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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 “Item 6. Selected Financial and Operating Data” and our consolidated financial statements and related notes of Emerald Holding, Inc. included in Item 15 of this Annual Report on Form 10-K. You should review the “Item 1A. Risk Factors” section of this filing for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by any forward-looking statements contained in the following discussion and analysis.

The following information has been adjusted to reflect the Q4 2021 revision of our consolidated financial statements as described in Note 1, “Basis of Presentation”, in Notes to the Consolidated Financial Statements of this Annual Report.

Overview and Background

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 B2B commerce and digital merchandising solutions, serving the needs of manufacturers and retailers, through our recently acquired Elastic Suite and Flex platforms. In addition to their respective revenues, these products complement our live events and provide us year-round channels of customer acquisition and development.

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, generally allowing 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 25 strategic acquisitions, with purchase prices, excluding the $335.0 million acquisition of GLM, ranging from approximately $5.0 million to approximately $142.2 million, 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. The 25 acquisitions we have completed are described as follows:

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GLM — Prior to its acquisition by Emerald in January 2014, GLM operated approximately 20 trade shows, including four of the largest 100 trade shows in the United States according to TSE. These trade shows serve industries as diverse as home furnishings, home textiles, stationery and paper products, giftware, tabletop, gourmet housewares, contemporary furniture and interiors, art & design, antiques & jewelry, fashion, board sports & resort lifestyle and e-commerce, and include the well-known NY NOW and Surf Expo brands. The acquisition of GLM substantially increased the scale and breadth of Emerald’s trade show portfolio.

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Healthcare Design Conference and Expo, Healthcare Design Magazine, Environments for Aging and Construction SuperConference (collectively, “HCD Group”) — On February 27, 2015, we acquired these brands, which were previously operated by the Healthcare Media division of Vendome Group. Healthcare Design Conference and Expo is the industry’s best attended and most respected trade show/conference primarily focused on evidence-based design for healthcare facilities. In addition to the annual trade show and conference, the brand has a complementary magazine, Healthcare Design Magazine, education and sponsored events and an online presence that together engage the industry all year round. Environments for Aging is a complementary niche event within the broader healthcare vertical, focused on creating functional and attractive living environments that meet the needs of the aging population. Construction SuperConference is an event for lawyers providing services in commercial construction markets.

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International Pizza Expo and Pizza Today magazine (“Pizza Group”) — On March 3, 2015, we acquired the International Pizza Expo, which was previously operated by Macfadden Communications Group and operates in the $40 billion pizza restaurant industry. The International Pizza Expo is the largest trade show for independent pizzeria owners and operators in the United States, and Pizza Today is the partner magazine and leading publication in this industry.

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HOW Design Live (“HOW”) — On October 14, 2015, we acquired HOW, which was previously operated by F+W Media, Inc. HOW is the largest graphic design conference and expo in the nation, combining seven separate conferences into a single event focused on creativity, business and inspiration for graphic designers.

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The National Industrial Fastener & Mill Supply Expo (“Fastener Expo”) — On November 12, 2015, we acquired Fastener Expo from the show’s co-founders. Fastener Expo brings together manufacturers and master distributors of industrial fasteners, precision formed parts, fastener machinery and tooling, and other related products and services with distributors and sales agents in the distribution chain.

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The International Gift Exposition in the Smokies and the Souvenir Super Show (“IGES”) — On August 1, 2016, we acquired IGES from M&M Gift Shows, LLC. IGES is the largest dedicated gathering of wholesale souvenir, resort and gift buyers in the United States.

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The Swim Collective and Active Collective trade shows (together “Collective”) — On August 8, 2016, we acquired Collective from the show’s founder. Swim Collective is the leading swimwear trade show on

the West Coast, while Active Collective is a more recently-launched, fast-growing show focused on activewear.

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Digital Dealer Conference & Expo (“Digital Dealer”) — On October 11, 2016, we acquired Digital Dealer from its founder. As the leading semi-annual trade show focused on the retail automotive industry’s digital strategy and operations, Digital Dealer is the premier venue to explore the implementation of digital components by auto dealers to engage their automotive consumer. In conjunction with the acquisition, we also acquired Dealer Magazine, a complementary magazine for automotive dealerships and franchises.

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National Pavement Expo (“NPE”) — On October 18, 2016, we acquired NPE, which was previously operated by AC Business Media. NPE is the largest trade show focused on paving and pavement maintenance.

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RFID Journal LIVE! (“RFID LIVE!”) — On November 15, 2016, we acquired RFID LIVE! from its founder. RFID LIVE! is the largest trade show that focuses on RFID technologies used to identify, track and manage corporate assets and inventory across a wide range of industries.

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American Craft Retailers Expo (“ACRE”) — On December 13, 2016, we acquired ACRE from its founder. ACRE is a wholesale craft exposition, consisting of two shows that took place annually in Philadelphia and Las Vegas at the time of acquisition.

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CEDIA Expo — On January 25, 2017, we acquired the trade show CEDIA from its namesake association, Custom Electronic Design & Installation Association. CEDIA is the largest trade show in the home technology market, serving industry professionals that manufacture, design and integrate goods and services for the connected home.

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The International Drone Conference & Exposition — On March 10, 2017, we acquired the trade show InterDrone from BZ Media LLC. InterDrone is the leading commercial drone-focused show in the United States.

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Snow Show — On May 24, 2017, we acquired the trade show Snow Show from SnowSports Industries America. When acquired, Snow Show was the largest snow sports industry event in North America. Starting in January 2018, Snow Show merged with OR to become Outdoor Retailer + Snow Show, endorsed and sponsored by SnowSports Industries America and the Outdoor Industry Association.

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Connecting Point Marketing Group — On November 29, 2017, we acquired CPMG from Corridor Capital, LLC, mezzanine investor Aldine Capital Partners and management. CPMG organizes and hosts senior executive level business-intensive trade events focused on innovation for the hospitality, restaurant, healthcare, grocery and retail industries. These events are highly-curated, invitation-only forums that bring together leaders in each vertical market.

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Technology Brands — On August 21, 2018, we acquired the Technology Brands from EH Media. The Technology Brands include a leading technology event and a group of four complementary technology intelligence brands focused on the integration of audio, video, communications, IT, security and energy management products into buildings of all types. The Technology Brands are also strategically aligned with our CEDIA Expo and CPMG events.

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Boutique Design New York and related assets — On October 15, 2018, we acquired BDNY and related assets from ST Media Group International and Hospitality Media Group. BDNY is a leading trade show and conference for boutique hospitality design professionals, primarily serving the eastern United States, Canada and Europe. BDNY has been recognized among the fastest-growing trade shows in the U.S. for the past five years.

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G3 Communications — On November 1, 2019, we acquired G3, the producer of the B2B Marketing Exchange event series and is a creator of custom content and lead generation services. Through its mix of

events, digital publications and marketing services, G3 helps B2B organizations develop revenue-producing, comprehensive campaigns by providing content ideation, creation and distribution services.

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EDspaces — On December 21, 2020, we acquired the trade show EDspaces from the Education Market Association, Inc. EDspaces is one of the nation’s largest events focused on educational spaces and related equipment.

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PlumRiver, LLC — On December 31, 2020, we acquired substantially all of the assets of PlumRiver. PlumRiver is a leading provider of B2B e-commerce software solutions under the Elastic Suite brand.

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Sue Bryce Education and The Portrait Masters — On April 1, 2021, we acquired substantially all of the assets of Sue Bryce Education and The Portrait Masters.Sue Bryce Education and The Portrait Masters is a subscription-based photography business education and e-learning service with a photography conference.

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MJBiz — On December 31, 2021, we acquired substantially all of the assets of MJBiz. MJBiz is a leading event producer and content platform serving the wide range of companies operating in the rapidly growing cannabis industry.

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Advertising Week — On June 21, 2022, we acquired substantially all of the assets of Advertising Week. Advertising Week is a global event and thought leadership platform focused on marketing, media, technology, and culture.

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Bulletin, Inc. ("Bulletin") — On July 11, 2022, we acquired substantially all of the assets of Bulletin. Bulletin is an online wholesale market for retail where brands, buyers and designers gather to connect and discover new products.

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Lodestone Events ("Lodestone") — On January 10, 2023, we acquired substantially all of the assets of Lodestone. Lodestone is a producer of the Overland Expo series of vehicle-based, adventure travel consumer shows.

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:

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Severe Impact of COVID-19 — The COVID-19 pandemic and the actions taken by governments around the world to combat the virus have negatively impacted and may in the future negatively impact our revenues from our live events, which depend on our ability to hold such in-person events and the willingness of exhibitors and attendees to attend. These governmental actions have included limitations and bans on travel or transportation; limitations on the size of gatherings; closures of work facilities, public buildings and businesses; cancellation of events, including trade shows, conferences and meetings; and quarantines and lockdowns. The pandemic and its consequences forced us to cancel or postpone a substantial portion of our event calendar for 2020 and 2021. These cancellations and postponements have had, and any future such cancellations and postponements could have, a material negative impact on our business, operations, and financial results. For more information, see “Risk Factors—Our operations, business and financial results have been, and may in the future be, materially impacted by COVID-19 or future public health emergencies, including outbreaks of contagious disease” and “—Liquidity and Capital Resources.”

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Market Fragmentation — The trade show industry is highly fragmented with the three largest companies, including us, comprising only 10% of the wider U.S. market according to the AMR International Globex Report 2018. This has afforded us the opportunity to acquire other trade show businesses, a growth opportunity we expect to continue pursuing. These acquisitions may affect our growth trends, impacting the comparability of our financial results on a year-over-year basis.

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Overall Economic Environment and Industry Sector Cyclicality — Our results of operations are correlated, in part, with the economic performance of the industry sectors that our trade shows serve, as

well as the state of the overall economy, which may be affected by factors such as inflation and supply chain interruption.

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Lag Time — As the majority of our exhibit space is sold during the twelve months prior to each trade show, there is often a timing difference between changes in the economic conditions of an industry sector vertical and their effect on our results of operations. This lag time can result in a counter-cyclical impact on our results of operations.

