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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 “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.

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 held 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 verticals, 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 and 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 20 strategic acquisitions, with purchase prices, excluding the $335.0 million acquisition of GLM, ranging from approximately $5.0 million to approximately $46.0 million, and annual revenues ranging from approximately $1.3 million to approximately $15.1 million. Historically, we have completed acquisitions at 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 20 acquisitions we have completed are described as follows:

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:

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, cost of revenues, selling, general and administrative expenses, interest expense, depreciation and amortization, income taxes, Adjusted EBITDA, Adjusted Net Income and Free Cash Flow.

Basis of Presentation

As described in Note 18, Segment Information, in the notes to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we made certain changes in 2019 that changed the determination of our reportable segments. These changes were made to be consistent with the information provided our Chief Executive Officer, who is considered the chief operating decision-maker ("CODM"). The CODM evaluates performance based on the results of six executive brand portfolios, which represent our six operating segments. Based on an evaluation of economic similarities and the nature of services and types of customers, four of these operating segments have been aggregated into two reportable segments, the Commerce reportable segment and the Design 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.

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

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.

Design and 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.

All Other: This category consists of Emerald’s remaining operating segments, which provide diverse events and services but are not aggregated with the reportable segments. Each of the operating segments in the All Other category represents less than 10% of consolidated revenue and does not meet the criteria to be a separate reportable segment.

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

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 sponsorship, fees for ancillary exhibition services and attendee registration fees. Additionally, we generate revenue through conferences, digital media and print publications that complement our trade shows. We also engage third-party sales agents to support our marketing efforts. More than 95% of our sales are made by our employees, with less than 5% made by third-party sales agents.

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. Management and Emerald’s 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

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 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, 2020 to the Year Ended December 31, 2019”.

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, as well as losses caused by natural disasters such as hurricanes. Our Other Income is primarily comprised of received or confirmed event cancellation insurance claim proceeds.

Cost of Revenues

Selling, General and Administrative Expenses

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, 2020, 2019 and 2018 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 ten 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. During 2018, we changed certain of our trade name intangibles assets from indefinite-lived to definite-lived assets, with estimated useful lives of between 10 and 30 years. As a result of the change in estimated useful lives of certain of our trade name intangible assets, we recorded $5.2 million, $5.9 million and $1.0 million in additional amortization expense for the years ended December 31, 2020, 2019 and 2018, respectively. Depreciation expense relates to property and equipment and represented approximately 1% of our total revenues for the year ended December 31, 2020 and less than 1% of our total revenues for each of the years ended December 31, 2019 and 2018.

Income Taxes

Income tax expense consists of U.S. federal, state and local taxes based on income in the jurisdictions in which we operate.

We used substantially all of our federal NOL carryforwards during 2017, and therefore our income tax payment obligations increased during 2018, notwithstanding the overall reduction in federal corporate tax rates as a result of the Tax Cuts and Jobs Act (“Tax Act”), and 2019. We also 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.

The Tax Act significantly revised the U.S. corporate income tax law by, among other things, decreasing the federal corporate income tax rate from 35% to 21% effective January 1, 2018.

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. Our working capital 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 (“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 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 cancelled events have been reclassified to Cancelled event liabilities in the condensed consolidated balance sheets, as the net amount represents balances which we expect will be refunded to our customers. While we believe that our business interruption insurance proceeds will largely mitigate this liability, cash outflows for customer refunds will likely exceed insurance claim settlement cash inflows for the foreseeable future.

The primary driver for our negative working capital 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. Most of our exhibitors pay in full in advance of each trade show, whereas the bulk of expenses are paid close to or after the show. Cash deposits start to be received as early as twelve months prior to a show taking place and the balance of booth space fees are typically received in cash one month prior to a show taking place. This highly efficient cash flow model, where cash is received in advance of expenses to be paid, creates a working capital benefit.

Free Cash Flow

In addition to net cash provided by operating activities presented in accordance with GAAP, we present Free Cash Flow because we believe it is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our core operations that, after capital expenditures, can be used for the repayment of indebtedness, paying of dividends, repurchasing of shares of our common stock and strategic initiatives, including investing in our business and making strategic acquisitions.

Free Cash Flow is a supplemental non-GAAP financial measure of liquidity and is not based on any standardized methodology prescribed by GAAP. Free Cash Flow should not be considered in isolation or as an alternative to net cash provided by operating activities or other measures determined in accordance with GAAP. Also, Free Cash Flow is not necessarily comparable to similarly titled measures used by other companies.

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 6 to the table under the heading “Results of Operations - Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019”.

Adjusted EBITDA

Adjusted EBITDA is a key measure of our performance. We define Adjusted EBITDA as net loss before (i) interest expense, (ii) income tax benefit, (iii) depreciation and amortization, (iv) stock-based compensation, (v) deferred revenue adjustment, (vi) goodwill and other intangible asset impairment charge, (vii) material show scheduling adjustments, and (viii) other items that management believes are not part of our core operations. We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

Management and our board of directors use Adjusted EBITDA to assess our financial performance and believe it is helpful in highlighting trends because it excludes the results of decisions that are outside the control of management, while other performance metrics can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. We reference Adjusted EBITDA frequently in our decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods.

Adjusted EBITDA is not defined under GAAP, and has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations include that Adjusted EBITDA excludes certain normal recurring expenses and one-time cash adjustments that we consider not to be indicative of our ongoing operating performance. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures used by other companies.

The most directly comparable GAAP measure to Adjusted EBITDA is net 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, 2020 to the Year Ended December 31, 2019”.

Adjusted Net Income

Our presentation of Adjusted Net Income adjusts net loss for (i) stock-based compensation, (ii) deferred revenue, (iii) goodwill and other intangible asset impairment charges, (iv) other items that management believes are not part of our core operations, (v) amortization of deferred financing fees and discount, (vi) amortization of acquired intangible assets and (vii) tax adjustments related to non-GAAP adjustments.

We use Adjusted Net Income as a supplemental metric to evaluate our business’s performance in a way that also considers our ability to generate profit without the impact of certain items. For example, it is useful to exclude stock-based compensation expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business, and these expenses can vary significantly across periods due to timing of new stock-based awards. We also exclude professional fees associated with debt refinancing, the amortization of intangible assets and certain discrete costs, including deferred revenue adjustments, impairments and transaction costs (including professional fees and other expenses associated with acquisition activity) in order to facilitate a period-over-period comparison of the Company’s financial performance. Each of the normal recurring adjustments and other adjustments described in this paragraph help management with a measure of our operating performance over time by removing items that are not related to day-to-day operations.

Adjusted Net Income is not defined under GAAP and has limitations as an analytical tool, and you should not consider such measure either in isolation or as an alternative to net (loss) income, cash flows from operating activities or other measures determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of Adjusted Net Income may not be comparable to other similarly titled measures used by other companies. The most directly comparable GAAP measure to Adjusted Net Income is net loss. The most directly comparable GAAP measure to Adjusted Net Income is net loss. For a reconciliation of Adjusted Net Income to net loss, see footnote 5 to the table under the heading “Results of Operations—Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019”.

Results of Operations

Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019

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 loss and comprehensive loss data:

Selling, general and administrative expenses(1) 118.6 133.4 (14.8 ) (11.1 )%

Depreciation and amortization expense 48.6 52.0 (3.4 ) (6.5 )%

Benefit from income taxes (57.6 ) (5.0 ) (52.6 ) NM

Net loss and comprehensive loss $ (633.6 ) $ (50.0 ) $ (583.6 ) NM

Other financial data (unaudited):

We define Adjusted EBITDA as net loss before (i) interest expense (including unrealized loss on interest rate swap and floor, net, for periods prior to the expiration of our interest rate swap), (ii) loss on extinguishment of debt, (iii) income tax expense, (iv) goodwill impairments, (v) intangible asset impairments, (vi) depreciation and amortization, (vii) stock-based compensation, (viii) deferred revenue adjustment and (ix) other items that management believes are not part of our core operations. We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management and our board of directors use Adjusted EBITDA to assess our financial performance and believe they are 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 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):

Benefit from income taxes (57.6 ) (5.0 )

Intangible asset impairments(b) 76.8 17.0

Depreciation and amortization 48.6 52.0

Stock-based compensation expense(c) 6.7 7.7

Deferred revenue adjustment(d) - 0.3

Other items(e) 7.0 6.4

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

We use Adjusted Net Income as a supplemental metric to evaluate our business’s performance in a way that also considers our ability to generate profit without the impact of certain items.

For example, we exclude the amortization of intangible assets and certain discrete costs, including deferred revenue adjustments, impairments and transaction costs (including professional fees and other expenses associated with acquisition activity) in order to facilitate a period-over-period comparison of our financial performance. This measure also reflects an adjustment for the difference between cash amounts paid in respect of taxes and the amount of tax recorded in accordance with GAAP. Each of the normal recurring adjustments and other adjustments described in this paragraph help to provide management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are noncash expenses.

Adjusted Net Income is not defined under GAAP and has limitations as an analytical tool, and you should not consider such measure either in isolation or as an alternative to net loss, cash flows from operating activities or other measures determined in accordance with GAAP. The most directly comparable GAAP measure to Adjusted Net Income is net loss. Because not all companies use identical calculations, our presentation of Adjusted Net Income may not be comparable to other similarly titled measures used by other companies.

