global Client: Emerald Expositions (hereinafter called the “Client”)
All employment legislation referred to in this Employment Agreement is for the province of Ontario.
WHEREAS the Employer and Employee have entered into an Employment Agreement dated the 19th day of April 2021 (the “Employment Agreement”).
WHEREAS The Employer and Employee agrees to amend the Employment Agreement to read as outlined below effective May 1st, 2021.
Benefits: Subject to the insurer’s eligibility requirements (if any), the Employee will be eligible for benefits upon employment, as outlined in the Benefits Handbook provided by the insurance company, Sun Life Financial, contracted by the Employer. All plans are governed and shall be interpreted in accordance with the written terms of the contract between the Employer and the insurer or the Employee and the insurer. Please note that the costs of any AD&D, and Life Insurance will be covered by the Employer as agreed upon by the employee, making this benefit a taxable benefit to the employee upon claim. The Employer reserves the right to amend or discontinue its insurance coverage or contributions in the future as the Employer deems necessary or advisable in its sole and absolute discretion.
The benefit coverage cost will be shared by the Client and Employee 50/50. The Employer agrees to provide the employee with a supplemental health benefit plan which will commence on upon employment, as per the Benefits handbook provided. Benefits will begin as soon as your application is processed; however, benefits are not binding until the insurance company has approved such application.
Out of Country Travel: You will be provided with travel insurance as per the benefit handbook provided. It is the employee’s responsibility to ensure that each trip meets the requirements for coverage when out of country. If a trip is not covered through the provided plan it is the employee’s responsibility to purchase additional coverage. In addition the employee is responsible to track his/her time out of the country ensuring that the he/she is not exceeding the allotted time allowed out of country to ensure there is no interruption to the employees provincial health coverage and residency. The employer will provide the employee with travel letters to assist in the entry into the U.S. for all work- related travel. If at any time a Visa is required, it will be the employee’s responsibility to arrange for the Visa documents.
For good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties agree as follows:
1. That all other terms and conditions of the Employment Agreement shall remain as written in the original document.
Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any counterpart signature transmitted by facsimile or by sending a scanned copy by electronic mail or similar electronic
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transmission shall be deemed an original signature.
Effect of this Agreement: This Agreement amends the Employment Agreement. In the event of any conflict between any provision of the Employment Agreement and this Agreement, the provision of this Agreement shall govern. This Agreement and the Employment Agreement constitute the entire agreement between the parties. This Agreement supersedes all prior agreements, understandings, negotiations and discussions of the parties, whether oral or written.
There are no warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement and the Employment Agreement except as specifically set forth in this Agreement and the employment. This Agreement may not be
supplemented, modified or amended without the prior express written consent of both parties.
Language: The parties hereby confirm their express agreement that this Agreement and all documents directly or indirectly related thereto be drawn up in English. Les parties présentées sont expressément exigés que las présente entente ainsi que tous documents connexes soint rédigés en anglasi.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date and year first above written.
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/s/ Anna Lorkovic |
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/s/ Issa Jouaneh |
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Anna Lorkovic, Payroll Service Manager |
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Addendum to Employment Agreement
Dated the 7th day of November 2022
Between: People 2.0 Workforce Services Canada ULC (hereinafter called the Employer)
AND: Issa Jouaneh
Newmarket, ON L3X 3K6
(hereinafter called the “Employee”)
on behalf of Papaya Global Client: Emerald Expositions (hereinafter called the “Client”)
All employment legislation referred to in this Employment Agreement is for the province of Ontario.
WHEREAS the Employer and Employee have entered into an Employment Agreement dated the 19th day of April 2021 (the “Employment Agreement”).
WHEREAS The Employer and Employee agrees to amend the Employment Agreement to read as outlined below effective January 1st, 2023.
Position:
The employee’s title will be changed to President, Connections Group, Emerald.
Duties and Responsibilities:
See Schedule “A”
Compensation:
The annual base salary will increase to $608,000.00 CAD paid in twenty-six (26) equal payments (bi-weekly).
Annual Discretionary Bonus:
The employee will be eligible for an annual discretionary bonus in a target amount equal to up to $608,000.00
(the “Annual Bonus Target”).