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Variability in Quarterly Results — Our business is seasonal, with trade show revenues typically reaching their highest levels during the first and fourth quarters of each calendar year, entirely due to the timing of our trade shows. This seasonality is typical within the trade show industry. However, as a result of event cancellations due to COVID-19, results for the years ended December 31, 2021 and December 31, 2020 may not align with this historical trend. Since event revenue is recognized when a particular event is held, we may also experience fluctuations in quarterly revenue and cash flows based on the movement of annual trade show dates from one quarter to another. Our presentation of Adjusted EBITDA accounts for these quarterly movements and the timing of shows, where applicable and material.

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.

Basis of Presentation

As described in Note 18, Segment Information, our business is organized into two reportable segments, 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 seven executive brand portfolios, which represent our seven operating segments. Based on an evaluation of economic similarities and the nature of services and types of customers, five of these operating segments have been aggregated into two reportable segments, the "Commerce" reportable segment and the "Design, Creative and Technology" reportable segment. The remaining two operating segments do not meet the quantitative thresholds to be considered reportable operating 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 18, “Financial Statements and Supplementary Data—Segment Information.

The following discussion provides additional detailed disclosure for the two reportable segments, the "All Other" category and the "Corporate-Level Activity" category:

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Commerce: This segment includes events and services covering merchandising, licensing, retail sourcing and marketing to enable professionals to make informed decisions and meet consumer demands.

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Design, Creative & Technology: This segment includes events and services that support a wide variety of industries connecting businesses and professionals with products, operational strategies, and integration opportunities to drive new business and streamline processes and creative solutions.

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All Other: This category consists of Emerald’s remaining operating segments, which provide diverse events, services and e-commerce software solutions, but are not aggregated with the reportable segments. Each of the operating segments in the All Other category do not meet the criteria to be a separate reportable segment.

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Corporate-Level Activity: This category consists of Emerald’s finance, legal, information technology and administrative functions.

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 conference, sponsorships, fees for ancillary exhibition services 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, (iii) material show scheduling adjustments and (iv) event cancellations for which the Company has received, or expects to receive, claim proceeds from its event cancellation insurance policy. 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. Our Board of Directors evaluate changes in Organic revenues 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

alternative to revenues or other measures determined in accordance with GAAP. Also, Organic revenues 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 revenues to revenues as reported, see footnote 6 to the table under the heading “Results of Operations—Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021”.

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. Specifically, these causes include event cancellation caused by the outbreak of communicable diseases, including COVID-19 for the years ended December 31, 2021 and 2020, as well as losses caused by natural disasters such as hurricanes. However, Emerald’s renewed event cancellation insurance policies for the calendar 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

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Decorating Expenses. We work with general service contractors to both set up communal areas of our trade shows and provide services to our exhibitors, who primarily contract directly with the general service contractors. We will usually select a single general service contractor for an entire show, although it is possible to bid out packages of work within a single show on a piecemeal basis to different task-specific specialists. Decorating expenses represented 17%, 16%, and 10% of our total cost of revenues for the years ended December 31, 2022, 2021, and 2020, respectively, and 6%, 6%, and 4% of our total revenues for each of the years ended December 31, 2022, 2021, and 2020, respectively.

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Sponsorship Costs. We often enter into long-term sponsorship agreements with industry trade associations whereby the industry trade association endorses and markets the show to its members in exchange for a percentage of the show’s revenue. Sponsorship costs represented 13%, 9%, and 34% of our total cost of revenues for the years ended December 31, 2022, 2021, and 2020, respectively, and 5%, 3%, and 15% of our total revenues for the year ended December 31, 2022, 2021, and 2020, respectively.

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Venue Costs. Venue costs represent rental costs for the venues, usually convention centers or hotels, where we host our trade shows. Given that convention centers are typically owned by local governments who have a vested interest in stimulating business activity in and attracting tourism to their cities, venue costs typically represent a small percentage of our total cost of revenues. Venue costs represented 11%, 13%, and 9% of our total cost of revenues for the years ended December 31, 2022, 2021, and 2020, respectively, and 4%, 5% and 4% of our total revenues for each of the years ended December 31, 2022, 2021, and 2020, respectively.

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Costs of Other Marketing Services. Costs of other marketing services represent paper, printing, postage, contributor and other costs related to digital media and print publications. Costs of other marketing services represented 6%, 10%, and 9% of our total cost of revenues for each of the years ended December 31, 2022, 2021, and 2020, respectively, and 2%, 4%, and 4% of our total revenues for each of the years ended December 31, 2022, 2021, and 2020, respectively.

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Other Event-Related Expenses. Other event-related costs include temporary labor for services such as security, shuttle buses, speaker fees, food and beverage expenses and event cancellation insurance. Other event-related expenses represented 27%, 51%, and 39% of our total cost of revenues for the years ended December 31, 2022, 2021, and 2020, respectively, and 10%, 20%, and 18% of our total revenues for the year ended December 31, 2022, 2021, and 2020, respectively.

Selling, General and Administrative Expenses

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Labor Costs. Labor costs represent the cost of employees who are involved in sales, marketing, planning and administrative activities. The actual on-site set-up of the events is contracted out to third-party vendors and is included in cost of revenues. Labor costs represented 72%, 67%, and 68% of our total selling, general and administrative expenses for the years ended December 31, 2022, 2021, and 2020,

respectively, and 32%, 66%, and 63% of our total revenues for each of the years ended December 31, 2022, 2021, and 2020, respectively.

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Miscellaneous Expenses. Miscellaneous expenses are comprised of a variety of other expenses, including advertising and marketing costs, promotion costs, credit card fees, travel expenses, printing costs, office supplies and office rental expense. Miscellaneous expenses represented 28%, 33%, and 32% of our total selling, general and administrative expenses, for the years ended December 31, 2022, 2021, and 2020, respectively, and 13%, 32%, and 30% of our total revenues for the years ended December 31, 2022, 2021, and 2020, respectively.

Interest Expense

Interest expense represents interest payments and refinancing fees paid to our lenders. On May 22, 2017, we refinanced our senior secured credit facilities with the Amended and Restated Senior Secured Credit Facilities (the “2017 Refinancing”). We further amended the Amended and Restated Senior Secured Credit Facilities in November 2017 to reduce the applicable interest rates.Interest expense for the years ended December 31, 2022, 2021, and 2020 principally represented interest paid in respect of our Amended and Restated Senior Secured Credit Facilities.

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. Depreciation expense relates to property and equipment and represented approximately 1% of our total revenues for each of the years ended December 31, 2022, 2021, and 2020.

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.

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 intangibles assets, depreciation, stock-based compensation charges and deferred financing costs.

Cash Flow Model

We 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 consistently negative working capital, excluding cash on hand. Our working capital, excluding cash on hand, is negative as 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, borrowings under our Amended and Restated Revolving Credit Facility (the “Amended and Restated Revolving Credit Facility”) 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. As a result of COVID-19, the accounts receivable and deferred revenue balances related to canceled events have been reclassified to Canceled event liabilities in the consolidated balance sheets, as the net amount represents balances which we expect will be refunded to our customers.

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

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.

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 5 to the table under the heading “Results of Operations—Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021”.

Adjusted EBITDA

Adjusted EBITDA is a key measure of our performance. We define Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) provision for (benefit from) income taxes, (iii) goodwill impairments, (iv) intangible asset impairments, (v) depreciation and amortization, (vi) stock-based compensation, (vii) deferred revenue adjustment and (viii) 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.

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 loss. For a reconciliation of Adjusted EBITDA to net loss, see footnote 4 to the table under the heading “Results of Operations—Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021”.

Results of Operations

Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

The tables in this section summarize key components of our results of operations for the periods indicated.

Year Ended December 31,

(dollars in millions)

Statement of income (loss) and comprehensive income (loss) data:

Selling, general and administrative expenses(1) 145.0 143.0 2.0 1.4 %

Loss on disposal of fixed assets — 0.4 (0.4 ) (100.0 )%

Income (loss) before income taxes 158.0 (81.0 ) 239.0 NM

Provision for (benefit from) income taxes 27.2 (1.3 ) 28.5 NM

Net income (loss) and comprehensive income (loss) $ 130.8 $ (79.7 ) $ 210.5 NM

Other financial data (unaudited):

(1)

Selling, general and administrative expenses for the years ended December 31, 2022 and 2021 included a gain of $14.0 million, and expenses of $9.4 million, respectively, in non-cash contingent consideration remeasurements and acquisition-related transaction, transition and integration costs, including legal and advisory fees. Also included in selling, general and administrative expenses for each of the years ended December 31, 2022 and 2021 were stock-based compensation expenses of $5.8 million and $10.4 million, respectively.

(2)

Goodwill impairments for the year ended December 31, 2022 represents non-cash impairments of $6.3 million in connection with our January 31, 2022 goodwill impairment testing. Goodwill impairments for the year ended December 31, 2021 represents non-cash impairment of $7.2 million in connection with our October 31, 2021 goodwill impairment testing. See Note 6, Intangible Assets and Goodwill, in the notes to our financial statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to our non-cash goodwill impairments.

(3)

Intangible asset impairments for the year ended December 31, 2022 included non-cash impairments of $1.6 million for certain indefinite-lived intangible assets in connection with our January 31, 2022 interim impairment assessment. Intangible asset impairments for the year ended December 31, 2021 included non-cash impairments of $21.0 million and $11.7 million for certain customer relationship intangible assets and definite-lived trade names, and certain indefinite-lived trade names, respectively, in connection with our October 31, 2021 testing of intangible assets. See Note 6, Intangible Assets and Goodwill, in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to our non-cash intangible asset impairments.

(4)

In addition to net income (loss) presented in accordance with GAAP, we use Adjusted EBITDA to measure our financial performance. Adjusted EBITDA is a supplemental non-GAAP financial measure

of operating performance and is not based on any standardized methodology prescribed by GAAP. Adjusted EBITDA should not be considered in isolation or as alternatives to net loss, cash flows from operating activities or other measures determined in accordance with GAAP. Also, Adjusted EBITDA is not necessarily comparable to similarly titled measures presented by other companies.

We define Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) provision for (benefit from) income taxes, (iii) goodwill impairments, (iv) intangible asset impairments, (v) depreciation and amortization, (vi) stock-based compensation, (vii) deferred revenue adjustment and (viii) other items that we believe are not part of our core operations. Our Board of Directors use Adjusted EBITDA to assess our financial performance and believe they are 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.

