Emerald Q3 Revenue Plunged 89% From Canceled Shows; 94 Events Nixed

Canceled trade shows cost CEDIA Expo owner Emerald Holding $68 million in Q3, said the company Monday evening, reporting an 89% revenue drop from the year-ago quarter to $8.5 million. It canceled “substantially all” trade events in the quarter due to COVID-19, it said, citing CEDIA Expo, ASD August, NY NOW August and Modern Day Marine.

Emerald has canceled 94 events in 2020 and hasn't staged an in-person one since mid-March, said Chief Financial Officer David Doft. The canceled events generated about $236 million of 2019 revenue. Net loss narrowed to $15.3 million vs. $19.7 million. The stock fell 8% Tuesday, closing at $2.54.

Emerald received an additional $39.8 million of payments in Q3, and $9.5 million so far in Q4 for event cancelation insurance claims, with an additional $15.8 million recently approved and pending receipt, said Doft. Through Oct. 31, Emerald submitted total claims of $146.2 million for events scheduled for 2020; it expects to submit more claims over the next several weeks for events canceled through year-end.

Insurance payments and a recent preferred stock offering left the company with $327 million in cash and another $150 million in a revolving credit line, providing it with “the flexibility to invest for future growth as well as take advantage of any dislocations in the trade show and exhibition market,” Doft said.

Interim CEO Brian Field cited a recent survey by Explori indicating “customers’ desire to return to live face-to-face events, given the value and importance of our marketplaces to their businesses,” on a call. The study, including more than 9,000 responses from 30 countries, showed “attendees overwhelmingly prefer live meetings taking place in a face-to-face format," Field said. The survey said the "social aspect of face-to-face events and the ability to make connections across their community is critical and cannot be achieved or duplicated in a purely digital media.”

Recently staged global shows demonstrate “the clear desire or return to live in-person events,” Doft said. He referenced Caravan Salon, a recreational vehicle show in Dusseldorf, Germany, held Aug. 29-Sept. 6. It drew 107,000 attendees vs. 268,000 in 2019.

Emerald canceled all large events through year-end, except for the International Gift Exposition in the Smokies, scheduled for Wednesday-Saturday in Pigeon Forge, Tennessee. In August, Emerald hosted several small showroom events in New York, which were down an average 9% from 2019 levels, Field said. In Q&A, Field said IGES, traditionally held in Sevierville, Tennessee, and Pigeon Forge, was consolidated into the latter location this year due to "limitations on mass gatherings" in Sevierville.

Emerald’s Q1 events are “certainly at risk” given state-level restrictions and the potential for venue closings due to COVID-19 government restrictions and venue takeovers, said Field: “We have already canceled some of our first quarter events and postponed others.” That includes Emerald's high-profile Kitchen + Bath Business Industry show, now scheduled as a virtual event Feb. 9-11.