For good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties agree as follows:
Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any counterpart signature transmitted by facsimile or by sending a scanned copy by electronic mail or similar electronic transmission shall be deemed an original signature.
Effect of this Agreement: This Agreement amends the Employment Agreement. In the event of any conflict between any provision of the Employment Agreement and this Agreement, the provision of this Agreement shall govern. This Agreement and the Employment Agreement constitute the entire agreement between the parties. This Agreement supersedes all prior agreements, understandings, negotiations and discussions of the parties, whether oral or written. There are no warranties, representations or other agreements between the parties in connection with the subject matter of this Agreement and the Employment Agreement except as specifically set forth in this Agreement and the employment. This Agreement may not be supplemented, modified or amended without the prior express written consent of both parties.
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Language: The parties hereby confirm their express agreement that this Agreement and all documents directly or indirectly related thereto be drawn up in English. Les parties présentées sont expressément exigés que las présente entente ainsi que tous documents connexes soint rédigés en anglasi.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date and year first above written.
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/s/ Deborah Nowicki |
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Signature: |
/s/ Issa Jouaneh |
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Misti Elder, VP, International Programs |
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Issa Jouaneh |
Date: |
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Schedule “A”
Position: President, Connections Group, Emerald
Start Date: January 1st, 2023 Job Duties:
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Addendum to Employment Agreement
Dated the 6th day of January 2023
Between: People 2.0 Workforce Services Canada ULC (hereinafter called the Employer)
AND: Issa Jouaneh
Newmarket, ON L3X 3K6
(hereinafter called the “Employee”)
on behalf of Papaya Global Client: Emerald Expositions (hereinafter called the “Client”)
All employment legislation referred to in this Employment Agreement is for the province of Ontario.
WHEREAS the Employer and Employee have entered into an Employment Agreement dated the 19th day of April 2021 (the “Employment Agreement”).
WHEREAS The Employer and Employee agrees to amend the Employment Agreement to read as outlined below effective January 1st, 2023.
Position:
The employee’s title will be changed to President, Connections Group, Emerald.
Duties and Responsibilities:
See Schedule “A”
Compensation:
The annual base salary will increase to $609,107.77 CAD paid in twenty-six (26) equal payments (bi-weekly).
Annual Discretionary Bonus:
The employee will be eligible for an annual discretionary bonus in a target amount equal to up to $609,107.77
(the “Annual Bonus Target”).
For good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties agree as follows:
Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any counterpart signature transmitted by facsimile or by sending a scanned copy by electronic mail or similar electronic transmission shall be deemed an original signature.
Effect of this Agreement: This Agreement amends the Employment Agreement. In the event of any conflict between any provision of the Employment Agreement and this Agreement, the provision of this Agreement shall govern. This Agreement and the Employment Agreement constitute the entire agreement between the parties. This Agreement supersedes all prior agreements, understandings, negotiations and discussions of the parties, whether oral or written. There are no warranties, representations or other agreements between the parties in connection with the subject matter of this Agreement and the Employment Agreement except as specifically set forth in this Agreement and the employment. This Agreement may not be supplemented, modified or amended without the prior express written consent of both parties.
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Language: The parties hereby confirm their express agreement that this Agreement and all documents directly or indirectly related thereto be drawn up in English. Les parties présentées sont expressément exigés que las présente entente ainsi que tous documents connexes soint rédigés en anglasi.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date and year first above written.
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Signature: |
/s/ Debbie Nowicki |
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Signature: |
/s/ Issa Jouaneh |
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Debbie Nowicki SVP Shared Service |
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Date: |
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Schedule “A”
Position: President, Connections Group, Emerald
Start Date: January 1, 2023 Job Duties:
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Employment Agreement
Amendment No. 1
This Amendment, dated this 21 of June 2023, to the Employment Agreement, dated April19, 2021.
BETWEEN: People 2.0 Workforce Services Canada, ULC (f/k/a The Staffing Edge ULC)
(hereinafter called the “Employer”)
On its own behalf and on behalf of Papaya Global Client’s: Emerald Expositions
(hereinafter called the “Client”)
AND: Issa Jouaneh
Newmarket, ON L3X 3K6
(hereinafter called the “Employee”)
Position:
Termination and Layoffs: The existing Termination and Layoffs language in the Agreement shall be removed entirely and replaced with the following:
“The Employee agrees that this Termination and Layoffs section shall apply to the current and any future position which the Employee may achieve, regardless of seniority, level of responsibility or level of remuneration, or any change of employment to a related employer, as provided for herein.
