Emerald Holding, Inc. Q2 FY2024 earnings call

• Customer centricity: Focused on improving customer experience, delivering add-on services, actionable data, and insights to enhance stickiness and drive higher revenue per customer.
• 365-day engagement: Providing multiple entry points to customer engagement cycle through trade shows, conferences, webinars, media content, and commerce; leveraging AI for personalization efforts, with early results and plans to fully implement in 2025.
• Portfolio optimization: Targeting industries with strong growth rates through acquisitions and new event launches; evaluating acquisition opportunities, with new event launches expected to contribute 1-2 percentage points of annual organic revenue growth.
• Dividend reinitiation: Board authorized re-initiation of regular quarterly dividend at an initial rate of $1.5 per share, with intention to grow dividend over time and target payout ratio up to 25% of free cash flow.
• International sales: Invested in creating international sales division with leadership assigned to different territories, aiming to attract international businesses to the U.S. using government sponsorship funds.

In the second quarter of 2024, total revenue was $86 million, compared to $86.5 million in the prior year quarter. The slight decrease was due to scheduling adjustments and discontinued unprofitable events. Organic revenue for Q2 2024 was $82.1 million, an increase of $2.6 million (3.3%) versus the prior year period. Second quarter adjusted EBITDA, excluding insurance proceeds, grew approximately 4.8% to $15.3 million, with an adjusted EBITDA margin of approximately 17.8%. Second quarter free cash flow was $7.1 million, compared to $4.6 million in the prior year quarter. There are different performance trends across sectors; for example, design sector is growing at double digits, while some consumer-oriented sectors have not rebounded as nicely. Revenue contribution varies by sector based on their performance and industry cycle.

• Reaffirm 2024 performance within full-year guidance of $415 million to $425 million of revenue and $110 million to $115 million of adjusted EBITDA, implying an adjusted EBITDA margin of approximately 27%.
• Plan to grow quarterly dividend over time with a target payout ratio of up to 25% of free cash flow.
• Balance capital allocation between acquisitions, investments in own business, managing debt leverage below 3.0 times net debt to EBITDA, and returns on capital including dividends and share buybacks.

None explicitly detailed in the transcript beyond general forward-looking statement risks associated with factors that could cause actual results to differ materially from forward-looking statements, as outlined in the company's periodic reports.

Q: Could you talk more about the quarterly cadence and what drives slower growth in the next quarter and speed-up in the fourth quarter?

A: Herve Sedky mentioned different sectors perform at different rates, with consumer-oriented sectors not rebounding as well as others, and David Doft explained it's due to the mix of shows staging at different times in the calendar year.

Q: Can you talk about international sales and what's being done there?

A: Herve Sedky said they invested in an international sales division with leadership assigned to territories, aiming to sign agents and access government sponsorship funds to attract international businesses to the U.S.

Q: Could you give an update on Hotel Interactive acquisition?

A: David Doft explained Hotel Interactive runs hosted buyer events, about 15 a year under the BITAC brand, part of high ROI products with phenomenal NPS scores, and fits into the strong organic growth category of hospitality and design.