Year Ended December 31,

(unaudited)

(dollars in millions)

Add (Deduct):

Interest expense, net 21.8 15.8

Provision for (benefit from) income taxes 27.2 (1.3 )

Goodwill impairments(a) 6.3 7.2

Intangible asset impairments(b) 1.6 32.7

Depreciation and amortization expense 59.5 47.6

Stock-based compensation expense(c) 5.8 10.4

Deferred revenue adjustment(d) 0.6 2.0

Other items(e) (14.0 ) 9.4

Deduct:

Event cancellation insurance proceeds 182.8 77.4

Adjusted EBITDA excluding event cancellation insurance proceeds $ 56.8 $ (33.3 )

(a)

Represents the non-cash goodwill impairments described in footnote 2 above.

(b)

Represents the non-cash intangible asset impairments described in footnote 3 above.

(c)

Represents costs related to stock-based compensation associated with certain employees’ participation in the 2013 Stock Option Plan (“2013 Plan”), the 2017 Omnibus Equity Plan (the “2017 Plan”) and the 2019 Employee Stock Purchase Plan (the “ESPP”).

(d)

Represents deferred revenue acquired in the PlumRiver acquisition that was marked down to the acquisition date fair value due to purchase accounting rules. If the business had been continuously owned by us throughout the periods presented, the fair value adjustments of $0.6 million and $2.0 million for PlumRiver for the years ended December 31, 2022 and 2021, respectively, would not have been required and the revenues for the years ended December 31, 2022 and 2021, would have been higher by $0.6 million and $2.0 million, respectively.

(e)

Other items for the year ended December 31, 2022 included: (i) $33.3 million in non-cash gains related to the remeasurement of contingent consideration; (ii) $6.1 million in restructuring-related transition costs, including $3.0 million in non-cash lease abandonment charges; (iii) $3.6 million in transaction costs, primarily in connection with the MJBiz, Advertising Week, Bulletin and Lodestone acquisitions; (iv) $1.7 million in non-recurring legal, audit and consulting fees and (v) $7.9 million in insurance settlement related expenses. Other items for the year ended December 31, 2021 included: (i) $3.1 million

in restructuring-related transition costs, including one-time severance expense of $1.3 million and costs associated with lease abandonment of $1.2 million; (ii) $1.7 million in non-recurring legal, audit and consulting fees; (iii) $1.4 million in transaction costs in connection with certain acquisition transactions; (iv) $1.0 million in insurance settlement related expenses and (iv) $2.2 million in expense related to the remeasurement of contingent consideration.

(5)

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 and strategic initiatives, including investing in our business, payment of dividends, making strategic acquisitions and strengthening our balance sheet. 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 cash flows from 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.

Year Ended December 31,

(unaudited)

(dollars in millions)

Net Cash Provided by Operating Activities $ 175.1 $ 90.0

Less:

Capital expenditures 10.3 6.6

(6)

In addition to revenues presented in accordance with GAAP, we present 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. Our management and Board of Directors evaluate changes in Organic revenue to understand underlying revenue trends of its events. Our presentation of Organic revenue adjusts revenue for (i) acquisition revenue, (ii) discontinued events and (iii) COVID-19 cancellations.

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.

Year Ended December 31, Change

(unaudited)

(dollars in millions)

Add (deduct):

Acquisition revenues (44.8 ) —

COVID-19 prior year cancellations(1) (76.0 ) —

(1)

Represents the increase in 2022 revenues attributable to events that staged in the current year and were canceled due to COVID-19 in the prior year.

Revenues

Total revenues of $325.9 million for the year ended December 31, 2022 increased $180.4 million, or 124.0%, from $145.5 million for the year ended December 31, 2021. See “Commerce Segment—Revenues,” “Design, Creative and Technology Segment—Revenues,” and “All Other Category—Revenues” below for a discussion of the factors contributing to the changes in total revenues.

Other Income, net

Total other income, net of $182.8 million for fiscal 2022 increased by $105.4 million, from $77.4 million for fiscal 2021. See “Commerce Segment—Other Income, net” “Design, Creative and Technology Segment—Other Income, net”, “All Other Category—Other Income, net” and "Corporate—Other Income, net" below for a discussion of the factors contributing to the changes in total other income, net.

Cost of Revenues

Total cost of revenues of $116.5 million for fiscal 2022 increased by $59.4 million, or 104.0%, from $57.1 million for fiscal 2021. See “Commerce Segment—Cost of Revenues,” “Design, Creative and Technology 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.

Selling, General and Administrative Expenses

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. Total selling, general and administrative expenses of $145.0 million for the year ended December 31, 2022 increased $2.0 million, or 1.4%, from $143.0 million for the year ended December 31, 2021. See “Commerce Segment—Selling, General and Administrative Expenses”, “Design, Creative and Technology Segment—Selling, General and Administrative Expenses”, “All Other category—Selling, General and Administrative Expenses” and “Corporate—Selling, General

and Administrative Expenses” below for a discussion of the factors contributing to the changes in total selling, general and administrative expenses.

Depreciation and Amortization Expense

Total depreciation and amortization expense of $59.5 million for the year ended December 31, 2022 increased $11.9 million, or 25.0%, from $47.6 million for the year ended December 31, 2021. See “Commerce Segment—Depreciation and Amortization Expense,” “Design, Creative and Technology 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.

Goodwill Impairments

As a result of the changes in our operating segments in the first quarter of 2022, we performed a goodwill impairment assessment and recorded a $6.3 million non-cash charge related to the impairment of goodwill as of January 31, 2022.

As a result of our annual goodwill impairment assessment, management recorded a $7.2 million non-cash charge related to the impairment of goodwill as of October 31, 2021.

Intangible Asset Impairments

As a result of the identification of an interim impairment trigger for one of its indefinite-lived intangible assets during the first quarter of 2022, the Company performed an impairment assessment and recorded a $1.6 million non-cash charge related to the impairment of an indefinite-lived trade name asset as of January 31, 2022.

customer relationship intangible assets and definite-lived trade names, and certain indefinite-lived trade names, respectively.

Interest Expense

Total interest expense of $24.5 million for the year ended December 31, 2022 increased $8.6 million, or 54.1%, from $15.9 million for the year ended December 31, 2021. See “Corporate—Interest Expense” below for a discussion of the factors contributing to the changes in total interest expense.

Interest Income

Total interest income of $2.7 million for the year ended December 31, 2022 increased $2.6 million, or 2,600.0%, from $0.1 million for the year ended December 31, 2021. See “Corporate—Interest Income” below for a discussion of the factors contributing to the changes in total interest income.

Loss on Disposal of Fixed Assets

See “Corporate—Loss on Disposal of Fixed Assets” below for a discussion of the factors contributing to the changes in total loss on disposal of fixed assets.

Commerce Segment

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 37.8 24.7 13.1 53.0 %

Depreciation and amortization expense 31.8 23.6 8.2 34.7 %

Goodwill impairments — 2.2 (2.2 ) NM

Intangible asset impairments — 30.1 (30.1 ) NM

Revenues

During the year ended December 31, 2022, revenues for the Commerce segment of $149.1 million increased by $92.1 million, or 161.6% from $57.0 million for the year ended December 31, 2021. The primary driver of the increase was $38.8 million in revenues related to live events that staged in 2022 but were canceled in the prior year due to COVID-19. Organic revenues increased by $24.1 million, or 44.9%, to $77.8 million, from $53.7 million in the prior year. This growth was driven by a $23.7 million, or 49.0%, increase to $72.1 million from $48.4 million in trade show revenue from events that staged in both 2022 and 2021 and $1.6 million from new launches in the first half of 2022, offset by lower other marketing services revenues. The acquisitions of MJBiz at the end of 2021 and Bulletin in July 2022 added incremental revenues of $29.2 million during fiscal year 2022.

Other Income, net

Other income, net of $8.0 million was recorded for the Commerce segment related to event cancellation insurance proceeds during the year ended December 31, 2022. All $8.0 million was received during 2022.

Other income, net of $57.5 million was recorded for the Commerce segment related to event cancellation insurance proceeds during the year ended December 31, 2021. All $57.5 million was received in 2021.

Cost of Revenues

During the year ended December 31, 2022, cost of revenues for the Commerce reportable segment increased $21.5 million, or 101.4%, to $42.7 million from $21.2 million for the year ended December 31, 2021. The primary driver of the increase was $9.5 million in cost of revenues related to events that staged in 2022 but were canceled due to COVID-19 in the prior year. Organic cost of revenues increased by $4.5 million, or 25.7%, to $22.0 million, from $17.5 million for the prior year. This growth was primarily driven by events that staged in both 2022 and 2021 and new launches in the first half of 2022. The acquisitions of MJBiz at the end of 2021 and Bulletin in July 2022 added $7.5 million of incremental cost of revenues.

Selling, General and Administrative Expenses

During the year ended December 31, 2022 selling, general and administrative expenses for theCommerce reportable segment increased $13.1 million, or 53.0%, to $37.8 million from $24.7 million for the comparable period in 2021. The increase was primarily due to the acquisitions of MJBiz and Bulletin, which added incremental expense of $8.8 million. The remaining increase was primarily driven by higher promotional, salaries, travel and credit card fee expenses.

Depreciation and Amortization Expense

Depreciation and amortization expense attributable to the Commerce segment of $31.8 million for the year ended December 31, 2022 increased $8.2 million, or 34.7%, from $23.6 million for the year ended December 31, 2021. The increase was due to higher amortization on the definite-lived trade name and customer relationship intangible assets associated with the MJBiz acquisition.

Goodwill Impairments

During 2021, the Company recorded non-cash goodwill impairments of $2.2 million in connection with reporting units under the Commerce segment in relation to its annual impairment assessment. Refer to the consolidated goodwill impairment discussion under the heading, Goodwill Impairments, above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion on goodwill impairment.

Intangible Asset Impairments

In connection with our 2021 annual impairment assessment, we recorded a non-cash impairment charge of $30.1 million for intangible assets related to the Commerce segment. The non-cash charges included $21.0 million for certain definite-lived customer relationship and trade names intangible assets, and $9.1 million for certain indefinite-lived trade name intangible assets.