Subject to the requirements of the applicable employment standards legislation, following the probationary period, the Employer may terminate the Employee’s employment without cause or wilful misconduct etc. by providing the Employee with only:
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In all circumstances, the Employee will receive the Employee’s minimum entitlements upon termination as required under the applicable employment standards legislation. The Employee understands and agrees that the Employer has no obligation to make any additional payments to the Employee or to provide the Employee with any additional notice upon termination other than those required to satisfy the Employee’s entitlements under the applicable employment standards legislation, and the Employee hereby waives any entitlement or claim to any payments other than those provided for in this Termination without Cause or Wilful Misconduct Etc. provision. The Employee hereby acknowledges and agrees that the Employee has had the opportunity to review the relevant portions of the applicable employment standards legislation, and/or to consult with legal counsel about their impact on the Employee’s entitlements upon termination of the Employee’s employment. The Employee understands and agrees that the notice requirements contained in this section constitute a material inducement to the Employer to enter into this Agreement and to employ the Employee, and that the Employer would not enter into this Agreement absent such inducement.
The Employee acknowledges and agrees that the payments, benefits and other compensation set out in this section shall constitute the Employee’s sole entitlement to notice, pay in lieu of notice, severance or other compensation on termination. For certainty, the Employee is not entitled to reasonable notice of termination or pay in lieu of notice under the common law.
The Employer may terminate the Employee’s employment without notice or damages or compensation in lieu of notice for conduct that constitutes wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the Employer, pursuant to applicable employment standards legislation (“wilful misconduct etc."). In the event of termination under this clause, the Employer will pay the Employee any earned and unpaid wages (including vacation pay) up to and including the date of termination. Should any part of this clause provide entitlements to the Employee that are less than the Employee’s entitlements under applicable employment standards legislation, such minimum entitlements shall prevail. This clause shall prevail in the event of conflict with a workplace policy, plan, or program.
The Employer may terminate your employment for conduct that constitutes just cause for summary dismissal at common law, but not wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the Employer pursuant to applicable employment standards legislation, by providing the Employee with only the minimum entitlement to notice of termination or pay in lieu thereof (or any combination thereof), benefits continuation, minimum severance pay (if applicable), vacation pay on termination pay (if applicable), and any other minimum entitlements required by the applicable employment standards legislation, and any earned and unpaid wages (including vacation pay) up to and including the date of termination.Should any part of this clause provide entitlements to the Employee that are less than the Employee’s entitlements under applicable employment standards legislation, such minimum entitlements shall prevail. This clause shall prevail in the event of conflict with a workplace policy, plan, or program.
The Employee may end the Employee’s employment with the Employer by providing the Employer with the greater of (a) 2 weeks’ written notice; and (b) the minimum notice of resignation required by the applicable employment standards legislation (the “resignation notice period”). The Employer may, in its sole discretion, waive all or part of your notice of resignation period, in which case your resignation will become effective immediately or on the date determined by the Employer. Upon resignation, the Employee will be paid only the following amounts accrued to the end of the resignation notice period: outstanding wages, including vacation pay. The Employee will not be entitled to any further payments, except as may be required by the applicable employment standards legislation.
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It is acknowledged and agreed that the Employer reserves the right to temporarily layoff the Employee, in accordance with the provisions of applicable employment standards legislation. If a layoff is deemed necessary by management for any reason whatsoever, then the employees chosen will be at the sole discretion of management, regardless of tenure, title, status, remuneration, or seniority. Such temporary layoff shall not constitute a dismissal or constructive dismissal so long as the layoff is executed in accordance with, and does not exceed the times allowed by, the applicable provincial employment standards legislation.
The Employee agrees that the provisions of this Temporary Layoff provision apply to the current and any future position which the Employee may achieve, regardless of seniority, level of responsibility, level of remuneration, or any change of employment to a related employer, as provided herein.”
Non-Competition: The Non-Competition section of the Agreement shall be removed entirely.
