8-K: Emerald Holding Eyes Refinancing with $415 Million Term Loan Amid Growth Projections

Emerald Holding, Inc. is pursuing a $415 million first lien term loan to refinance existing debt and extend its revolving credit facility, while projecting continued growth and margin expansion.

Summary

• Emerald Holding, Inc. is seeking to refinance its existing debt with a new $415 million first lien term loan.
• The company also intends to extend its revolving credit facility into a new 5-year facility.
• As of September 30, 2024, Emerald had $299 million in liquidity, including $189 million in cash and $110 million in undrawn revolver capacity.
• The company's LTM September 30, 2024, total revenue and adjusted EBITDA excl. insurance were $393.5 million and $103.5 million, respectively.
• Emerald expects FY 2024 revenue to be at least $400 million and adjusted EBITDA to be at least $100 million.
• The company is the largest U.S. based B2B events platform.
• Emerald operates across three business lines: Connections (~90% of revenue), Content (~5% of revenue), and Commerce (~5% of revenue).
• The company's strategy focuses on customer centricity, 365-day engagement, and portfolio optimization.
• Emerald has a history of acquiring and integrating high-quality events.
• The company is targeting a net leverage ratio between 2.0x and 3.0x long-term.

Sentiment

Score: 7

Explanation: The document presents a positive outlook with refinancing plans, growth projections, and a strong market position. However, it also acknowledges risks and uncertainties associated with forward-looking statements and the completion of the refinancing transaction.

Positives

• Emerald has a diversified portfolio of market-leading brands.
• The company has a history of successful acquisitions and integrations.
• Emerald has a strong balance sheet and free cash flow conversion.
• The company has a best-in-class management team with deep industry experience.
• The company is the largest U.S. based B2B events platform.
• The company is targeting adjusted EBITDA margin expansion to 35%+ over the next several years.
• The company reinstated a common stock dividend at an annualized level of $12 million ($0.06/share) or $3.0 million per quarter to start.
• Emerald announced a $25 million share repurchase program, representing approximately 3% of the current equity market capitalization.

Negatives

• The company's audited consolidated financial statements for the year ended December 31, 2024, are not yet complete, and the information provided is a preliminary estimate.
• The consummation of any refinancing transaction is subject to completion of definitive agreements, customary closing conditions, and market conditions, with no assurance that any refinancing will occur.

Risks

• The company's forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially.
• The company's ability to continue staging live events and scale its business beyond pre-COVID levels is subject to general economic conditions and the markets in which the company operates.
• The declaration, timing, and amount of any future dividends will be subject to the discretion and approval of the company's Board of Directors.
• The company's preliminary financial results are based on management estimates and are subject to the completion of financial and operating closing procedures and customary audit procedures.

Future Outlook

The company anticipates continued growth and margin expansion, driven by yield optimization, integration of acquired brands, expansion of eCommerce, and pruning of underperforming events, with a long-term goal for mid-high single-digit organic growth and adjusted EBITDA margin expansion to 35%+

Industry Context

The B2B events market is large and fragmented, with Emerald positioned as a leading player and acquirer of choice. The industry is experiencing a post-COVID recovery and is expected to continue growing.

Comparison to Industry Standards

• The US B2B trade show market represents a $13.5bn TAM.
• The largest trade show organizers represent only a small portion of the overall market.
• The market is expected to have a 2024E-2028E CAGR of ~3.0%.

Stakeholder Impact

• Shareholders: Potential for increased value through growth and dividends.
• Employees: Stability and growth opportunities within the company.
• Customers: Enhanced services and offerings through strategic initiatives.
• Creditors: Refinancing aims to improve the company's financial structure.

Next Steps

• Completion of definitive agreements for the refinancing transaction.
• Closing and effectiveness of the refinancing transaction.
• Continued execution of the company's growth strategy focused on customer centricity, 365-day engagement, and portfolio optimization.

Key Dates