Design, Creative and Technology Segment

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 43.6 36.8 6.8 18.5 %

Depreciation and amortization expense 19.4 19.4 — 0.0 %

Intangible asset impairments 1.6 2.6 (1.0 ) (38.5 )%

Operating income (loss) $ 47.1 $ (1.8 ) $ 48.9 NM

Revenues

During the year ended December 31, 2022, revenues for the Design, Creative and Technology segment of $157.7 million increased by $80.3 million, or 103.7%, from $77.4 million for the year ended December 31, 2021. The primary driver of the increase was $33.0 million in revenues related to live events that staged in 2022, but were canceled in the prior year due to COVID-19. Organic revenues increased by $31.9 million, or 41.6%, to $108.6 million, from $76.7 million in the prior year. This growth was driven by a $29.4 million, or 57.8%, increase to $80.3 million from $50.9 million in trade show revenue from events that staged in both 2022 and 2021 and $3.8 million from new event launches in 2022, offset by a $1.3 million decline in other marketing services revenues. The acquisitions of AV-IQ at the end of 2021 and Advertising Week in June 2022 added incremental revenues of $15.5 million during fiscal year 2022.

Other Income, net

Other income, net of $25.3 million was recorded for the Design, Creative and Technology segment related to event cancellation insurance claims during the year ended December 31, 2022. All $25.3 million was received during 2022.

Other income, net of $19.1 million was recorded for the Design, Creative and Technology segment related to event cancellation insurance claims during the year ended December 31, 2021. All $19.1 million was received during 2021.

Cost of Revenues

During the year ended December 31, 2022, cost of revenues for the Design, Creative and Technology segment of $65.5 million increased by $31.0 million, or 89.9%, from $34.5 million for the year ended December 31, 2021. The primary driver of the increase was $13.6 million in cost of revenues related to events that staged in 2022, but were canceled due to COVID-19 in the prior year. Organic cost of revenues increased by $9.7 million, or 30.3%, to $41.7 million, from $32.0 million for the prior year. This growth was primarily driven by events that staged in both 2022 and 2021 and new event launches in the first half of 2022, offset by lower other market services expense. The acquisitions of AV-IQ at the end of 2021 and Advertising Week in June 2022 added $7.7 million of incremental cost of revenues.

Selling, General and Administrative Expenses

During the year ended December 31, 2022, selling, general and administrative expenses for the Design, Creative and Technology segment of $43.6 million increased by $6.8 million, or 18.5%, from $36.8 million for the year ended December 31, 2021. The increase was primarily due to the acquisition of Advertising Week, which added incremental expense of $3.7 million. The remaining increase was primarily driven by higher promotional, travel and credit card fee expenses.

Depreciation and Amortization Expense

Depreciation and amortization expense for the Design, Creative and Technology segment was $19.4 million for each of the years ended December 31, 2022 and 2021.

Goodwill Impairments

During the first quarter of 2022 and the fourth quarter of 2021, we recorded non-cash goodwill impairment charges of $5.8 million and $5.0 million, respectively, in connection with reporting units under the Design, Creative and Technology segment in relation to our interim impairment assessment. Refer to the consolidated goodwill

impairment discussion under the heading, Goodwill Impairments, above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion on goodwill impairment.

Intangible Asset Impairments

In connection with our 2022 interim impairment assessment, we recorded a non-cash impairment charge of $1.6 million for intangible assets related to the Design, Creative and Technology segment.

In connection with our 2021 annual impairment assessment, a non-cash impairment charge of $2.6 million for intangible assets related to the Design, Creative and Technology segment was recorded. The non-cash charges included a $2.6 million for certain indefinite-lived trade name intangible assets.

All Other Category

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 21.8 14.4 7.4 NM

Depreciation and amortization expense 3.8 2.3 1.5 65.2 %

Goodwill impairments 0.5 — 0.5 NM

Operating loss $ (14.4 ) $ (6.2 ) $ (8.2 ) NM

Revenues

During the year ended December 31, 2022, revenue attributable to the All Other category of $19.1 million increased by $8.0 million, or 72.1%, from $11.1 million for the year ended December 31, 2021. Organic revenues increased by $6.1 million, 55.0%, to $17.2 million from $11.1 million in the prior year. The growth was primarily driven by a $4.2 million, or 37.8%, increase to $15.3 million from $11.1 million in software subscription revenue and $1.9 million from new event launches. All Other category revenues also increased by $1.9 million from events that staged during 2022 but were canceled in the prior year due to COVID-19.

Other Income, net

Other income, net of $0.9 million was recorded for the All Other category related to event cancellation insurance claims proceeds during the year ended December 31, 2022. All $0.9 million was received during 2022.

Other income, net of $0.8 million was recorded for the All Other category related to event cancellation insurance claims proceeds during the year ended December 31, 2021. All $0.8 million was received during 2021.

Cost of Revenues

During the year ended December 31, 2022, cost of revenues attributable to the All Other category of $8.3 million increased by $6.9 million, or 492.9%, from $1.4 million for the year ended December 31, 2021. The primary drivers of the increase were $3.0 million of costs related to the growth of our software subscription business, $1.8 million related to the events that staged in the current year but were canceled in the prior year due to COVID-19 and $2.1 million related to new event launches.

Selling, General and Administrative Expenses

During the year ended December 31, 2022, selling, general and administrative expenses for the All Other category of $21.8 million increased by $7.4 million, from $14.4 million for the year ended December 31, 2021. The

increase in selling, general and administrative expense was primarily driven by the continued ramp of new launches as well as higher costs associated with the growth of our software subscription business.

Depreciation and Amortization Expense

Depreciation and amortization expense for the All Other category of $3.8 million for the year ended December 31, 2022 increased $1.5 million, or 65.2%, from $2.3 million for the year ended December 31, 2021. The increase was due to higher amortization of software development costs related to our software subscription business.

Corporate

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 41.8 67.1 (25.3 ) (37.7 )%

Depreciation and amortization expense 4.5 2.3 2.2 95.7 %

Other Income, net

During the year ended December 31, 2022 other income, net for the Corporate category was $148.6 million and was related to a one-time insurance litigation settlement. The one-time settlement payment was not specifically attributable to any of our outstanding event cancellation insurance claims and therefore was not recorded at the segment level.

Selling, General and Administrative Expenses

During the year ended December 31, 2022, selling, general and administrative expenses of $41.8 million for the Corporate category decreased by $25.3 million, or 37.7%, from $67.1 million for the year ended December 31, 2021. The decrease in selling, general and administrative expense was primarily driven by $33.3 million in non-cash gains related to the remeasurement of contingent consideration liabilities.

Depreciation and Amortization Expense

Depreciation and amortization expense relating to the Corporate category of $4.5 million for the year ended December 31, 2022 increased $2.2 million, or 95.7%, from $2.3 million for the year ended December 31, 2021.

Interest Expense; Interest Income; Loss on Disposal of Fixed Assets; Provision for (benefit from) Income Taxes; Net Income (Loss) and Comprehensive Income (Loss); Adjusted EBITDA

Interest Expense

Interest expense of $24.5 million for the year ended December 31, 2022 increased $8.6 million, or 54.1%, from $15.9 million for the year ended December 31, 2021. The increase was primarily attributable to an increase in the variable interest rate on our Amended and Restated Term Loan Facility, for which the average rate during 2022 was 4.26%, compared to 2.60% during 2021.

Interest Income

Interest income of $2.7 million for the year ended December 31, 2022 increased $2.6 million, from $0.1 million for the year ended December 31, 2021. The increase was primarily attributable to an increase in our cash balance due to the receipt of event cancellation insurance claim and insurance litigation settlement proceeds as well as rising interest rates throughout fiscal year 2022.

Loss on Disposal of Fixed Assets

Loss on Disposal of Fixed Assets for the year ended December 31, 2022 decreased 100.0% from $0.4 million for the year ended December 31, 2021. The decrease was primarily attributable to the disposal of leasehold improvements and other fixed assets associated with two office operating leases the Company abandoned during fiscal year 2021.

Provision for (benefit from) Income Taxes

For the years ended December 31, 2022 and 2021, we recorded a provision for income taxes of $27.2 million and a benefit from income taxes of $1.3 million, respectively. The increase in our provision for income taxes of $28.5 million for the year ended December 31, 2022 compared to the prior year was primarily attributable to the impact of higher other income, net from event cancellation insurance claim and insurance litigation settlement proceeds.

Net Income (Loss) and Comprehensive Income (Loss)

Net income and comprehensive income of $130.8 million for the year ended December 31, 2022 increased $210.5 million from net loss of $79.7 million for the year ended December 31, 2021. The key drivers of the increase in net income and comprehensive income were the higher revenues as a result of executing a full schedule of events in 2022, the increase in other income, net related to event cancellation insurance claim and insurance litigation settlement proceeds and decreases in non-cash goodwill and intangible asset impairment charges, partly offset by higher cost of revenues, depreciation and amortization and interest expenses as well as the increase in provision for income taxes described above.

Adjusted EBITDA

Total Adjusted EBITDA of $239.6 million for the year ended December 31, 2022 increased $195.5 million, or 443.3%, from $44.1 million for the year ended December 31, 2021. The increase in Adjusted EBITDA was primarily attributable to higher other income, net related to event cancellation insurance claim and insurance litigation settlement proceeds as well as the profits generated from executing a full schedule of events in 2022.

Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted EBITDA, see footnote 4 to the table under the heading “Results of Operations—Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021”.

Results of Operations

Comparison of the Year Ended December 31, 2021 to the Year Ended December 31, 2020

The tables in this section summarize key components of our results of operations for the periods indicated.

Year Ended December 31,

(dollars in millions)

Statement of income (loss) and comprehensive income (loss) data:

Depreciation and amortization expense 47.6 48.6 (1.0 ) (2.1 )%

Interest income 0.1 0.1 — —

Other expense 0.1 0.1 — —

Loss on disposal of fixed assets 0.4 — 0.4 NM

Other financial data (unaudited):

(1)

Selling, general and administrative expenses for the years ended December 31, 2021 and 2020 included $9.4 million and $7.0 million, respectively, in contract termination, acquisition-related transaction, transition and integration costs, including legal and advisory fees. Also included in selling, general and administrative expenses for each of the years ended December 31, 2021 and 2020 were stock-based compensation expenses of $10.4 million and $6.7 million, respectively.