Enforceability of this Amendment: The parties agree that this Amendment No. 1 is enforceable as an amendment, supplement and modification to the Agreement; otherwise, the original terms of the Agreement govern for all other engagements. In case of any dispute between this Amendment No. 1 and the Agreement, the Amendment No. 1 shall prevail. Except to the extent expressly modified, supplemented, amended or clarified herein, all of the terms and provisions of the Agreement shall remain unchanged and are hereby ratified and confirmed and remain in full force and effect.
Miscellaneous:
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/s/ Issa Jouaneh |
Kellen Economy Chief Revenue Officer |
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Issa Jouaneh |
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Date: |
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EXHIBIT 10.44
NON-CALIFORNIA FORM
EMERALD HOLDING, INC.
2017 OMNIBUSEQUITY PLAN
RESTRICTED STOCK UNIT
AWARD AGREEMENT
Pursuant to Section 8 of the 2017 Omnibus Equity Plan (the “Plan”) of Emerald Holding, Inc. (the “Company”), on January 4, 2021 (the “Grant Date”) the Company granted David Doft (the “Recipient”) an award of restricted stock units with respect to the Company’s common stock, par value $0.01 per share (“Common Stock”), subject to the terms and conditions of this agreement between the Company and the Recipient (this “Agreement”). By accepting this award, the Recipient agrees to all of the terms and conditions of this Agreement. By executing this Agreement, the Recipient hereby acknowledges and agrees that, except as otherwise determined by the Committee, this Award is intended to be in lieu of any “Subsequent Annual Equity Grant”awards (as described in the Recipient’s employment agreement) through 2025. The Company and the Recipient understand and agree that any capitalized terms used herein, if not otherwise defined, shall have the same meanings as in the Plan (the Recipient being referred to in the Plan as a Participant).
For purposes of the foregoing, the “Vesting Commencement Date” shall mean January 5, 2021.
In the event of a Change in Control at any time prior to the fifth anniversary of the Vesting Commencement Date, subject to the Recipient’s continued employment through the date of such Change in Control, the RSUs shall become 100% vested as of immediately prior to such Change in Control. In no event will the RSUs, whether vested or unvested, be terminated in connection with any Corporate Transaction that is not a Change in Control unless they are fully accelerated as of immediately prior to the Corporate Transaction (and treated in accordance with Section 13.1(b)(ii) of the Plan) or continued in accordance with Section 13.1(a) of the Plan (and the requirements set forth herein).
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For purposes of this Agreement:
“Competitive Business” shall mean any business that is engaged in the operation of business-to-business live events, including trade shows, conferences and hosted buyer events, or related digital media or publications; provided, however, that a business shall be excluded from this definition of Competitive Business upon the direct, written approval of any two of the Company’s CEO, CFO, COO, or General Counsel, in their sole discretion on behalf of the Company (with the approval represented by their signatures on a writing delivered to the Recipient), after a request for approval, in sufficient detail, made by the Recipient prior to Recipient engaging in Prohibited Conduct with respect to such business.
“Proprietary Information” shall mean confidential specifications, know-how, strategic or technical data, marketing research data, product research and development data, manufacturing techniques, confidential customer data and lists, employee data, sources of supply, and trade secrets, all of which are confidential and may be proprietary and are owned or used by the Company, or any of its Subsidiaries or affiliates, and shall include any and all items enumerated in the preceding sentence and coming within the scope of the business of the Company or any of its Subsidiaries or affiliates as to which the Recipient may have access, whether conceived or developed by others or by the Recipient alone or with others during the period of service to the Company, whether or not conceived or developed during regular working hours.
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Proprietary Information shall not include any records, data or information which (a) are in the public domain during or after the period of service by the Recipient provided the same are not in the public domain as a consequence of disclosure directly or indirectly by the Recipient in violation of this Agreement or (b) were known to the Recipient prior to commencing employment with the Company.
“Territory” shall mean the United States of America and every other territory or country where the Company maintains employees, owns property or otherwise conducts business during any time that the Recipient is employed by the Company or owns any shares of Common Stock (or rights to acquire shares of Common Stock).
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To the Company: |
Emerald Holding, Inc. |
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100 Broadway, 14th Floor |
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New York, NY 10005 |
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Attention: Mitchell Gendel |
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Email: mitch.gendel@emeraldx.com |
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To the Recipient: |
At the most recent address or email contained in the Company’s records. |
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[signature page follows]
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IN WITNESS WHEREOF, the Company and the Recipient have caused this Agreement to be executed on their behalf, by their duly authorized representatives, all on the day and year first above written.