Year ended December 31

(unaudited)

(dollars in millions)

Add (Deduct):

Stock-based compensation expense(a) 6.7 7.7

Deferred revenue adjustment(b) — 0.3

Intangible asset impairments(d) 76.8 17.0

Other items(e) 7.0 6.4

Amortization of deferred financing fees and discount 1.5 1.4

Amortization of acquired intangible assets(f) 46.0 49.6

Tax adjustments related to non-GAAP adjustments(g) (67.4 ) (34.2 )

Adjusted Net Income $ 40.4 $ 67.3

(e) Represents other items described in Note 4(e) above.

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 (Used in) Provided by Operating Activities $ (37.1 ) $ 67.8

Less:

Capital expenditures 4.0 3.9

Free Cash Flow $ (41.1 ) $ 63.9

Year Ended December 31, Change

(unaudited) (dollars in millions)

Add (deduct):

Acquisition revenues (7.2 ) —

Discontinued events — (6.7 )

COVID-19 cancellations(1) — (230.6 )

Revenues

Total revenues of $127.4 million for the year ended December 31, 2020 decreased $233.5 million, or 64.7%, from $360.9 million for the year ended December 31, 2019. See “Commerce Segment – Revenues,” “Design 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

Total other income of $107.0 million for fiscal 2020 increased by $100.9 million, from $6.1 million for fiscal 2019. See “Commerce Segment – Cost of Revenues,” “Design 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.

Cost of Revenues

Total cost of revenues of $57.6 million for fiscal 2020 decreased by 52.1%, or $62.6 million, from $120.2 million for fiscal 2019. See “Commerce Segment – Cost of Revenues,” “Design 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 $118.6 million for the year ended December 31, 2020 decreased $14.8 million, or 11.1%, from $133.4 million for the year ended December 31, 2019. See “Commerce Segment – Selling, General and Administrative Expenses”, “Design 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 $48.6 million for the year ended December 31, 2020 decreased $3.4 million, or 6.5%, from $52.0 million for the year ended December 31, 2019. See “Commerce Segment – Depreciation and Amortization Expense,” “Design 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 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 the Company’s carrying value. As a result, we determined that a triggering event occurred and performed a quantitative assessment of the Company’s fair value as of March 31, 2020. In connection with this assessment management recorded a $564.0 million non-cash charge related to the impairment of goodwill. In addition, as a result of our annual goodwill impairment assessment, management recorded an additional $39.4 million non-cash charge related to the impairment of goodwill as of October 31, 2020.

In connection with the re-evaluation of our operating segments and reporting units due to changes in our internal financial reporting structure, management performed the annual goodwill impairment assessment and recorded a $59.8 million non-cash charge related to the impairment of goodwill. The impairment consisted of the write-down of goodwill, equal to the excess carrying value of goodwill above fair value, of one or more reporting units included in our Commerce and Design and Technology segments and the All Other category. In addition, during the third quarter of 2019, we recognized a non-cash goodwill impairment charge of $9.3 million, as a result of a triggering event caused by reduced performance expectations in the current year. See “Commerce Segment – Goodwill Impairments,” “Design and Technology Segment – Goodwill Impairments” and “All Other Category—Goodwill Impairments” below for further discussion of goodwill impairments.

Intangible Asset Impairments

Due to the triggering event in the first quarter of 2020 described above, management 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, management 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.

Due to the triggering event in the third quarter of 2019 caused by reduced performance expectations during the year, management performed impairment assessments of our long-lived assets and indefinite-lived intangible assets. These assessments resulted in the recognition of a non-cash impairment charge of $17.0 million, which included non-cash impairment charges for certain of our customer relationship intangible assets and trade name intangible assets of $8.7 million and $8.3 million, respectively. See “Commerce Segment – Intangible Asset Impairments”, “Design and Technology Segment – Intangible Asset Impairments” and “All Other Category –Intangible Asset Impairments” below for further discussion of total intangible asset impairments.

Commerce Segment

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 27.8 37.2 (9.4 ) (25.3 )%

Depreciation and amortization expense 21.9 26.9 (5.0 ) (18.6 )%

Intangible asset impairments 45.9 0.7 45.2 NM

Revenues

During the year ended December 31, 2020, revenues for the Commerce segment of $56.9 million decreased by $127.8 million, or 69.2% from $184.7 million for the year ended December 31, 2019. The primary driver of the decline was the cancellation of several first quarter and all but one subsequent live event scheduled in 2020 due to COVID-19. These cancelled events represented $126.2 million in prior year revenues. The remaining $1.2 million decline in revenues was primarily attributable to a decline of 3.9% for the events that staged during the first quarter as well as one event that staged in the fourth quarter of 2020, lower other marketing services revenue and several small discontinued events, offset by revenues generated by the launch of new virtual events.

Other Income

Other Income of $70.3 million was recorded for the Commerce reportable segment related to event cancellation insurance claims proceeds, of which $61.3 million was received and $9.0 million was confirmed by the insurance provider during the year ended December 31, 2020. All $9.0 million of insurance receivables as of December 31, 2020 were received in January 2021.

During the third quarter of 2019, as a result of Hurricane Dorian, our Surf Expo and Impressions Expo Orlando (“ISS Orlando”) shows were forced to be cancelled. Emerald carries cancellation insurance to mitigate losses caused by natural disasters and received a settlement of $6.1 million to offset the lost revenues from the affected trade shows. As a result, Other income of $6.1 million attributable to the Commerce segment was recorded in the consolidated statements of loss and comprehensive loss for the year ended December 31, 2019 to recognize the amount recovered from the insurance company. We also maintained supplemental insurance to mitigate the losses of our exhibitors for out-of-pocket expenses incurred in connection with the cancelled shows. We received $10.1 million under this policy which was fully paid to participating exhibitors during 2019.

Cost of Revenues

During the year ended December 31, 2020, cost of revenues of $24.6 million for the Commerce segment decreased by $24.8 million, or 50.2%, from $49.4 million for the year ended December 31, 2019. The primary driver of the decline was the cancellation of several first quarter and all but one subsequent live event scheduled in 2020 due to COVID-19. These cancelled events represented $24.2 million in prior year cost of revenues.

Selling, General and Administrative Expenses

During the year ended December 31, 2020, selling, general and administrative expenses of $27.8 million for the Commerce segment decreased by $9.4 million or 25.3% from $37.2 million for the year ended December 31, 2019. The decrease was primarily comprised of lower compensation and employee-related costs due to a combination of permanent staff reductions and furloughs, and lower travel and promotional expenses related to the cancelled events. Lower credit card fees related to the cancelled events generated additional cost reductions.

Depreciation and Amortization Expense

Depreciation and amortization expense attributable to the Commerce segment of $21.9 million for the year ended December 31, 2020 decreased $5.0 million, or 18.6%, from $26.9 million for the year ended December 31, 2019. 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 the first quarter of 2020, a $340.6 million non-cash goodwill impairment charge was recorded in connection with reporting units under the Commerce segment. In addition, in relation to our annual impairment assessment we recorded an additional $26.9 million non-cash goodwill impairment charge in connection with reporting units under the Commerce segment. 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.

During 2019, we recorded a $36.3 million non-cash charge in connection with our annual goodwill assessment that was related to reporting units under the Commerce segment in connection with the re-evaluation of our internal financial reporting structure. In addition, during the third quarter of 2019, we recognized a non-cash goodwill impairment charge of $5.6 million, related to reporting units under the Commerce segment, as a result of a triggering event caused by reduced performance expectations for the year.

Intangible Asset Impairments

In connection with the triggering event in the first quarter of 2020 described above, we performed impairment assessments of long-lived assets and indefinite-lived assets and recorded non-cash impairment charges related to long-lived assets and indefinite-lived intangible assets under the Commerce segment of $6.7 million and $24.0 million, respectively. In relation to our annual impairment assessment performed as of October 31, we recorded additional non-cash impairment charges related to related to long-lived assets under the Commerce segment of $15.2 million. During 2020, we recorded total non-cash impairment charges related to long-lived assets and indefinite-lived intangible assets under the Commerce segment of $21.9 million and $24.0 million, respectively.

In connection with the triggering event in the third quarter of 2019 described above, we performed impairment assessments of long-lived assets and indefinite-lived intangible assets and recognized a non-cash impairment charge related to indefinite-lived intangible assets under the Commerce segment of $0.7 million.

Design and Technology Segment

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 23.0 30.2 (7.2 ) (23.8 )%

Depreciation and amortization expense 16.4 19.2 (2.8 ) (14.6 )%

Intangible asset impairments 24.9 7.9 17.0 NM

Operating (loss) income $ (212.0 ) $ 4.7 $ (249.2 ) NM

Revenues

During the year ended December 31, 2020, revenues for the Design and Technology segment of $51.2 million decreased by $88.7 million, or 63.4%, from $139.9 million for the year ended December 31, 2019. The primary driver of the decline was the cancellation of several first quarter and substantially all subsequent live events scheduled in 2020 due to COVID-19. These cancelled events represented $86.9 million in prior year revenues. The remaining $1.8 million decline in revenues was primarily attributable to several small discontinued events and a decline of 1.0% for the events that staged during the first quarter in the Design and Technology segment, offset by revenues generated by the launch of new virtual events.