(2)

Goodwill impairments for the year ended December 31, 2021 represents non-cash impairment of $7.2 million in connection with our October 31, 2021 goodwill impairment testing. Goodwill impairments for the year ended December 31, 2020 represents non-cash impairments of $588.2 million and $15.2 million in connection with our March 31, 2020 and October 31, 2020 goodwill impairment testing, respectively. See Note 6, Intangible Assets and Goodwill, in the notes to our financial statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to our non-cash goodwill impairments.

(3)

Intangible asset impairments for the year ended December 31, 2021 included non-cash impairments of $21.0 million and $11.7 million for certain customer relationship intangible assets and definite-lived trade names, and certain indefinite-lived trade names, respectively, in connection with our October 31, 2021 testing of intangible assets. Intangible asset impairments for the year ended December 31, 2020 included non-cash impairments of $13.2 million and $46.2 million for certain customer relationship intangible assets and definite-lived trade names, and certain indefinite-lived trade names, respectively, in connection with our March 31, 2020 testing of intangible assets. In addition, non-cash impairments of $16.8 million and $0.6 million for certain customer relationship intangible assets and definite-lived trade names, and certain indefinite-lived trade names, respectively, in connection with our October 31, 2020 testing of intangible assets. See Note 6, Intangible Assets and Goodwill, in the notes to our consolidated financial

statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to our non-cash intangible asset impairments.

(4)

In addition to net loss presented in accordance with GAAP, we use Adjusted EBITDA to measure our financial performance. Adjusted EBITDA is a supplemental non-GAAP financial measure of operating performance and is not based on any standardized methodology prescribed by GAAP. Adjusted EBITDA should not be considered in isolation or as alternatives to net loss, cash flows from operating activities or other measures determined in accordance with GAAP. Also, Adjusted EBITDA is not necessarily comparable to similarly titled measures presented by other companies.

Year Ended December 31,

(unaudited)

(dollars in millions)

Add (Deduct):

Benefit from income taxes (1.3 ) (57.6 )

Goodwill impairments(a) 7.2 603.4

Intangible asset impairment(b) 32.7 76.8

Depreciation and amortization expense 47.6 48.6

Stock-based compensation expense(c) 10.4 6.7

Deferred revenue adjustment(d) 2.0 -

Other items(e) 9.4 7.0

Deduct:

Event cancellation insurance proceeds 77.4 107.0

(a)

Represents the non-cash goodwill impairments described in footnote 2 above.

(b)

Represents the non-cash intangible asset impairments described in footnote 3 above.

(c)

(d)

Deferred revenue balances in the opening balance sheet of acquired assets and liabilities for PlumRiver and EDspaces reflected the fair value of the assumed deferred revenue performance obligations at the acquisition date. If the businesses had been continuously owned by us throughout the years presented, the deferred revenue fair value adjustment of $2.0 million, would not have been required and the revenues for the year ended December 31, 2021 would have increased by $2.0 million.

(e)

Other items include amounts our management believes are not representative of our core operations. Other items for the year ended December 31, 2021 included: (i) $3.1 million in restructuring-related transition costs, including one-time severance expense of $1.3 million and costs associated with lease abandonment of $1.2 million; (ii) $1.7 million in non-recurring legal, audit and consulting fees; (iii) $1.4 million in transaction costs in connection with certain acquisition transactions; (iv) $1.0 million in insurance settlement related expenses and (iv) $2.2 million in expense related to the remeasurement of contingent consideration. For the year ended December 31, 2020, the $7.0 million included: (i) $4.6 million in restructuring-related transition costs, including one-time severance expense of $2.8 million, (ii) $2.2 million in non-recurring legal, audit and consulting fees and (iii) $1.7 million in transaction costs in connection with certain acquisition transactions offset by (iv) $1.5 million reduction to expense related to the remeasurement of contingent consideration.

(5)

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 cash flows from 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.

Year Ended December 31,

(unaudited)

(dollars in millions)

Net Cash Provided by (Used in) Operating Activities $ 90.0 $ (37.1 )

Less:

Capital expenditures 6.6 4.0

Free Cash Flow $ 83.4 $ (41.1 )

(6)

Year Ended December 31, Change

(unaudited)

(dollars in millions)

Add (deduct):

Acquisition revenues (16.6 ) —

Discontinued events — (7.6 )

COVID-19 cancellations(1) (85.1 ) —

COVID-19 cancellations(2) — (75.7 )

(1)

Represents the increase in 2021 revenues attributable to events that staged in the current year and were canceled due to COVID-19 in the prior year.

(2)

Represents reduction in revenues attributable to certain events that were canceled in fiscal 2021 due to COVID-19, compared to all events that staged in 2020. The Company believes the financial impact, net of costs saved, will be partially offset by event cancellation insurance proceeds from pending claims.

Revenues

Total revenues of $145.5 million for the year ended December 31, 2021 increased $18.1 million, or 14.2%, from $127.4 million for the year ended December 31, 2020. See “Commerce Segment – Revenues,” “Design, Creative and Technology Segment – Revenues,” and “All Other Category – Revenues” below for a discussion of the factors contributing to the changes in total revenues.

Other Income, net

Total other income of $77.4 million for fiscal 2021 decreased by $29.6 million, from $107.0 million for fiscal 2020. See “Commerce Segment – Other Income, net” “Design, Creative and Technology Segment – Other Income,

net”, “All Other Category – Other Income, net” and "Corporate—Other Income, net" below for a discussion of the factors contributing to the changes in total other income, net.

Cost of Revenues

Total cost of revenues of $57.1 million for fiscal 2021 decreased by $0.5 million, or 0.9%, from $57.6 million for fiscal 2020. See “Commerce Segment – Cost of Revenues,” “Design, Creative and Technology 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.

Selling, General and Administrative Expenses

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. Total selling, general and administrative expenses of $143.0 million for the year ended December 31, 2021 increased $24.4 million, or 20.6%, from $118.6 million for the year ended December 31, 2020. See “Commerce Segment – Selling, General and Administrative Expenses”, “Design, Creative and Technology Segment – Selling, General and Administrative Expenses”, “All Other category – Selling, General and Administrative Expenses” and “Corporate—Selling, General and Administrative Expenses” below for a discussion of the factors contributing to the changes in total selling, general and administrative expenses.

Depreciation and Amortization Expense

Total depreciation and amortization expense of $47.6 million for the year ended December 31, 2021 decreased $1.0 million, or 2.1%, from $48.6 million for the year ended December 31, 2020. See “Commerce Segment – Depreciation and Amortization Expense,” “Design, Creative and Technology 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.

Goodwill Impairments

As a result of our annual goodwill impairment assessment, management recorded a $7.2 million non-cash charge related to the impairment of goodwill as of October 31, 2021.

As a result of the COVID-19 pandemic and the measures implemented to prevent its spread, during the first quarter of 2020, we determined that the COVID-19 outbreak would continue to have a material negative impact on our financial results even following the time when the outbreak is contained. These factors, as well as uncertainty around when we would be able to resume normal operations, caused a significant and prolonged decline in our stock price, resulting in our market capitalization falling below our carrying value. As a result, we determined that a triggering event occurred and performed a quantitative assessment of our fair value as of March 31, 2020. In connection with this assessment we recorded a $588.2 million non-cash charge related to the impairment of goodwill. In addition, as a result of our annual goodwill impairment assessment, we recorded an additional $15.2 million non-cash charge related to the impairment of goodwill as of October 31, 2020.

Intangible Asset Impairments

As a result of our annual impairment assessment as of October 31, 2021, we recorded a non-cash impairment charge of $32.7 million, which included non-cash impairment charges of $21.0 million and $11.7 million for certain customer relationship intangible assets and definite-lived trade names, and certain indefinite-lived trade names, respectively.

Due to the triggering event in the first quarter of 2020 described above, we performed impairment assessments of our long-lived assets and indefinite-lived assets. The assessments resulted in the recognition of a non-cash impairment charge of $59.4 million, which included non-cash impairment charges for certain of our long-lived customer relationship and trade name intangible assets, and certain of our indefinite-lived trade name intangible assets of $13.2 million and $46.2 million, respectively. As a result of our annual impairment assessment as of October 31,

2020, we recorded a non-cash impairment charge of $17.4 million, which included non-cash impairment charges for certain of our long-lived customer relationship and trade name intangible assets, and certain of our indefinite-lived trade name intangible assets of $16.8 million and $0.6 million, respectively.

Commerce Segment

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 24.7 26.7 (2.0 ) (7.5 )%

Depreciation and amortization expense 23.6 25.3 (1.7 ) (6.7 )%

Revenues

During the year ended December 31, 2021, revenues for the Commerce segment of $57.0 million decreased by $1.8 million, or 3.1% from $58.8 million for the year ended December 31, 2020. The primary driver of the decrease was $39.8 million from events that staged in 2020 but were canceled in 2021 due to COVID-19. This decrease was offset by $43.8 million in revenues related to live events that staged primarily in the second half of 2021 but were canceled due to COVID-19 in the prior year. The remaining $5.8 million decline in revenues was primarily due to a $4.9 million, or 38.6%, decrease in revenues from three events that staged in both 2021 and 2020. This decline was largely attributable to one event that staged pre-COVID in January 2020 and was our only large event to stage in the first half of 2021. Several small discontinued events representing $1.0 million of 2020 revenues also impacted 2021 results.

Other Income

Other income of $57.5 million was recorded for the Commerce segment related to event cancellation insurance proceeds during the year ended December 31, 2021. All $57.5 million was received during 2021.

Other income of $64.3 million was recorded for the Commerce segment related to event cancellation insurance proceeds during the year ended December 31, 2020. Of the $64.3 million, $55.2 million was received and $9.1 million was confirmed by the insurance provider during 2020. All $9.1 million of insurance receivables for the Commerce segment as of December 31, 2020 were received in January 2021.

Cost of Revenues

During the year ended December 31, 2021, cost of revenues for the Commerce reportable segment decreased $4.6 million, or 17.8%, to $21.2 million from $25.8 million for the year ended December 31, 2020. The primary drivers of the decrease were an $11.7 million decline in expense from events that were canceled due to COVID-19 in 2021, but staged in 2020, a $0.5 million decline from events that were canceled in both years due to COVID-19, a $0.5 million decrease from live and virtual events that staged in both years and $0.5 million in cost savings from several small discontinued events. These declines were partially offset by $8.6 million in cost of revenues related to live events that staged in 2021 but were canceled in 2020 due to COVID-19.