EMERALD HOLDING, INC. |
/s/Mitchell Gendel |
Mitchell Gendel |
General Counsel and Corporate Secretary |
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RECIPIENT: |
/s/David Doft |
David Doft |
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EXHIBIT 10.45
RETENTION BONUS AGREEMENT
This Retention Bonus Agreement (“Agreement”) is entered into on the date on which the last party executes this Agreement (“Effective Date”), between Emerald X, LLC, along with any related entities and subsidiaries (collectively, the “Company”) and ______________. (“Employee”).
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IN WITNESS WHEREOF the Company and Employee have each duly executed this Agreement on the dates set forth below opposite their respective signatures.
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EMERALD X LLC |
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EXHIBIT 10.46
SEPARATION AGREEMENT AND GENERAL
RELEASE
This Separation Agreement and General Release (this “Agreement”) is entered into by and between Stacey Sayetta (“you”), and Emerald X, LLC, a Delaware limited liability company (the “Company”). You and the Company (each a “Party” and collectively the “Parties”) acknowledge that the terms and conditions of this Agreement have been voluntarily agreed to and are intended to be final and binding.
RECITALS
WHEREAS, you entered into an offer letter with the Company, dated as of September 28, 2021 (the “Offer Letter”);
WHEREAS, you were previously granted nonqualified stock options (the “Options”) to acquire shares of common stock of Emerald Holding, Inc. (“Parent,” and together with the Company and its subsidiaries and affiliates, the “Company Group”) pursuant to the Emerald Holding, Inc. 2017 Omnibus Equity Plan and the applicable Stock Option Agreement (the “Option Agreements”); and
WHEREAS, as agreed between the Parties, your employment with the Company will end effective March 16, 2024 unless earlier terminated pursuant to this Agreement (your final date of employment with the Company, howsoever occurring, the “Separation Date”).
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for the monetary and other consideration set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates set forth below.
EMERALD X, LLC
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/s/ Ren Akinci |
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03/03/2024 |
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Agreed to and Accepted By: |
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/s/Stacey Sayetta |
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Date: |
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EXHIBIT A
Reaffirmation of Agreement
Reference is hereby made to the Separation Agreement and General Release (“Agreement”), between the undersigned and Emerald X, LLC, a Delaware limited liability company (the “Company”), which Agreement contemplates the execution by the undersigned of this Reaffirmation (this “Reaffirmation”). It is acknowledged and agreed that this Reaffirmation will be part of and subject to the terms of the Agreement, and capitalized terms in this Reaffirmation will be as defined in the Agreement unless otherwise defined herein.
The undersigned hereby states, affirms, and agrees as follows:
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stacey.sayetta@emeraldx.com |
EXHIBIT 10.47
SEPARATION AGREEMENT AND GENERAL RELEASE
YOU ARE ADVISED TO CONSULT AN ATTORNEY BEFORE SIGNING THIS RELEASE OF CLAIMS.
This Separation Agreement and General Release (including the exhibits, this “Agreement”) is entered into by and between Brian Field (“you”), and Emerald X, LLC, a Delaware limited liability company (the “Company”). You and the Company (each a “Party” and collectively the “Parties”) acknowledge that the terms and conditions of this Agreement have been voluntarily agreed to and are intended to be final and binding.
RECITALS
WHEREAS, you entered into an employment agreement with the Company, dated as of May 22, 2019 (as amended, the “Employment Agreement”);
WHEREAS, you were previously granted nonqualified stock options (the “Options”) to acquire shares of common stock of Emerald Holding, Inc. (“Parent”) pursuant to the Emerald Holding, Inc. 2017 Omnibus Equity Plan (the “Plan”) and the applicable Stock Option Agreements (collectively, the “Option Agreements”);
WHEREAS, you were previously granted restricted stock units (the “RSUs”) with respect to shares of common stock of Parent pursuant to the Plan and the applicable Restricted Stock Unit Award Agreements (collectively, the “RSU Agreements”);
WHEREAS, you were previously granted a share award subject to performance-based market conditions (the “PSA”) pursuant to the Plan and the applicable Performance Based Share Award Agreement (the “PSA Agreement”);
WHEREAS, you will be separated from your employment with the Company effective April 13, 2024, unless earlier terminated pursuant to this Agreement (your final date of employment with the Company, howsoever occurring, the “Separation Date”); and
WHEREAS, as a condition precedent and a material inducement for the Company to make available to you the benefits set forth in this Agreement, you have agreed to execute this Agreement, including the Release attached as Exhibit A (the “Release”), and be bound by the provisions herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for the monetary and other consideration set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates set forth below.