Other Income

Other Income of $32.5 million was recorded for the Design and Technology reportable segment related to event cancellation insurance claims proceeds, of which $24.8 million was received and $7.7 million was confirmed by the insurance provider during the year ended December 31, 2020. All $7.7 million of insurance receivables as of December 31, 2020 were received in January 2021.

Cost of Revenues

During the year ended December 31, 2020, cost of revenues for the Design and Technology segment of $25.7 million decreased by $28.2 million, or 52.3%, from $53.9 million for the year ended December 31, 2019. The primary driver of the decline was the cancellation of several first quarter and substantially all subsequent live events scheduled in 2020 due to COVID-19. These cancelled events represented $29.3 million in prior year cost of revenues. This decline was offset by increased costs related to live events that staged in the first quarter and the launch of several new virtual events.

Selling, General and Administrative Expenses

During the year ended December 31, 2020, selling, general and administrative expenses for the Design and Technology segment of $23.0 million decreased by $7.2 million, or 23.8%, from $30.2 million for the year ended December 31, 2019. The decrease was primarily comprised of lower promotional expenses related to the cancelled events, lower compensation and employee-related costs due to a combination of permanent staff reductions and furloughs, and lower travel. Lower credit card fees related to the cancelled events generated additional cost reductions.

Depreciation and Amortization Expense

During the year ended December 31, 2020, depreciation and amortization expense for the Design and Technology segment of $16.4 million decreased $2.8 million, or 14.6%, from $19.2 million for the year ended December 31, 2019. 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 the first quarter of 2020, a $198.5 million non-cash goodwill impairment charge was recorded in connection with reporting units under the Design and Technology segment. In addition, in relation to our annual impairment assessment we recorded an additional $7.2 million non-cash goodwill impairment charge in connection with reporting units under the Design and Technology segment. 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.

During the third quarter of 2019, we recognized a non-cash goodwill impairment charge of $3.2 million, related to reporting units under the Design and Technology segment, as a result of a triggering event caused by reduced performance expectations for the year. In addition, we recorded a $20.8 million non-cash goodwill impairment charge in connection with our annual goodwill impairment assessment that was related to reporting units under the Design and Technology segment in connection with the re-evaluation of our internal financial reporting structure during 2019.

Intangible Asset Impairments

In connection with the triggering event in the first quarter of 2020, described above, we performed impairment assessments of long-lived assets and indefinite-lived assets and recorded non-cash impairment charges related to long-lived assets and indefinite-lived intangible assets under the Design and Technology segment of $5.7 million and $17.0 million, respectively. In relation to our annual impairment assessment performed as of October 31, we recorded additional non-cash impairment charges of $1.6 million and $0.6 million, in connection with long-lived assets and indefinite-lived intangible assets, respectively, under the Design and Technology segment. During 2020, we recorded total non-cash impairment charges related to long-lived assets and indefinite-lived intangible assets under the Design and Technology segment of $7.3 million and $17.6 million, respectively.

In connection with the triggering event in the third quarter of 2019 described above, we performed impairment assessments of long-lived assets and indefinite-lived intangible assets, and recognized non-cash impairment charges related to indefinite-lived trade name intangible assets, long-lived trade name and customer relationship intangible assets allocated to the Design and Technology segment of $3.6 million and $4.3 million, respectively.

All Other Category

Year Ended December 31,

(dollars in millions)

Other income 4.2 — 4.2 NM

Selling, general and administrative expenses 13.3 10.3 3.0 29.1 %

Depreciation and amortization expense 7.4 3.5 3.9 111.4 %

Intangible asset impairments 6.0 8.4 (2.4 ) (28.6 )%

Revenues

During the year ended December 31, 2020, revenue attributable to the All Other category of $19.3 million decreased by $17.0 million, or 46.8%, from $36.3 million for the year ended December 31, 2019. The primary driver of the decline was the cancellation of several first quarter and substantially all subsequent live events scheduled in 2020 due to COVID-19. These cancelled events represented $19.3 million in prior year revenues. In addition, lower revenues from several discontinued brands and several events that staged in the first quarter contributed to the decline. These decreases were offset by incremental revenues from the G3 acquisition, which closed in November 2019.

Other Income

Other Income of $4.2 million was recorded for All Other category related to event cancellation insurance claims proceeds, of which $3.0 million was received and $1.2 million was confirmed by the insurance provider during the year ended December 31, 2020. All $1.2 million of insurance receivables as of December 31, 2020 were received in January 2021.

Cost of Revenues

During the year ended December 31, 2020, cost of revenues attributable to the All Other category of $7.3 million decreased by $9.6 million, or 56.8%, from $16.9 million for the year ended December 31, 2019. These cancelled events represented $7.7 million in prior year cost of revenues. In addition, discontinued print and digital publications contributed to the decrease in cost of revenues for the All Other category.

Selling, General and Administrative Expenses

During the year ended December 31, 2020, selling, general and administrative expenses for the All Other category of $13.3 million increased by $3.9 million, or 29.1%, from $10.3 million for the year ended December 31, 2019. The increase was primarily comprised of $4.5 million in incremental expense related to the 2019 acquisition of G3, offset by savings comprised of lower promotional expenses related to the cancelled events, lower compensation and employee-related costs due to a combination of permanent staff reductions and furloughs, and lower travel.

Depreciation and Amortization Expense

Depreciation and amortization expense for the All Other category of $7.4 million for the year ended December 31, 2020 increased $3.9 million, or 111.4%, from $3.5 million for the year ended December 31, 2019. The increase was attributable to higher long-lived intangible asset amortization related to the G3 acquisition.

Goodwill Impairments

In the first quarter of 2020, a $24.9 million non-cash goodwill impairment charge was recorded in connection with reporting units under the All Other category. In addition, in relation to our annual impairment assessment we recorded an additional $5.3 million non-cash goodwill impairment charge in connection with reporting units under the All Other category. 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.

We recorded a $2.8 million non-cash charge in connection with our annual goodwill impairment assessment that was related to reporting units under the All Other category in 2019. In addition, during the third quarter of 2019, we recognized a non-cash goodwill impairment charge of $0.4 million, related to reporting units under the All Other category, as a result of a triggering event caused by reduced performance expectations for the year.

Intangible Asset Impairments

Corporate

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses $ 54.5 $ 55.6 $ (1.1 ) (2.0 )%

Depreciation and amortization expense 2.9 2.5 0.4 16.0 %

Total operating expenses $ 57.4 $ 58.1 $ (0.7 ) (1.2 )%

Selling, General and Administrative Expenses

During the year ended December 31, 2020, selling, general and administrative expenses of $54.5 million for corporate-level activity decreased by $1.1 million, or 2.0%, from $55.6 million for the year ended December 31, 2019.

Depreciation and Amortization Expense

Depreciation and amortization expense relating to corporate-level activity of $2.9 million for the year ended December 31, 2020 increased 0.4 million, or 16%, from $2.5 million for the year ended December 31, 2019.

Interest Expense; Benefit from Income Taxes; Net Loss; Adjusted EBITDA; Adjusted Net Income

Interest Expense

Interest expense of $20.6 million for the year ended December 31, 2020 decreased $9.7 million, or 32%, from $30.3 million for the year ended December 31, 2019. 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 2020 was 3.28%, compared to 5.02% during 2019, and a $0.2 million decrease in interest expense related to borrowings under the Amended and Restated Revolving Credit Facility.

Benefit from Income Taxes

For the years ended December 31, 2020 and 2019, we recorded a benefit from income taxes of $57.6 million and $5.0 million, respectively. The increase in our benefit from income taxes of $52.6 million for the year ended December 31, 2020 compared to the prior year was primarily attributable to the impact of goodwill impairments and operating losses incurred as a result of the COVID-19 pandemic.

Net Loss

Net loss of $633.6 million for the year ended December 31, 2020 increased $583.6 million from net loss of $50.0 million for the year ended December 31, 2019. The key drivers of the increase in net loss were the increases in non-cash goodwill and intangible asset impairment charges and lower revenue, partly offset by increases in other

income, lower operating costs, decreased corporate overhead, lower depreciation and amortization costs, decreased interest costs and higher benefits from income taxes described above.

Adjusted EBITDA

Total Adjusted EBITDA of $71.9 million for the year ended December 31, 2020 decreased $55.9 million, or 43.7%, from $127.8 million for the year ended December 31, 2019. The decrease in Adjusted EBITDA was primarily attributable to the $583.6 million increase in net loss described above, an increase in the deduction for benefits from income taxes of $52.6 million and decreases in addbacks of $9.7 million for interest expense and $3.4 million for depreciation and amortization. These decreases were partially offset by benefits from the increase in combined non-cash goodwill and intangible asset impairment charges addback of $594.1 million.

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, 2020 to the Year Ended December 31, 2019”.

Adjusted Net Income

Adjusted Net Income for the year ended December 31, 2020 of $40.4 million decreased $26.9 million, or 40.0%, from $67.3 million for the year ended December 31, 2019. The drivers of the decrease in Adjusted Net Income were the same as those for the decrease in Adjusted EBITDA. In addition, Adjusted Net Income declined as a result of the absence of add-backs for interest and depreciation and amortization expenses. Adjusted Net Income benefited from a $15.7 million increase in the tax effect of non-GAAP adjustments versus the prior year.

Adjusted Net Income is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted Net Income, see footnote 5 to the table under the heading “Results of Operations - Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019.”

Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018

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

Other income 6.1 — 6.1 NM

Depreciation and amortization expense 52.0 46.8 5.2 11.1 %

Goodwill impairments(2) 69.1 — 69.1 NM

Benefit from income taxes (5.0 ) (8.3 ) 3.3 (39.8 %)

Net loss and comprehensive loss $ (50.0 ) $ (25.1 ) $ (24.9 ) 99.2 %

Other financial data (unaudited):

Year Ended December 31,

(unaudited)

(dollars in millions)

Add (Deduct):

Benefit from income taxes (5.0 ) (8.3 )

Goodwill impairments(a) 69.1 —

Intangible asset impairment(b) 17.0 104.3

Depreciation and amortization expense 52.0 46.8

Stock-based compensation expense(c) 7.7 6.1

Deferred revenue adjustment(d) 0.3 0.8

Other items(e) 6.4 9.2

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

Year ended December 31

(unaudited)

(dollars in millions)

Add (Deduct):

Stock-based compensation expense(a) 7.7 6.1

Deferred revenue adjustment(b) 0.3 0.8

Goodwill impairments(c) 69.1 —

Intangible asset impairment(d) 17.0 104.3

Other items(e) 6.4 9.2

Amortization of deferred financing fees and discount 1.4 1.7

Amortization of acquired intangible assets(f) 49.6 44.6

Tax adjustments related to non-GAAP adjustments(g) (34.2 ) (41.4 )

(e) Represents other items described in Note 4(e) above.

Year Ended December 31,

(unaudited)

(dollars in millions)

Net Cash Provided by Operating Activities $ 67.8 $ 103.9

Less:

Capital expenditures 3.9 3.5

Organic revenue is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Organic revenue, see footnote 6 to the table under the heading “Results of Operations - Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019.”

Year Ended December 31, Change

(unaudited) (dollars in millions)

Add (deduct):

Acquisition revenues (10.2 ) -

Discontinued events - (11.7 )

Revenues

Total revenues of $360.9 million for the year ended December 31, 2019 decreased $19.8 million, or 5.2%, from $380.7 million for the year ended December 31, 2018. See “Commerce Segment – Revenues,” “Design and Technology Segment – Revenues,” and “All Other Category – Revenues” below for a discussion of the factors contributing to the changes in total revenues.

Cost of Revenues

Total cost of revenues of $120.2 million for fiscal 2019 increased by 7.2%, or $8.1 million, from $112.1 million for fiscal 2018. See “Commerce Segment – Cost of Revenues,” “Design 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 $133.4 million for the year ended December 31, 2019 increased $11.6 million, or 9.5%, from $121.8 million for the year ended December 31, 2018. See “Commerce Segment – Selling, General and Administrative Expenses”, “Design 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 $52.0 million for the year ended December 31, 2019 increased $5.2 million, or 11.1%, from $46.8 million for the year ended December 31, 2018. See “Commerce Segment – Depreciation and Amortization Expense,” “Design 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

million non-cash charge related to the impairment of goodwill. The impairment consisted of the write-down of goodwill, equal to the excess carrying value of goodwill above fair value, of one or more reporting units included in our Commerce and Design and Technology segments and the All Other category. In addition, during the third quarter of 2019, we recognized a non-cash goodwill impairment charge of $9.3 million, as a result of a triggering event caused by reduced performance expectations in the current year. See “Commerce Segment – Goodwill Impairments,” “Design and Technology Segment – Goodwill Impairments” and “All Other Category—Goodwill Impairments” below for further discussion of goodwill impairments.

Intangible Asset Impairments

Due to the triggering event described above, management performed impairment assessments of our long-lived assets and indefinite-lived intangible assets during the third quarter of 2019. These assessments resulted in the recognition of a non-cash impairment charge of $17.0 million, which included non-cash impairment charges for certain of our customer relationship intangible assets and trade name intangible assets of $8.7 million and $8.3 million, respectively. During the year ended December 31, 2018, we recorded a $104.3 million non-cash impairment charge related to certain of its trade names and customer relationship intangible assets. The impairment charge was due to a decline in fair value compared to the carrying value of the respective trade names and customer relationship intangible assets, which were driven by changes in forecasted revenues and gross profits and minor adjustments to the valuation assumptions around future royalty and discount rates. See “Commerce Segment – Intangible Asset Impairments”, “Design and Technology Segment – Intangible Asset Impairments” and “All Other Category –Intangible Asset Impairments” below for further discussion of total intangible asset impairments.

Commerce Segment

Year Ended December 31,

(dollars in millions)

Other income 6.1 — 6.1 NM

Selling, general and administrative expenses 37.2 37.7 (0.5 ) (1.3 )%

Depreciation and amortization expense 26.9 25.1 1.8 7.2 %

Goodwill impairments 41.9 — 41.9 NM

Intangible asset impairments 0.7 58.4 (57.7 ) NM

Revenues

During the year ended December 31, 2019, revenues for the Commerce segment of $184.7 million decreased by $31.2 million, or 14.5% from $215.9 million for the year ended December 31, 2018. The decrease was related to discontinued events of $11.0 million, which were primarily driven by the decision to cancel the 2019 Outdoor Retailer Winter Market and combine it with the January 2020 Outdoor Retailer Snow Show, as well as the decision not to stage Interbike 2019. In addition, Commerce revenues declined by $7.1 million as a result of the cancellation of Surf Expo and ISS Orlando due to Hurricane Dorian. We recorded the $6.1 million cancellation insurance settlement related to these events as Other income in the Commerce segment during the year. The remaining $13.1 million decline was primarily attributable to organic decreases which were driven by a 7.8% year-over-year decline in net square footage of exhibit space (“NSF”) sold, which was slightly offset by a 1.8% increase in yield.

Other Income

Cost of Revenues

During the year ended December 31, 2019, cost of revenues of $49.4 million for the Commerce segment decreased by $0.5 million, or 1.0%, from $49.9 million for the year ended December 31, 2018. The decrease was related to savings on discontinued events of $3.1 million as well as $1.0 million in savings related to the cancellation of Surf Expo and ISS Orlando. These declines were partially offset by incremental costs of our 2019 show-improvement initiatives, which were focused on several of our largest brands within the Commerce segment.

Selling, General and Administrative Expenses

During the year ended December 31, 2019, selling, general and administrative expenses of $37.2 million for the Commerce segment decreased by $0.5 million or 1.3% from $37.7 million for the year ended December 31, 2018.

Depreciation and Amortization Expense

Depreciation and amortization expense attributable to the Commerce segment of $26.9 million for the year ended December 31, 2019 increased $1.8 million, or 7.2%, from $25.1 million for the year ended December 31, 2018. The increase was due to additional amortization on the trade name intangible assets for which we adjusted the estimated useful life in the fourth quarter of 2018, offset by lower amortization for brands that were fully written off in the prior year.

Goodwill Impairments

We recorded a $36.3 million non-cash charge in connection with our annual goodwill assessment that was related to reporting units under the Commerce segment in connection with the re-evaluation of our internal financial reporting structure during 2019. In addition, during the third quarter of 2019, we recognized a non-cash goodwill impairment charge of $5.6 million, related to reporting units under the Commerce segment, as a result of a triggering event caused by reduced performance expectations for the year.

Intangible Asset Impairments

In connection with the triggering event described above, we performed impairment assessments of long-lived assets and indefinite-lived intangible assets during the third quarter of 2019, and recognized a non-cash impairment charge related to indefinite-lived intangible assets under the Commerce segment of $0.7 million. During the year ended December 31, 2018, we also recorded a $58.4 million non-cash impairment charge related to certain of our trade names and customer relationship intangible assets under the Commerce segment. The impairment charge was due to a decline in fair value compared to the carrying value of the respective trade names and customer relationship intangible assets, which were driven by changes in forecasted revenues and gross profits and minor adjustments to the valuation assumptions around future royalty and discount rates.

Design and Technology Segment

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 30.2 25.0 5.2 20.8 %

Depreciation and amortization expense 19.2 14.9 4.3 28.9 %

Goodwill impairments 24.0 — 24.0 NM

Intangible asset impairments 7.9 16.2 (8.3 ) NM

Revenues

During the year ended December 31, 2019, revenues for the Design and Technology segment of $139.9 million increased by $12.1 million, or 9.5%, from $127.8 million for the year ended December 31, 2018. The increase was related to incremental revenues of $10.2 million from our 2018 acquisitions of the Technology Brands and BDNY (collectively, the “2018 acquisitions”) and organic growth of $3.9 million which was driven by a 2.8% increase in yield, partially offset by a 1.2% decline in net square feet. These increases were further offset by a $0.6 million decline related to several small discontinued events.

Cost of Revenues

During the year ended December 31, 2019, cost of revenues for the Design and Technology segment of $53.9 million increased by $7.1 million, or 15.2%, from $46.8 million for the year ended December 31, 2018. The increase reflected $4.2 million in incremental expense related to the 2018 acquisitions and $3.5 million related to incremental costs of shows that grew during the year, as well as the additional costs of our 2019 show-improvement initiatives, which focused on several of our largest brands within the Design and Technology segment. These increases were partially offset by $0.6 million in savings related to several small discontinued events.