Selling, General and Administrative Expenses

During the year ended December 31, 2021 selling, general and administrative expenses for the Commerce reportable segment decreased $2.0 million, or 7.5%, to $24.7 million from $26.7 million for 2020. The decrease was primarily related to lower compensation and benefits expense attributable to the centralization initiatives implemented over the prior year, lower sales commissions related to lower revenues, avoided promotional and travel costs related to canceled events, as well as credit card fee savings during the year ended December 31, 2021.

Depreciation and Amortization Expense

Depreciation and amortization expense attributable to the Commerce segment of $23.6 million for the year ended December 31, 2021 decreased $1.7 million, or 6.7%, from $25.3 million for the year ended December 31, 2020. The decrease was due to lower amortization on the definite-lived trade name and customer relationship intangible assets which were impaired in the first and fourth quarters of 2020.

Goodwill Impairments

In connection with our 2021 annual impairment assessment, we recorded a $2.2 million non-cash goodwill impairment charge related to reporting units under the Commerce segment.

During 2020, we recorded $357.0 million in non-cash goodwill impairment charges in connection with reporting units under the Commerce segment in relation to our interim and annual impairment assessments. Refer to the consolidated goodwill impairment discussion under the heading, Goodwill Impairment, above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion on goodwill impairment.

Intangible Asset Impairments

In connection with the triggering event in the first quarter of 2020 described above, we performed impairment assessments of intangible assets and recorded non-cash impairment charges related to intangible assets under the Commerce segment of $24.0 million. In relation to our annual impairment assessment performed as of October 31, 2020, we recorded additional non-cash impairment charges related to related to intangible assets under the Commerce segment of $5.4 million.

Design, Creative and Technology Segment

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 36.8 36.9 (0.1 ) (0.3 )%

Depreciation and amortization expense 19.4 20.0 (0.6 ) (3.0 )%

Revenues

During the year ended December 31, 2021, revenues for the Design, Creative and Technology segment of $77.4 million increased by $10.8 million, or 16.2%, from $66.6 million for the year ended December 31, 2020. The primary drivers of the increase were $41.5 million in revenues related to live events that staged primarily in the second half of 2021 but were canceled due to COVID-19 in the prior year and incremental revenues of $5.5 million from the acquisitions of EDspaces, Sue Bryce and AV-IQ. These increases were partially offset by a $34.6 million reduction from the cancellation of nearly all live events scheduled to stage in the first half of 2021 due to COVID-19. Discontinued other marketing services representing $1.7 million of 2020 revenues also impacted 2021 results.

Other Income

Other income of $19.1 million was recorded for the Design, Creative and Technology segment related to event cancellation insurance claims during the year ended December 31, 2021. All $19.1 million was received during 2021.

Other income of $42.6 million was recorded for the Design, Creative and Technology segment related to event cancellation insurance claims proceeds during the year ended December 31, 2020. Of the $42.6 million, $33.9 million was received and $8.7 million was confirmed by the insurance provider during 2020. All $8.7 million of insurance receivables for the Technology and Design segment as of December 31, 2020 were received in January 2021.

Cost of Revenues

During the year ended December 31, 2021, cost of revenues for the Design, Creative and Technology segment of $34.5 million increased by $4.3 million, or 14.2%, from $30.2 million for the year ended December 31, 2020. The primary drivers of the increase were $19.3 million related to live events that staged primarily in the second half of 2021 but were canceled due to COVID-19 in the prior year, $0.9 million related to events that were canceled in both years due to COVID-19 and incremental expenses of $1.6 million related to the acquisitions of EDspaces, Sue Bryce and AV-IQ. These increases were partially offset by a $16.8 million reduction from the cancellation of nearly all events scheduled to stage in the first half of 2021 due to COVID-19. Discontinued other marketing services resulted in savings of $0.7 million in 2021.

Selling, General and Administrative Expenses

During the year ended December 31, 2021, selling, general and administrative expenses for the Design, Creative and Technology segment of $36.8 million decreased by $0.1 million, or 0.3%, from $36.9 million for the year ended December 31, 2020. The decrease was attributable to lower external sales commissions and credit card fee expense partially offset by increased promotional and marketing expenses.

Depreciation and Amortization Expense

During the year ended December 31, 2021, depreciation and amortization expense for the Design, Creative and Technology segment of $19.4 million decreased $0.6 million, or 3.0%, from $20.0 million for the year ended December 31, 2020. The decrease was due to lower amortization on the definite-lived trade name and customer relationship intangible assets which were impaired in the first and fourth quarters of 2020.

Goodwill Impairments

During the years ended December 31, 2021 and 2020, we recorded $5.0 million and $241.0 million in non-cash goodwill impairment charges, respectively, in connection with reporting units under the Design, Creative and Technology segment in relation to our interim and annual impairment assessments. Refer to the consolidated goodwill impairment discussion under the heading, Goodwill Impairment, above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion on goodwill impairment.

Intangible Asset Impairments

In connection with our 2021 annual impairment assessment, we recorded a non-cash impairment charge of $2.6 million for intangible assets related to the Design, Creative and Technology segment. The non-cash charges included a $2.6 million for certain indefinite-lived trade name intangible assets.

In connection with the triggering event in the first quarter of 2020, management performed impairment assessments of intangible assets and recorded non-cash impairment charges related to intangible assets under the Design, Creative and Technology of $34.6 million. In relation to our 2020 annual impairment assessment performed as of October 31, 2020, we recorded additional non-cash impairment charges of $11.1 million, in connection with intangible assets under the Design, Creative and Technology segment.

All Other Category

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 14.4 0.5 13.9 2780.0 %

Depreciation and amortization expense 2.3 0.4 1.9 475.0 %

Goodwill impairments — 5.4 (5.4 ) NM

Intangible asset impairments — 1.7 (1.7 ) NM

Operating loss $ (6.2 ) $ (7.5 ) $ 1.3 NM

Revenues

During the year ended December 31, 2021, revenue attributable to the All Other category of $11.1 million increased by $9.1 million, or 455.0%, from $2.0 million for the year ended December 31, 2020. The primary driver of the increase was incremental revenues of $11.1 million from the acquisition of PlumRiver, which closed in December 2020. This increase was partially offset by the non-recurrence of $1.6 million of revenue for events that staged in 2020 but were canceled due to COVID-19 in 2021.

Other Income

Other income of $0.8 million was recorded for the All Other category related to event cancellation insurance claims proceeds during the year ended December 31, 2021. All $0.8 million was received during 2021.

Other income of $0.1 million was recorded for All Other category related to event cancellation insurance claims proceeds during the year ended December 31, 2020. All of the $0.1 million was confirmed by the insurance provider during 2020. All $0.1 million of insurance receivables for the All Other category as of December 31, 2020 were received in January 2021.

Cost of Revenues

Cost of revenues attributable to the All Other category of $1.4 million decreased by $0.2 million, or 12.5%, from $1.6 million for the year ended December 31, 2020. Lower event expenses due to the cancellation of all live events in the All Other category in 2021 were offset by increases in software maintenance expense related to the acquisition of PlumRiver.

Selling, General and Administrative Expenses

During the year ended December 31, 2021, selling, general and administrative expenses for the All Other category of $14.4 million increased by $13.9 million, from $0.5 million for the year ended December 31, 2020. The increase in selling, general and administrative expense was primarily driven by the acquisition of PlumRiver in December 2020.

Depreciation and Amortization Expense

Depreciation and amortization expense for the All Other category of $2.3 million for the year ended December 31, 2021 increased $1.9 million, from $0.4 million for the year ended December 31, 2020. The increase was due to the acquisition of PlumRiver in December 2020.

Goodwill Impairments

During 2020, we recorded non-cash goodwill impairment charges of $5.4 million in connection with reporting units under the All Other category in relation to our interim and annual impairment assessments. Refer to the consolidated goodwill impairment discussion under the heading, Goodwill Impairment, above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion on goodwill impairment.

Intangible Asset Impairments

In connection with the triggering event in the first quarter of 2020 described above, we performed impairment assessments of intangible assets and recorded non-cash impairment charges related to intangible assets under the All Other category of $0.8 million. In relation to our 2020 annual impairment assessment performed as of October 31, 2020, we recorded additional non-cash impairment charges of $0.9 million, in connection with intangible assets, respectively, under the All Other category.

Corporate

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses $ 67.1 $ 54.5 $ 12.6 23.1 %

Depreciation and amortization expense 2.3 2.9 (0.6 ) (20.7 )%

Selling, General and Administrative Expenses

During the year ended December 31, 2021, selling, general and administrative expenses of $67.1 million for corporate-level activity increased by $12.6 million, or 23.1%, from $54.5 million for the year ended December 31, 2020. The increase in selling, general and administrative expense was primarily driven by higher compensation and benefits expense, higher stock-based compensation costs and higher transition costs, including one-time severance expense.

Depreciation and Amortization Expense

Depreciation and amortization expense relating to corporate-level activity of $2.3 million for the year ended December 31, 2021 decreased $0.6 million, or 20.7%, from $2.9 million for the year ended December 31, 2020. The decrease was attributable to the disposal of corporate fixed assets and lower corporate internally developed software additions during 2021.

Interest Expense; Loss on Disposal of Fixed Assets; Benefit from Income Taxes; Net Loss and Comprehensive Loss; Adjusted EBITDA

Interest Expense

Interest expense of $15.9 million for the year ended December 31, 2021 decreased $4.7 million, or 22.8%, from $20.6 million for the year ended December 31, 2020. The decrease was primarily attributable to a decrease in the variable interest rate on our Amended and Restated Term Loan Facility, for which the average rate during 2021 was 2.60%, compared to 3.28% during 2020, and a $0.9 million decrease in interest expense related to lower borrowings under the Amended and Restated Revolving Credit Facility.

Loss on Disposal of Fixed Assets

Loss on Disposal of Fixed Assets of $0.4 million for the year ended December 31, 2021 increased $0.4 million, from zero for the year ended December 31, 2020. The increase was primarily attributable to the disposal of leasehold improvements and other fixed assets associated with two office operating leases the Company abandoned during fiscal year 2021.