EMERALD X, LLC |
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By: |
/s/Ren Akinci |
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03/03/2024 |
Agreed to and Accepted By: |
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By: |
/s/Brian Field |
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Date: |
03/03/2024 |
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Exhibit A
YOU SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE OF CLAIMS.
Release
IN WITNESS WHEREOF, this Release has been signed by the Executive as of the date set forth below.
/s/Brian Field |
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Brian Field |
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Exhibit B
ADEA Disclosure
Pursuant to Section 7(f)(1)(H) of the Age Discrimination in Employment Act, as amended, the following information is provided by Emerald X, LLC (the “Company”) in connection with an employment termination program which resulted in the loss of employment for certain employees of the Company.
The class, unit or group of individuals covered by the employment termination program was the executive leadership team for the Company. Three of the 13 members of the executive leadership team were terminated and have been offered severance compensation in consideration for the execution, delivery, and non-revocation of a Separation Agreement and General Release. There were no time limits for the program.
The following is a listing of the Company job titles and ages of the employees within the group of individuals covered by the employment termination program, broken down by whose employment was and was not terminated:
Job Title |
Age as of 2/13/24 |
Selected for Separation of Employment [Y/N] |
Offered Severance [Y/N] |
Executive Vice President, Customer Experience |
59 |
Y |
Y |
Chief Operations Officer |
56 |
Y |
Y |
General Counsel |
51 |
Y |
Y |
Executive Vice President, Construction, Medical & Military |
48 |
N |
N/A |
Executive Vice President, Design, Jewelry & Antique |
44 |
N |
N/A |
Executive Vice President |
54 |
N |
N/A |
Executive Vice President, Elastic Suite |
48 |
N |
N/A |
Executive Vice President, People & Culture |
40 |
N |
N/A |
Executive Vice President, Content & Commerce |
46 |
N |
N/A |
Chief Information Officer |
53 |
N |
N/A |
Chief Financial Officer |
52 |
N |
N/A |
Chief Executive Officer & President |
54 |
N |
N/A |
President, Connections Group |
48 |
N |
N/A |
Exhibit C
Reaffirmation of Agreement
Reference is hereby made to the Separation Agreement and General Release (“Agreement”), between the undersigned and Emerald X, LLC, a Delaware limited liability company (the “Company”), which Agreement contemplates the execution by the undersigned of this Reaffirmation (this “Reaffirmation”). It is acknowledged and agreed that this Reaffirmation will be part of and subject to the terms of the Agreement, and capitalized terms in this Reaffirmation will be as defined in the Agreement unless otherwise defined herein.
The undersigned hereby states, affirms, and agrees as follows:
ACCEPTED AND AGREED: |
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Signature: |
/s/ Brian Field |
Signature: |
/s/ Ren Akinci |
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Email: |
brian.field@emeraldx.com |
Email: |
Ren.Akinci@emeraldx.com |
EXHIBIT 31.1
SECTION 302 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Hervé Sedky, certify that:
Date: May 7, 2024
/s/ Hervé Sedky |
Hervé Sedky Chief Executive Officer |
(Principal Executive Officer)
EXHIBIT 31.2
SECTION 302 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, David Doft, certify that:
Date: May 7, 2024
/s/ David Doft |
David Doft Chief Financial Officer |
(Principal Financial Officer)
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Emerald Holding, Inc. (the “Company”), for the quarterly period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to each of their knowledge:
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Date: May 7, 2024 |
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/s/ Hervé Sedky |
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Hervé Sedky, |
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Chief Executive Officer (Principal Executive Officer) |
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Date: May 7, 2024 |
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/s/ David Doft |
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David Doft |
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Chief Financial Officer (Principal Financial Officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.