Selling, General and Administrative Expenses

During the year ended December 31, 2019, selling, general and administrative expenses for the Design and Technology segment of $30.2 million increased by $5.2 million, or 20.8%, from $25.0 million for the year ended December 31, 2018. The increase was primarily comprised of $5.0 million in incremental expense related to the 2018 acquisitions.

Depreciation and Amortization Expense

During the year ended December 31, 2019, depreciation and amortization expense for the Design and Technology segment of $19.2 million increased $4.3 million, or 28.9%, from $14.9 million for the year ended December 31, 2018. The increase was primarily attributable to incremental amortization related to the 2018 acquisitions as well as increased amortization on the trade name intangible assets for which we adjusted the estimated useful life in the fourth quarter of 2018.

Goodwill Impairments

We recorded a $20.8 million non-cash charge in connection with our annual goodwill impairment assessment that was related to reporting units under the Design and Technology segment in connection with the re-evaluation of our internal financial reporting structure during 2019. In addition, during the third quarter of 2019, we recognized a non-cash goodwill impairment charge of $3.2 million, related to reporting units under the Design and Technology segment, as a result of a triggering event caused by reduced performance expectations for the year.

Intangible Asset Impairments

Due to the triggering event described above, we performed impairment assessments of long-lived assets and indefinite-lived intangible assets during the third quarter of 2019, and recognized non-cash impairment charges related to indefinite-lived trade name intangible assets, long-lived trade name and customer relationship intangible assets allocated to the Design and Technology segment of $3.6 million and $4.3 million, respectively. During the year ended December 31, 2018, we recorded a $16.2 million non-cash impairment charge related to certain trade names and customer relationship intangible assets allocated to the Design and Technology segment. The impairment charge was due to a decline in fair value compared to the carrying value of the respective trade names and customer relationship intangible assets, which were driven by changes in forecasted revenues and gross profits and minor adjustments to the valuation assumptions around future royalty and discount rates.

All Other Category

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses 10.3 9.6 0.7 7.3 %

Depreciation and amortization expense 3.5 4.6 (1.1 ) (23.9 %)

Goodwill impairments 3.2 — 3.2 NM

Intangible asset impairments 8.4 29.7 (21.3 ) NM

Operating loss $ (6.0 ) $ (21.7 ) $ 15.7 NM

Revenues

During the year ended December 31, 2019, revenue attributable to the All Other category of $36.3 million decreased by $0.7 million, or 1.9%, from $37.0 million for the year ended December 31, 2018. The decrease was related to an organic decline of $1.8 million, which was partially offset by incremental revenues of $1.2 million from our 2019 acquisition of G3.

Cost of Revenues

During the year ended December 31, 2019, cost of revenues for the All Other category increased by $2.1 million, or 14.2%, from $14.8 million for the year ended December 31, 2018. The increase primarily reflected incremental costs of our 2019 show-improvement initiatives.

Selling, General and Administrative Expenses

During the year ended December 31, 2019, selling, general and administrative expenses for the All Other category of $10.3 million increased by $0.7 million, or 7.3%, from $9.6 million for the year ended December 31, 2018. The increase was primarily comprised of $0.8 million in incremental expense related to the 2019 acquisition of G3.

Depreciation and Amortization Expense

Depreciation and amortization expense for the All Other category of $3.5 million for the year ended December 31, 2019 decreased $1.1 million, or 23.9%, from $4.6 million for the year ended December 31, 2018. The decrease was attributable to lower amortization for brands that were fully written off in the prior year.

Goodwill Impairments

We recorded a $2.8 million non-cash charge in connection with our annual goodwill impairment assessment that was related to reporting units under the All Other category. In addition, during the third quarter of 2019, we recognized a non-cash goodwill impairment charge of $0.4 million, related to reporting units under the All Other category, as a result of a triggering event caused by reduced performance expectations for the year.

Intangible Asset Impairments

Due to the triggering event described above, we performed impairment assessments of long-lived assets and indefinite-lived intangible assets during the third quarter of 2019, and recognized non-cash impairment charges related to indefinite-lived trade name intangible assets, long-lived trade name and customer relationship intangible assets under the All Other category of $0.6 million and $7.8 million, respectively. During the year ended December 31, 2018, we recorded a $29.7 million non-cash impairment charge related to certain trade names and customer relationship intangible assets allocated to the All Other category. The impairment charge was due to a decline in fair value compared to the carrying value of the respective trade names and customer relationship intangible assets, which were driven by changes in forecasted revenues and gross profits and minor adjustments to the valuation assumptions around future royalty and discount rates.

Corporate

Year Ended December 31,

(dollars in millions)

Selling, general and administrative expenses $ 55.6 $ 49.5 $ 6.1 12.3 %

Depreciation and amortization expense 2.5 2.2 0.3 13.6 %

Selling, General and Administrative Expenses

During the year ended December 31, 2019, selling, general and administrative expenses of $55.6 million for corporate-level activity increased by $6.1 million, or 12.3%, from $49.5 million for the year ended December 31, 2018. The increase was primarily comprised of incremental expense related to new senior management costs and incremental investments in 2019 and future events.

Depreciation and Amortization Expense

Depreciation and amortization expense relating to corporate-level activity of $2.5 million for the year ended December 31, 2019 increased $0.3 million, or 13.6%, from $2.2 million for the year ended December 31, 2018.

Interest Expense; Benefit from Income Taxes; Net Loss; Adjusted EBITDA; Adjusted Net Income

Interest Expense

Interest expense of $30.3 million for the year ended December 31, 2019 increased $1.2 million, or 4.1%, from $29.1 million for the year ended December 31, 2018. 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 2019 was 5.02%, compared to 4.76% during 2018, and a $0.5 million increase in interest expense related to borrowings under the Amended and Restated Revolving Credit Facility attributable to higher outstanding indebtedness during 2019.

Benefit from Income Taxes

For the years ended December 31, 2019 and 2018, we recorded a benefit from income taxes of $5.0 million and $8.3 million, respectively. The decrease in our benefit from income taxes of $3.1 million for the year ended December 31, 2019 compared to the prior year was primarily attributable to the tax effect of goodwill impairments that are not deductible, and to a lesser extent, the relative mix of operations in and among various U.S. state and local jurisdictions, partially offset by the increase in loss before income taxes in 2019.

Net Loss

Net loss of $50.0 million for the year ended December 31, 2019 increased $24.9 million, or 99.2%, from net loss of $25.1 million for the year ended December 31, 2018. The key drivers of the increase in net loss were the declines in organic revenues, higher operating costs, increased corporate overhead and lower benefits from income taxes described above. These declines were partly offset by lower combined non-cash goodwill and intangible asset impairment charges.

Adjusted EBITDA

Total Adjusted EBITDA of $127.8 million for the year ended December 31, 2019 decreased $35.1 million, or 21.5%, from $162.9 million for the year ended December 31, 2018. The decrease in Adjusted EBITDA was primarily attributable to the $25.0 million increase in net loss described above and $17.9 million lower combined non-cash goodwill and intangible asset impairment charges. These decreases were partially offset by benefits from the increase in depreciation and amortization addback of $5.3 million and the decrease of $3.1 million in the deduction for benefit from income taxes. 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, 2020 to the Year Ended December 31, 2019.”

Adjusted Net Income

Adjusted Net Income for the year ended December 31, 2019 of $67.3 million decreased $32.9 million, or 32.8%, from $100.2 million for the year ended December 31, 2018. The drivers of the decrease in Adjusted Net Income were the same as those for the decrease in Adjusted EBITDA. In addition, Adjusted Net Income declined as a result of the absence of higher add-backs for interest and depreciation and amortization expenses. Adjusted Net Income benefited from a $7.2 million decline in the tax effect of non-GAAP adjustments versus the prior year.

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.

In March 2020, the World Health Organization categorized the Coronavirus Disease 2019 (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. In conjunction with this declaration and the spread of COVID-19 across the United States, recommendations and mandates were handed down by various local, state and federal government agencies regarding social distancing, containment areas and against large gatherings. In addition, travel restrictions were imposed by the United States and foreign governments, and by companies with respect to their employees, and various event venues announced indefinite closures. As a result of these and various other factors, management made the decision to cancel nearly all ofour face-to-face events scheduled through the end of 2020. In addition, beginning in October 2020 management announced the cancellation or postponement of several live events that were scheduled for the first half of 2021. The ongoing effects of COVID-19 on our operations and event calendar have had, and will continue to have, a material negative impact on its financial results and liquidity, and such negative impact may continue beyond the containment of such outbreak.

The assumptions used to estimate the our liquidity are subject to greater uncertainty because we have never previously cancelled or postponed all upcoming events for a period of multiple months due to a pandemic where the timing for resolution and ultimate impact of the pandemic remains uncertain. Management cannot at present estimate with certainty (i) when we will be able to resume full or partial event operations and, once resumed, (ii) whether event exhibitors and attendees will attend our events. Therefore, current estimates of revenues and the associated impact on liquidity could differ materially in the future. Therefore, current estimates of revenues and the associated impact on liquidity could differ materially in the future. As a consequence, management cannot estimate with a high degree of certainty the ultimate impact on our business, financial condition or near or longer term financial or operational results. During the year ended December 31, 2020, we implemented several actions to preserve cash and strengthen our liquidity position, including, but not limited to:

• Reducing our expense structure across all key areas of discretionary spending;

• Significantly reducing the use of outside contractors;

• Suspending the regular quarterly cash dividend.