Benefit from Income Taxes

For the years ended December 31, 2021 and 2020, we recorded a benefit from income taxes of $1.3 million and $57.6 million, respectively. The decrease in our benefit from income taxes of $56.3 million for the year ended December 31, 2021 compared to the prior year was primarily attributable to the impact of lower non-cash charges related to goodwill and intangible asset impairments, offset by lower other income and higher operating losses incurred as a result of the continued impact of the COVID-19 pandemic.

Net Loss

Net loss of $79.7 million for the year ended December 31, 2021 decreased $553.9 million from net loss of $633.6 million for the year ended December 31, 2020. The key drivers of the decrease in net loss were the decreases in non-cash goodwill and intangible asset impairment charges and interest expense, partly offset by the higher corporate overhead expense and lower benefits from income taxes described above.

Adjusted EBITDA

Total Adjusted EBITDA of $44.1 million for the year ended December 31, 2021 decreased $27.8 million, or 38.7%, from $71.9 million for the year ended December 31, 2020. The decrease in Adjusted EBITDA was primarily attributable to lower other income related to event cancellation insurance proceeds received or confirmed during the year as well as lower operating profits as a result of the continued impact of the COVID-19 pandemic.

Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, other commitments and contractual obligations. We consider liquidity in terms of cash flows from operations and their sufficiency to fund our operating and investing activities.

The unprecedented and rapid spread of COVID-19 and the related government restrictions and social distancing measures implemented in the United States and throughout the world significantly impacted Emerald’s business from mid-March 2020 through the end of fiscal year 2021. Late in the second quarter of 2021, we began to see positive impacts of successful vaccination rollouts in many countries, with social distancing restrictions easing and live events resuming in the United States. In the second half of 2021, Emerald’s live events business experienced a meaningful restart with the successful execution of 56 in-person events, serving more than 129,000 attendees and 7,500 exhibiting companies. During 2022 we were able to stage a full slate of events and successfully traded 124 in-person events during the year, serving approximately 393,000 attendees and 17,800 exhibiting companies. While we have been able to resume our full schedule of events in 2022, the ongoing effects of COVID-19 on our operations have had, and may continue to have, a negative impact on its financial results and liquidity. The assumptions used to estimate our liquidity are subject to greater uncertainty because we had never previously canceled or postponed all upcoming events for a period of over a year due to a pandemic. We cannot estimate with certainty when event exhibitors and attendees will attend our events in numbers similar to pre-pandemic editions now that our events have fully resumed. Therefore, current estimates of revenues and the associated impact on liquidity could differ significantly in the future.

On August 3, 2022, we reached an agreement to settle outstanding insurance litigation relating to event cancellation insurance for proceeds of $148.6 million. During the years ended December 31, 2022 and 2021, we recorded other income, net of $182.8 million and $77.4 million, respectively, related to event cancellation insurance claim and settlement proceeds deemed to be realizable by our management. All of the other income, net recognized for fiscal years 2022 and 2021was received during the periods. During the year ended December 31, 2020, we recorded other income, net of $107.0 million. Of the $107.0 million, $89.2 million was received and $17.8 million was confirmed by the insurance provider during 2020. All $17.8 million of insurance receivables as of December 31, 2020 were received in January 2021.

Emerald maintains event cancellation insurance to protect against losses due to the unavoidable cancellation, postponement, relocation and enforced reduced attendance at events due to certain covered events. Specifically, for the policies covering calendar years 2021 and 2020, Emerald was insured for losses due to event cancellations caused by the outbreak of communicable diseases, including COVID-19. However, Emerald’s renewed event cancellation insurance policies for the year 2022 do not cover losses due to event cancellations caused by the outbreak of communicable diseases, including COVID-19. In addition, coverage for each of our event cancellation insurance policies extends to include additional promotional and marketing expenses necessarily incurred by us should a covered loss occur. These policies also include a terrorism endorsement covering an act of terrorism and/or threat of terrorism

directed at the insured event or within the United States or its territories. The aggregate limit for the our renewed 2022 primary event cancellation insurance policy is $100.0 million if losses arise for reasons within the scope of these policies. We also obtained a similar separate event cancellation insurance policy for the Surf Expo Winter 2022 and Surf Expo Summer 2022 shows, with a coverage limit of $8.4 million and $6.5 million for each respective event.

As of December 31, 2022, we had $413.9 million of borrowings outstanding under the Amended and Restated Term Loan Facility, which was recorded net of unamortized discount of $0.6 million, and net of unamortized deferred financing fees of $0.8 million. Borrowings under our Amended and Restated Term Loan Facility are subject to mandatory prepayments under specified circumstances, including 50% of Excess Cash Flow, subject to step-downs to 25% and 0% of excess cash flow at certain leverage based thresholds, and with 100% of the net cash proceeds of asset sales and casualty events in excess of certain thresholds (subject to certain reinvestment rights). If these thresholds are triggered, we would be required to make these mandatory prepayments. See “—Long-Term Debt-Amended and Restated Senior Secured Credit Facilities” below for more detail regarding the terms of our Amended and Restated Senior Secured Credit Facilities.

Based on the our return to positive operating cash flows, current cash position and assumptions regarding the impact of COVID-19, we believe that our current financial resources will be sufficient to fund the Company's liquidity requirements for the next twelve months.

Dividend Policy

On March 20, 2020, due to the negative impact of COVID-19 on our business, our Board of Directors temporarily suspended our regular quarterly cash dividend on its common stock. The payment of any such dividend in future quarters is subject to the discretion of our Board of Directors and depending upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by applicable laws and other factors that our Board of Directors may deem relevant, and the amount of any future dividend payment may be changed or terminated in the future at any time and for any reason without advance notice.

Our business is conducted through our subsidiaries. Dividends, distributions and other payments from, and cash generated by, our subsidiaries will be our principal sources of cash to repay indebtedness, fund operations and pay dividends. Accordingly, our ability to pay dividends to our stockholders is dependent on the earnings and distributions of funds from our subsidiaries. In addition, the covenants in the agreements governing our existing indebtedness, including the Amended and Restated Senior Secured Credit Facilities, significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. See “—Long-Term Debt”, “Risk Factors—Risks Relating to Ownership of Our Common Stock—Because we are a holding company with no operations of our own, we rely on dividends, distributions, and transfers of funds from our subsidiaries” and “Risk Factors—Risks Relating to Ownership of Our Common Stock—We cannot assure you that we will continue to pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.”

Share Repurchases

On October 26, 2022, our Board of Directors approved an extension and expansion of its share repurchase program, which allows for the repurchase of $20.0 million of our common stock through December 31, 2023, subject to early termination or extension by the Board of Directors. We repurchased 21,393 shares for $0.1 million during the year ended December 31, 2022 under this repurchase program. There was $19.9 million remaining available for share repurchases under the October 2022 Share Repurchase Program as of December 31, 2022. 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:

Year Ended December 31,

(unaudited)

Statement of Cash Flows Data (dollars in millions)

Net cash provided by operating activities $ 175.1 $ 90.0 $ (37.1 )

Net cash used in investing activities $ (47.9 ) $ (131.9 ) $ (37.3 )

Net cash (used in) provided by financing activities $ (119.3 ) $ (22.2 ) $ 360.1

Operating Activities

Operating activities consist primarily of net income (loss) adjusted for noncash 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.

Net cash provided by operating activities for the year ended December 31, 2022 increased $85.1 million to $175.1 million provided by operating activities, from $90.0 million provided by operating activities during the year ended December 31, 2021. The increase was primarily driven by a $210.5 million increase in net income to net income of $130.8 million from net loss of $79.7 million during the year ended December 31, 2021 as a result of event cancellation insurance claim proceeds during the current year. This increase was partly offset by an increase in cash used for working capital of $68.9 million and a decrease in non-cash adjustments of $56.5 million. The working capital decline represented cash used for working capital of $4.4 million in the current year from cash generated by working capital of $64.5 million during the year ended December 31 2021. The working capital decline was primarily attributable to lower cash from deferred revenues of $37.6 million, and $17.8 million lower cash inflows from insurance receivables. While the increase in deferred revenues during 2022 is a sign of Emerald's continued recovery from the COVID-19 pandemic, the increase in sales in the second half of 2021 generated a more significant increase in the prior year. In addition, lower cash inflows from accounts payable during 2022 was a result of an unusually low accounts payable and other current liabilities balance at the end of 2020, which was a result of low business activities due to COVID-19. Our return to staging live events in the second half of 2021 resulted in an unusually significant increase in accounts payable and other current liabilities during 2021. Our operations have continued to return to a more normal cadence during 2022, resulting in lower cash from accounts payable and other current liabilities in the current year. Non-cash adjustments declined $56.5 million to non-cash adjustments of $48.7 million in the current year from $105.2 million during the year December 31, 2021. The decline in non-cash adjustments was driven by remeasurement of contingent consideration and lower intangible asset impairment partly offset by an increase in depreciation and amortization driven by the amortization of intangible assets primarily related to the 2021 acquisitions. Net income (loss) and non-cash adjustments to net income generated $179.5 million in cash during the year ended December 31, 2022 compared to $25.5 million in cash generated during the prior year. The primary driver of this increase was an increase in net income (loss) of $210.5 million offset by a lower add-back for intangible asset impairment and higher non-cash adjustment related to the gain from remeasurement of contingent consideration.

Net cash provided by operating activities for the year ended December 31, 2021 increased $127.1 million to $90.0 million provided by operating activities, from $37.1 million used in operating activities during the year ended December 31, 2020. The increase was primarily due to a $152.4 million increase in cash generated by working capital, from $64.5 million in cash generated by working capital during the year ended December 31, 2021 compared to the use of $87.9 million in cash for working capital during the year ended December 31, 2020. This increase was primarily attributable to higher deferred revenues, partially offset by higher accounts receivable, related to increased sales activity as our live events begin to emerge from the COVID-19 pandemic as well as the receipt of event cancellation insurance claim proceeds during the year ended December 31, 2021. These working capital improvements were partially offset by refunds paid to customers for live events that were canceled or postponed due to COVID-19 during 2020 and 2021. Net loss and non-cash adjustments to net loss generated $25.5 million in cash during the year ended December 31, 2021 compared to $50.8 million in cash generated during the year ended December 31, 2020. The

primary driver of this decline was lower non-cash goodwill and impairment addbacks offset by lower net loss and deferred income tax benefit addbacks during the year ended December 31, 2021.