Further, 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, Emerald is insured for losses due to event cancellations caused by the outbreak of communicable diseases, including COVID-19.

The aggregate limit under these event cancellation insurance policies is approximately $191.1 million in 2020 and $191.4 million in 2021 if losses arise for reasons within the scope of this policy. In addition to this primary policy, Emerald maintains a separate event cancellation insurance policy for the Surf Expo Summer 2020 and Surf Expo Winter 2021 shows, with a coverage limit of $6.0 million and $7.7 million, for each respective event.

We are in the process of pursuing claims under these insurance policies to offset the financial impact of cancelled and postponed events as a result of COVID-19. During the year ended December 31, 2020, we recorded Other income of $107.0 millionrelated to event cancellation insurance claim proceeds deemed to be realizable by management. Of the $107.0 million in other income, $89.2 million was received in 2020 and $17.8 million was received in January 2021. These proceeds represent an interim payment in respect of the $167.4million in event cancellation insurance claims filed in relation to events cancelled during the year ended December 31, 2020. These claims are subject to review and adjustment. There is no guarantee or assurance as to the amount or timing of future recoveries from Emerald’s event cancellation insurance policy.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which provides for the ability of employers to delay payment of employer payroll taxes during 2020 after the date of enactment. As a result, the payment approximately $2.0 million of our employer payroll taxes otherwise due in 2020 will be delayed, with 50% due by December 31, 2021 and the remaining 50% due by December 31, 2022.

As of December 31, 2020, we had $525.2 million of borrowings outstanding under the Amended and Restated Term Loan Facility, which included unamortized deferred financing fees of $2.0 million and unamortized original issue discount of $2.5 million, with an additional $149.0 million available to borrow (after giving effect to $1.0 million letters of credit outstanding) under the Amended and Restated Revolving Credit Facility. Borrowings under our Amended and Restated Term Loan Facility are subject to mandatory prepayments under specified circumstances, including 50.0% 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.

Dividend Policy

We paid a dividend of $0.07 per share in each of the second, third and fourth quarters of 2017 and the first quarter of 2018 and $0.0725 per share in each of the second, third and fourth quarters of 2018. We paid a dividend of $0.0725 per share in first quarter of 2019 and $0.0750 per share in each of the second, third and fourth quarters of 2019 and first quarter of 2020. On March 20, 2020, due to the negative impact of COVID-19 on our business, our Board of Directors temporarily suspended the Company’s 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

Our board of directors approved a $20.0 million share repurchase program in the fourth quarter of 2018 and a $30.0 million share repurchase program in the third quarter of 2019. We settled the repurchase of 853,557 and 1,627,248 shares of our common stock for $8.3 million and $19.4 million during the years ended December 31, 2019, and 2018, respectively. There were no remaining amounts available for the $20.0 million share repurchase program approved in the fourth quarter of 2018 and the $30.0 million share repurchase program approved in the third quarter of 2019 was discontinued in the first quarter of 2020.

On October 5, 2020, our Board authorized and approved a new $20.0 million share repurchase program. Share repurchases may be made from time to time through and including December 31, 2021, subject to early termination or extension by the Board, through open market purchases, block transactions, privately negotiated purchases or otherwise. We settled the repurchase of 203,837 shares of our common stock for $0.8 million during the year ended December 31, 2020. As of December 31, 2020, there was $19.2 million remaining available to repurchase shares pursuant to the share repurchase program publicly announced in the third quarter of 2020.

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 (used in) provided by operating activities $ (37.1 ) $ 67.8 $ 103.9

Net cash used in investing activities $ (37.3 ) $ (16.7 ) $ (74.7 )

Net cash provided by (used in) financing activities $ 360.1 $ (62.0 ) $ (19.6 )

Operating Activities

Operating activities consist primarily of net 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 used in operating activities for the year ended December 31, 2020 decreased $104.9 million to $37.1 million used in operating activities, from $67.8 million provided by operating activities during the year ended December 31, 2019. The decrease was primarily due to a $583.6 million increase in net loss and a $70.1 million increase in cash used for working capital. These were partially offset by a $548.8 million increase in non-cash reconciling adjustments driven by increases in non-cash goodwill and intangible asset impairment charges of $534.3 million and $59.8 million, respectively, partly offset by decreases of $42.7 million for deferred income taxes and $3.4 million for depreciation and amortization. Net cash provided by operating activities for the year ended December 31, 2019 decreased $36.1 million, or 34.7%, to $67.8 million from $103.9 million during the year ended December 31, 2018. The decrease was primarily due to a $24.9 million increase in net loss and a $6.1 million increase in cash used for working capital. These decreases were partially offset by a $5.1 million decrease in non-cash reconciling adjustments.

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, 2020 increased $20.6 million, or 123.4%, to $37.3 million from $16.7 million in the year ended December 31, 2019. The increase was due to

increased cash used for business acquisitions during the year ended December 31, 2020compared to the prior year. In the year ended December 31, 2020, we completed two acquisition for cash consideration of $33.3 million, while during the year ended December 31, 2019, we completed one acquisition in the prior year for aggregate cash consideration of $12.8 million. Net cash usedin investing activities for the year ended December 31, 2019 decreased $58.0 million, or 77.6%, to $16.7 million from $74.7 million in the year ended December 31, 2018. 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. We have minimal capital expenditure requirements. Capital expenditures totaled $4.0 million, $3.9million and $3.5 million in the years ended December 31, 2020, 2019 and 2018, respectively.

Financing Activities

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

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 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 deferred consideration related to a business acquisition. Net cash used in financing activities for the year ended December 31, 2019 was $62.0 million, comprised of $46.0 million in repayments of borrowings on our Amended and Restated Senior Revolving Credit Facility, $21.3 million in quarterly cash dividend payments,$8.3 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 $1.0 million payment of deferred consideration related to a business acquisition. These were offset by net proceeds of $16.0 million borrowings on our Amended and Restated Senior Revolving Credit Facility and $4.3 million in proceeds from common stock issuances related to the exercise of employee equity awards. Net cash used in financing activities for the year ended December 31, 2018 was $19.6 million, comprised of a $25.7 million repayment of principal on our Amended and Restated Term Loan Facility, $21.0 million in quarterly cash dividend payments and $19.4 million in share repurchases associated with our publicly announced share repurchase program. These were offset by net proceeds of $40.0 million borrowings on our Amended and Restated Senior Revolving Credit Facilities and $6.5 million in proceeds from common stock issuances related to the exercise of employee equity awards.

Free Cash Flow

Free Cash Flow of negative $41.1 million for the year ended December 31, 2020 decreased $105.0 million, from inflow of $63.9 million for the year ended December 31, 2019. Free Cash Flow of $63.9 million for the year ended December 31, 2019 decreased $36.5 million, or 36.4% from $100.4 million for the year ended December 31, 2018. Free Cash Flow of $100.4 million for the year ended December 31, 2018 decreased $7.4 million, or 6.9% from $107.8 million for the year ended December 31, 2017.

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 6 to the table under the heading “Results of Operations - Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019”.

Interest Rate Swap and Floor

In March 2014, we entered into forward interest rate swap and floor contracts with the Royal Bank of Canada, which modified our exposure to interest rate risk by effectively converting $100.0 million of floating-rate borrowings under our Term Loan Facility to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. The interest rate swap and floor had an effective date of December 31, 2015 and through December 31, 2018. The contract expired and was fully settled on December 31, 2018.

The interest rate swap and floor contractswerenot designated as effective hedges for accounting purposes. Accordingly, we marked to market the interest rate swap and floor quarterly with the unrealized gain or loss recognized in unrealized net loss on interest swap and floor in our consolidated statements of lossand comprehensive loss, and the net liability included in accounts payable and other current liabilities and other noncurrent liabilities in the consolidated balance sheets.

For the years ended December 31, 2020 and 2019, we recorded no realized or unrealized gains or losses on our former interest rate swap and floor agreement. For the year ended December 31, 2018 we recorded a realized net loss of $0.5 million and an unrealized gain of $0.8 million on our interest rate swap and floor agreement in the consolidated statement of lossand comprehensive loss. The impact of the gains and losses on the interest rate swap and floor agreement is recorded in interest expense. The interest rate swap and floor contracts have been designated as Level 2 financial instruments. Due to the expiration and full settlement of the interest rate swap and floor contracts in 2018, there is no liability outstanding at December 31, 2020 and 2019.

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 October 28, 2016, Emerald X, Inc., formerly known as Emerald Events Holding, Inc., entered into a third amendment to our then-existing senior secured credit facilities to (i) borrow an additional $200.0 million of term loans under the term loan facility to fund the redemption of $200.0 million in aggregate principal amount of the Company’s 9.000% Senior Notes and (ii) increase commitments under the revolving credit facility by $10.0 million to a total of $100.0 million. On May 8, 2017, using the net proceeds to us from the IPO, we prepaid $159.2 million of borrowings outstanding under the then-existing term loan facility.

On May 22, 2017, Emerald X, Inc. amended and restated our then-existing senior secured credit facilities; the Amended and Restated Senior Secured Credit Facilities now consist of (i) the Amended and Restated Term Loan Facility, 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 (ii) the Amended and Restated Revolving Credit Facility, a $150.0 million senior secured revolving credit facility, scheduled to mature on May 23, 2022 (the “Amended and Restated Revolving Credit Facility” and, together with the Amended and Restated Term Loan Facility, the “Amended and Restated Senior Secured Credit Facilities”). On November 27, 2017, Emerald X, Inc. entered into the Refinancing Agreement and First Amendment to our Amended and Restated Credit Facilities to reduce the interest rate applicable to term loans under the Amended and Restated Term Loan Facility by 0.25% and on November 29, 2017, Emerald X, Inc. entered into the Repricing Agreement and Second Amendment to Amended and Restated Credit Agreement to reduce the interest rate applicable to revolving loans under the Amended and Restated Revolving Credit Agreement by 0.25%.

Following the November 2017 repricing, loans under the Amended and Restated Senior Secured Credit Facilities bear interest at a rate equal to, at Emerald X, Inc.’s option, either:

The Amended and Restated Senior Secured Credit Facilities also include an uncommitted incremental facility which, subject to certain conditions, provides for additional term loans in the sum of:

The Amended and Restated Revolving Credit Facility is subject to payment of a commitment fee of 0.50% per annum, calculated on the unused portion of the facility, which may be reduced to 0.375% upon achievement of a Total First Lien Net Leverage Ratio of 3.50 to 1.00. Upon the issuance of letters of credit under the Amended and Restated Senior Secured Credit Facilities, Emerald X, Inc. 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 LIBOR) for the Amended and Restated Revolving Credit Facility.

The Amended and Restated Term Loan Facility requires scheduled quarterly payments, each equal to 0.25% of the original principal amount of the loans made under the Amended and Restated Term Loan Facility on May 22, 2017.

The Amended and Restated Senior Secured Credit Facilities requires certain mandatory prepayments of outstanding loans under the Amended and Restated Term Loan Facility, subject to certain exceptions, based on (i) a percentage of net cash proceeds of certain asset sales and casualty and condemnation events in excess of certain thresholds (subject to certain reinvestment rights), (ii) net cash proceeds of any issuance of debt, excluding permitted debt issuances and (iii) a percentage of Excess Cash Flow (as defined in the Amended and Restated Senior Secured Credit Facilities) in excess of certain thresholds during a fiscal year.

Subject to certain customary exceptions and limitations, all obligations under the Amended and Restated Senior Secured Credit Facilities are guaranteed by Expo Event Midco, Inc. (“EEM”) and all of Emerald X, Inc.’s direct and indirect wholly-owned domestic subsidiaries, and such obligations and the related guarantees are secured by a perfected first priority security interest in substantially all tangible and intangible assets owned by Emerald X, Inc. 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.

In addition, the Amended and Restated Revolving Credit Facility contains a financial maintenance covenant (the “Financial Covenant”) requiringEmerald X, Inc.to comply with a 5.50 to 1.00 Total First Lien Net Leverage Ratio, which is defined as the ratio of Consolidated Total Debt (as defined in the Amended and Restated Senior Secured Credit Facilities) secured on a first lien basis, net of unrestricted cash and cash equivalents (“Total First Lien Net Debt”) to Acquisition Adjusted EBITDA. This financial covenant is tested quarterly only if the aggregate amount of revolving loans, swingline loans and letters of credit outstanding under the Amended and Restated Revolving Credit Facility (net of up to $10.0 million of outstanding letters of credit) exceeds 35% of the total commitments thereunder.We were not required to test the Financial Covenant at December 31, 2020.

Events of default under the Amended and Restated Senior Secured Credit Facilities include, among others, nonpayment of principal when due; nonpayment of interest, fees or other amounts; cross-defaults; covenant defaults; material inaccuracy of representations and warranties; certain bankruptcy and insolvency events; material unsatisfied or unstayed judgments; certain ERISA events; change of control; or actual or asserted invalidity of any guarantee or security document.

As of December 31, 2020, we were in compliance with the terms of the Amended and Restated Senior Secured Credit Facilities.

Modifications to our Debt Agreements

We may, from time to time, repurchase or otherwise retire or extend our debt and/or take other steps to reduce our debt, lower our interest payments or otherwise improve our financial position. These actions may include open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and/or opportunistic refinancing, amendment or repricing of debt. The amount of debt that may be repurchased or otherwise retired or refinanced, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations. Our affiliates may also purchase our debt from time to time, through open market purchases or other transactions. In such cases, our debt may not be retired, in which case we would continue to pay interest in accordance with the terms of the debt, and we would continue to reflect the debt as outstanding in our consolidated balance sheets.

Contractual Obligations and Commercial Commitments

The table below summarizes our contractual obligations as of December 31, 2020.

Payments Due By Period

Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years

(dollars in millions)

Short-term debt obligations(3) — — — — —

Interest on long-term debt obligations(5) 47.0 14.0 33.0 — —

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the appropriate application of certain accounting policies, some of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements. Since future events and their impact cannot be determined with absolute certainty, the actual results will inevitably differ from our estimates.

We believe the application of our accounting policies, and the estimates inherently required therein, are reasonable. Our accounting policies and estimates are reevaluated on an ongoing basis and adjustments are made when facts and circumstances dictate a change.

The policies and estimates discussed below involve the selection or application of alternative accounting policies that are material to our consolidated financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations.

Our accounting policies are more fully described in Note 1, Description of Business, Basis of Presentation and Significant Accounting Policies, in the notes to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Management has discussed the selection of these critical accounting policies and estimates with members of our board of directors.

We have certain accounting policies that require more significant management judgment and estimates than others. These include our accounting policies with respect to revenue recognition, goodwill and indefinite-lived intangibles, definite-lived intangibles, share-based compensation and accounting for income taxes, which are more fully described below.

Revenue Recognition, Deferred Revenue and Allowance for Credit Losses

Trade Shows and Other Events Revenue

A significant portion of our annual revenue is generated from the production of trade shows and conference events, including booth space sales, registration fees and sponsorship fees. We recognize revenue in the period the trade show or conference occurs. The ongoing COVID-19 pandemic and its consequences forced us to cancel a significant portion of our in-person events beginning in March 2020 through the end of the year and the first half of 2021. As a result, 75% of our revenue for the year ended December 31, 2020 was generated through live events 4% from virtual events and 21% from non-virtual event other marketing services. Trade show and other event revenues represented approximately 79%, 92% and 93% of total revenues for the years ended December 31, 2020, 2019 and 2018, respectively. 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 and deferred until the event takes place and all promised services have been provided and performance obligations are met. Similarly, attendees register and are typically qualified for attendance prior to the show staging. Attendee registration revenues are also collected prior to the show and deferred until the show stages. Revenue is recognized when our customer receives the benefit of the promised services and all performance obligations are met. Revenue is recognized at an amount that reflects the consideration we expect to receive in exchange for those services. Customers receive the benefit of our services over the course of each trade show or other event for our trade shows and conference events. We recognized $101.2 million, $331.1 million and $353.8 million of trade show and other event revenue on a consolidated basis for the years ended December 31, 2020, 2019 and 2018, respectively.

Because we collect our booth space, sponsorship and attendee registration revenue prior to the trade show staging, we do not incur substantial bad debt expense with relation to these revenue streams. Any trade show related receivables outstanding 60 days following the month in which a trade show stages are fully reserved for in the allowance for doubtful accounts for periods before 2020 and allowance for credit losses in 2020. Bad debt expense is recognized in the consolidated statements of loss and comprehensive loss as selling, general and administrative expense. Accounts receivable are presented on the face of the consolidated balance sheet, net of an allowance for doubtful accounts for periods before 2020 and allowance for credit losses in 2020.

Other Marketing Services Revenue

The remaining portion of our revenues primarily consist of advertising sales for industry publicationsand digital products, which are recognized in the period in which the publications are issuedor digital products are provided. Typically, the fees we charge are collected after the publications are issued. We recognized $26.2 million, $30.2 million and $26.9 million of other marketing services revenue for the years ended December 31, 2020, 2019 and 2018, respectively.

Deferred Revenue

Our deferred revenues generally consist of booth space sales, registration fees and sponsorship fees that are invoiced prior to the trade show or other event. Total deferred revenues, including the current and non-current portions, were $48.6 million and $187.3 million, as of December 31, 2020 and 2019, respectively. As a result of the measures to prevent the spread of COVID-19, we have experienced an unprecedented low level of booth space sales, registration fees and sponsorship fees and the associated cash received for future trade shows. In addition, we cancelled all but one of the trade shows and other events which had been scheduled to stage in the second half of March 2020 through December 2020, as well as, cancelled or postponed several trade shows and other events in the first half of 2021, which led to a significant decrease in deferred revenues.