Investing Activities

Investing activities 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 year ended December 31, 2022 decreased $84.0 million to $47.9 million from $131.9 million in the year ended December 31, 2021. The decrease was primarily due to a decrease in aggregate cash used for business acquisitions during the year ended December 31, 2022 of $37.6 million compared to $125.3 million in the prior year. The Company completed two business acquisitions in each of the years ended December 31, 2022 and 2021. Net cash used in investing activities for the year ended December 31, 2021 increased $94.6 million to $131.9 million from $37.3 million in the year ended December 31, 2020. The increase was primarily due to increased aggregate cash used for business acquisitions during the year ended December 31, 2021 of $125.3 million compared to $33.3 million during the year ended December 31, 2020. The Company completed two business acquisitions in each of the years ended December 31, 2022, 2021 and 2020. See Note 4, Business Acquisitions, in the notes to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to the acquisitions. Capital expenditures totaled 10.3 million, $6.6 million and $4.0 million in the years ended December 31, 2022, 2021 and 2020, respectively.

Financing Activities

Financing activities primarily consist of borrowing and repayments on our debt to fund business acquisitions and our operations.

Net cash used in financing activities for the year ended December 31, 2022 was $119.3 million, comprised of $104.2 million in repayments of principal on our Amended and Restated Term Loan Facilities, $10.4 million in share repurchases associated with our share repurchase programs, $4.4 million in payments of contingent consideration related to business acquisitions and $0.4 million of fees paid associated the Amendment to our Amended and Restated Credit Agreement. Net cash used in financing activities for the year ended December 31, 2021 was $22.2 million, comprised of $12.4 million in share repurchases associated with our publicly announced share repurchase programs, $5.7 million in repayments of principal on our Amended and Restated Term Loan Facilities and $4.2 million in payments of contingent consideration related to business acquisitions. Net cash provided by financing activities for the year ended December 31, 2020 was $360.1 million, comprised of $382.7 million of net proceeds for issuance of redeemable convertible preferred stock, partly offset by $10.0 million in repayments net of borrowings on our Amended and Restated Senior Revolving Credit Facility, $5.4 million in cash dividend payments, $0.9 million in share repurchases associated with our publicly announced share repurchase programs, $5.7 million in repayments of principal on our Amended and Restated Term Loan Facilities and a $0.8 million payment of contingent consideration related to a business acquisition.

Free Cash Flow

Free Cash Flow of $164.8 million for the year ended December 31, 2022 increased $81.4 million, from $83.4 million for the year ended December 31, 2021. Free Cash Flow of $83.4 million for the year ended December 31, 2021 increased $124.5 million, from outflow of $41.1 million for the year ended December 31, 2020.

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 5 to the table under the heading “Results of Operations—Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021”.

Off-Balance Sheet Commitments

We are not party to, and do not typically enter into any, off-balance sheet arrangements.

Long-Term Debt

Amended and Restated Senior Secured Credit Facilities

On February 14, 2020, Emerald Events Holding, Inc., the borrower under the Amended and Restated Senior Secured Credit Facilities, was renamed Emerald X, Inc (“Emerald X”). The Amended and Restated Term Loan Facilities include a seven-year $565.0 million senior secured term loan facility, scheduled to mature on May 22, 2024 (the “Amended and Restated Term Loan Facility”) and an Amended and Restated Revolving Credit Facility (as defined below).

The Amended and Restated Senior Secured Credit Facilities allows for Emerald X to choose from the following two interest rate options:

Alternate Base Rate (“ABR”) loans bear interest at a rate equal to a spread, or applicable margin, above the greatest of (i) the administrative agent’s prime rate, (ii) the Federal Funds Rate plus 50 basis points, and (iii) the one month London Interbank Offered Rate (“LIBOR”) plus 1.00%.

LIBOR loans bear interest at a rate equal to a spread, or applicable margin, over the LIBOR rate.

The spread, or applicable margin, was 1.75% for ABR loans and 2.75% for LIBOR loans through August 6, 2020. Beginning in the first quarter of 2018, (i) the applicable margin steps down by 0.25% if Emerald X’s Total First Lien Net Leverage Ratio (as defined in the Amended and Restated Senior Secured Credit Facilities) is lower than 2.75 to 1.00 and (ii) the applicable margin under the Amended and Restated Revolving Credit Facility (but not the Amended and Restated Term Loan Facility) steps down by an additional 0.25% if Emerald X’s Total First Lien Net Leverage Ratio is less than 2.50 to 1.00. As a result of Company’s Total First Lien Net Leverage Ratio decreasing below 2.50 to 1.00 (as defined below), from August 7, 2020 through December 31, 2022, borrowings under the Revolving Credit Facility were subject to an interest rate equal to LIBOR plus 2.25% or ABR plus 1.25%.

Amended and Restated Revolving Credit Facility

On December 21, 2022, Emerald X, entered into a Fourth Amendment to the Amended and Restated Credit Agreement (the “Amendment”), by and among Emerald X, 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, including by the Amendment the “Amended Credit Agreement”).

Maturity Extension; Partial Termination

The Amendment extended the maturity of $100.4 million of revolving commitments under the Amended Credit Agreement (the extended revolving facility, the “Extended Revolving Facility”) from November 23, 2023 to the earlier to occur of (i) May 23, 2026 and (ii) the day that is 91 days prior to the scheduled final maturity date of all outstanding term loans under the Amended Credit Agreement (the “Term Loans”) having an aggregate principal amount equal to or greater than the greater of (x) $75.0 million and (y) 100% of the Company’s Consolidated EBITDA (calculated on a pro forma basis).

The remaining $9.6 million of revolving commitments under the Amended Credit Agreement were terminated as of the date of the Amendment. Emerald X subsequently increased the revolver commitments under the Amended Credit Agreement by $9.6 million. See Note 19, Subsequent Events.

SOFR Transition

The Amendment also replaced the LIBOR interest rate benchmark with a Term Secured Overnight Financing Rate (“Term SOFR”) interest rate benchmark for borrowings under the Extended Revolving Facility.

Accordingly, the Amended Credit Agreement allows the Borrower to choose from the following two interest rate options for revolver borrowings:

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Alternate Base Rate (“ABR”) loans that bear interest at a rate equal to a spread, or applicable margin, above the greatest of (i) the administrative agent’s prime rate, (ii) the Federal Funds Rate plus 50 basis points, and (iii) the one month Term SOFR plus 1.00%, or

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Term SOFR loans that bear interest at a rate equal to a spread, or applicable margin, over Term SOFR.

The Amendment did not change the spread, or applicable margin, for revolver borrowings as described above.

The Amendment did not change the interest rate benchmarks or applicable margin for Term Loan borrowings.

Unaffected Terms of the Amended and Restated Revolving Credit Facility

Emerald X is required to pay a quarterly commitment fee in respect of the unutilized commitments under the Amended and Restated Revolving Credit Facility in an amount equal to 0.50% per annum, calculated on the unused portion of the facility, which is reduced to 0.375% upon achievement of a Total First Lien Ratio of 3.50 to 1.50. Upon the issuance of letters of credit under the Amended and Restated Revolving Credit Facility, Emerald X is required to pay fronting fees, customary issuance and administration fees and a letter of credit fee equal to the then-applicable margin (as determined by reference to SOFR) for the Amended and Restated Revolving Credit Facility.

Prepayment; Payment and Commitment Reductions

On December 28, 2022, Emerald X voluntarily prepaid $100.0 million of outstanding Term Loans. After giving effect to the prepayment, Emerald X has approximately $415.3 million in principal amount of Term Loans outstanding.

The Amended and Restated Term Loan Facility required repayment in equal quarterly installments of 0.25% of the $565.0 million, with the balance due at maturity. Installment payments on the Amended and Restated Term Loan Facility are due on the last business day of each quarter, commencing on September 29, 2017. As a result of the term loan prepayment described above, no future amortization payments are required under the Amended and Restated Term Loan Facility.

Subject to the certain customary exceptions and limitations, Emerald X is required to prepay amounts outstanding under the Amended and Restated Term Loan Facility under specified circumstances, including 50.0% of Excess Cash Flow (“ECF”), subject to step-downs to 25% and 0% of excess cash flow at certain leverage based thresholds, and with 100% of the net cash proceeds of asset sales and casualty events in excess of certain thresholds (subject to certain reinvestment rights).

Guarantees; Collateral; Covenants; Events of Default

All obligations under the Amended and Restated Senior Secured Facility are guaranteed by Emerald X’s direct parent company and, subject to certain exceptions, by all of Emerald X’s direct and indirect wholly owned domestic subsidiaries. As of December 31, 2022, all of Emerald X’s domestic subsidiaries and Emerald X’s direct parent have provided guarantees.

Subject to certain limitations, the obligations under the Amended and Restated Senior Secured Credit Facilities are secured by a perfected first priority security interest in substantially all tangible and intangible assets owned by Emerald X or by any guarantor.

The Amended and Restated Senior Secured Credit Facilities contain a number of customary incurrence-based covenants imposing certain restrictions on our business, including limitations on indebtedness; limitations on liens; limitations on certain fundamental changes (including, without limitation, mergers, consolidations, liquidations and dissolutions); limitations on asset sales; limitations on dividends and other restricted payments; limitations on investments, loans and advances; limitations on certain repayments of subordinated indebtedness; limitations on transactions with affiliates; limitations on changes in fiscal periods; limitations on agreements restricting liens and/or dividends; and limitations on changes in lines of business.

Certain of these incurrence-based covenants restrict, subject to various exceptions, our ability to take certain actions (such as incurring additional secured and unsecured indebtedness, making certain investments and paying certain dividends) unless we meet certain minimum Fixed Charge Coverage Ratio or maximum Total First Lien Net Leverage Ratio and/or Total Net Secured Leverage Ratio standards. These ratios are calculated on the basis of our Acquisition Adjusted EBITDA (which is defined as “Consolidated EBITDA” in the credit agreement governing the Amended and Restated Senior Secured Credit Facilities), calculated on a trailing four-quarter basis.

EEX US Equity

EEX · 10-K · period ended 2022-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

EEX US Equity☆

EEX · 10-K · period ended 2022-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

EEX US Equity