Segment information

Operating segments are components of an enterprise for which discrete financial reporting information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. We routinely evaluate whether our operating segments continue to reflect the way the CODM evaluates the business. The determination is based on: (1) how our CODM evaluates the performance of the business, including resource allocation decisions, and (2) whether discrete financial information for each operating segment is available. We consider our Chief Executive Officer to be our CODM. Due to the appointment of a new Chief Executive Officer and subsequent changes to the internal structure of Emerald’s operations and executive management responsibilities during the fourth quarter of 2019, we identified a change in operating and reportable segments. The CODM evaluates performance based on the results of six executive brand portfolios, which represent six operating segments. Due to economic similarities and the nature of services, fulfillment processes of those services and types of customers, four of these operating segments are aggregated into two reportable segments, the Commerce and the Design and Technology reportable segments. Three operating segments do not meet the quantitative thresholds of a reportable segment and did not meet the aggregation criteria set forth in ASC 280, Segment Reporting, as of December 31, 2020 and as such are referred to as “All Other.” Refer to Note 18, Segment Information, in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our reportable segments.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the assets acquired and liabilities assumed resulting from acquisitions. Goodwill is not amortized but instead tested for impairment at least annually or more frequently should an event or circumstances indicate that a reduction in fair value of the reporting unit may have occurred. We test for impairment on October 31 of each year, or more frequently if events and circumstances warrant. Such events and circumstances may be a significant change in our business climate, economic and industry trends, legal factors, negative operating performance indicators, significant competition or changes in strategy. Given a change in operating segments occurred in the fourth quarter of 2019, we determined there were multiple reporting units as of October 31, 2019. We perform our goodwill impairment test at the reporting unit level, using a fair value method based on management’s judgments and assumptions or third party valuations. The fair value of a reporting unit refers to the price that would be expected to be received to sell the reporting unit in an orderly transaction between market participants at the measurement date. See Note 18, Segment Information, 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 our reportable segments.

In testing goodwill for impairment, we first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then additional impairment

testing is not required. If the carrying amount of goodwill exceeds the fair value, an impairment loss is recognized in an amount equal to the excess of the carrying amount over the fair value of the reporting unit. We would also be required to reduce the carrying amounts of the related assets on our balance sheet.

Determining the fair value of a reporting unit requires the application of judgment and involves the use of significant estimates and assumptions including, projections of future cash flows, revenue growth rates, weighted average cost of capital, forecasting future sales and expenses, selecting appropriate discount rates and other factors which can be affected by changes in business climate, economic conditions, the competitive environment and other factors. We base these fair value estimates on assumptions our management believes to be reasonable but which are unpredictable and inherently uncertain. A change in underlying assumptions would cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future. Additionally, if actual results are not consistent with the estimates and assumptions or if there are significant changes to our planned strategy, it may cause fair value to be less than the carrying amounts and result in additional impairments of goodwill in the future. We corroborate the reasonableness of the total fair value of the reporting unit with our market capitalization. Our market capitalization is calculated using the number of shares outstanding and stock price of our publicly traded shares. In the event of a goodwill impairment, we would be required to record an impairment, which would impact earnings and reduce the carrying amounts of goodwill on the consolidated balance sheet.

We also consider the amount of headroom for our reporting units when determining whether an impairment existed. Headroom is the difference between the fair value of a reporting unit and its carrying value. In performing our annual impairment analysis as of October 31, 2020, the fair values of the reporting units which were not impaired exceeded their carrying values by amounts ranging from zero to 150%. Of the $408.8 million of goodwill, the carrying value equals the fair value for $62.7 million as of October 31, 2020. Thefair values of the respective reporting units were determined primarily by discounting estimated future cash flows, which were determined based on revenue and expense growth assumptions ranging from negative growth of 20.0% to growth of 5.0%, at a weighted average cost of capital (discount rate) ranging from 12.9% to 14.5%.

Accordingly, a relatively small change in the underlying assumptions, including if the financial performance of the reporting unit does not meet expectations in future years or a decline occurs in the market price of our publicly traded stock, may cause a change in the results of the impairment assessment in future periods and, as such, could result in an impairment of goodwill, for which the carrying amount is $408.8 million as of December 31, 2020. The aggregate remaining goodwill carrying value of reporting units with impairment was $408.8 million as of December 31, 2020.

Indefinite-Lived Intangible Assets

The annual evaluation for impairment of indefinite-lived intangible assets is a two-step process. The first step is to perform a qualitative impairment assessment. If this qualitative assessment indicates that, more likely than not, the indefinite lived intangible assets are not impaired, then no further testing is performed. If the qualitative assessment indicates that, more likely than not, the indefinite lived intangible assets are impaired, then the fair value of the indefinite lived intangible assets must be calculated. If the carrying value exceeds the fair value, an impairment loss is recorded for that excess.

Indefinite-lived intangible assets are not amortized but instead tested for impairment at least annually or more frequently should an event or circumstances indicate that a reduction in fair value may have occurred. We test for impairment on October 31 of each year, or more frequently if events and circumstances warrant. Such events and circumstances may be a significant change in our business climate, economic and industry trends, legal factors, negative operating performance indicators, significant competition or changes in strategy. We perform testing of indefinite-lived intangible assets, other than goodwill, at the asset group level using the relief from royalty method. If the carrying value exceeds the fair value, an impairment loss is recorded for that excess.We would also be required to reduce the carrying amounts of the related assets on our balance sheet.

See Note 6, Intangible Assets and Goodwill, in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to goodwill and indefinite-lived intangible assets.

Definite-Lived Intangible Assets

Definite-lived intangible assets consist of certain trade names, acquired technology, customer relationships and other amortized intangible assets. The definite-lived assets are being amortized over their estimated useful lives. Intangible assets with finite lives are stated at cost, less accumulated amortization and impairment losses, if any. These intangible assets are amortized on a straight-line basis over the following estimated useful lives, which are reviewed each reporting period:

Estimated Useful Life Weighted Average

Customer relationship intangibles 7-10 years 9 years

Definite-lived trade names 10-30 years 24 years

Acquired technology 7 years 7 years

Computer software 3-7 years 5 years

With respect to business acquisitions, the fair values of acquired definite-lived intangibles are estimated using a relief from royalty method. Input assumptions regarding future cash flows, growth rates, discount rates and tax rates used in developing the present value of future cash flow projections are the basis of the fair value calculations.

Impairment of Long-Lived Assets

We review long-lived assets, including tangible assets and other intangible assets with definitive lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We conduct our long-lived asset impairment analysis by grouping assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset group is recoverable, an impairment is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on the discounted cash flow analysis. If the carrying amount of an intangible asset exceeds its fair value, we recognize an impairment loss in an amount equal to that excess.We would also be required to reduce the carrying amounts of the related assets on our balance sheet.

Stock-Based Compensation

Weuse share-based compensation, including stock options and restricted stock units, to provide long-term performance incentives for our employees and non-employee directors. We calculate stock-based compensation expense for each vesting tranche of stock options using the Black-Scholes option pricing model and recognize such costs, net of forfeitures, within the consolidated statements of lossand comprehensive loss; however, no expense is recognized for awards that do not ultimately vest. The determination of the grant date fair value of stock options using an option-pricing model is affected by a number of assumptions, such as the fair value of the underlying stock, our expected stock price volatility over the expected term of the options, stock option forfeiture behaviors, risk-free interest rates and expected dividends, which we estimated as follows:

See Note 12, Stock-Based Compensation, in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to stock-based compensation.

Income Taxes

We provide for income taxes utilizing the asset and liability method of accounting. Under this method, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. If it is determined that it is more likely than not that future tax benefits associated with a deferred tax asset will not be realized, a valuation allowance is provided. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in the consolidated statements of loss and comprehensive loss as an adjustment to income tax expense in the period that includes the enactment date.

We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. See Note 15, Income Taxes, in the notes to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the potential loss arising from adverse changes in market rates and prices. Our primary exposure to market risk is interest rate risk associated with our Amended and Restated Senior Secured Credit Facilities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Long-Term Debt—Amended and Restated Senior Secured Credit Facilities” for further description of our Amended and Restated Senior Secured Credit Facilities. As of December 31, 2020, we had $525.2 million of variable rate borrowings outstanding under our Amended and Restated Senior Secured Credit Facilities and no variable rate borrowings outstanding under our Amended and Restated Revolving Credit Facility with respect to which we are exposed to interest rate risk. Holding other variables constant and assuming no interest rate hedging, a 0.25% increase in the average interest rate on our variable rate indebtedness would have resulted in a $1.3 million increase in annual interest expense based on the amount of borrowings outstanding as of December 31, 2020.

In March 2014, we entered into forward interest rate swap and floor contracts with the Royal Bank of Canada, which modify our exposure to interest rate risk by effectively converting $100.0 million of floating-rate borrowings under our Term Loan Facility to a fixed rate basis, thus reducing the impact of interest-rate changes on future interest expense, which expired on December 31, 2018. The swap agreement involved the receipt of floating rate amounts at three-month LIBOR in exchange for fixed rate interest payments at 2.705% over the life of the agreement without an exchange of the underlying principal amount of $100.0 million. In the event that the three-month LIBOR rate dropped below 1.25%, the interest rate floor contract required us to make variable payments based on an underlying principal amount of $100.0 million and the differential between the three-month LIBOR rate and 1.25%. The interest rate swap and floor had an effective date of December 31, 2015 and was settled on the last business day of each month of March, June, September and December, beginning March 31, 2016 through December 31, 2018. We have not entered into a new forward interest rate swap and floor contract to hedge any portion of our Amended and Restated Senior Secured Credit Facilities subsequent to expiration on December 31, 2018.

Our former interest rate swap and floor contracts were not designated as effective hedges for accounting purposes. Accordingly, during the year ended December 31, 2018 we marked to market the interest rate swap and floor quarterly with the unrealized and realized gain or loss recognized in interest expense, in the consolidated statements of loss and comprehensive loss and the net liability was included in other current liabilities and other noncurrent liabilities in the consolidated balance sheets.

For the years ended December 31, 2020 and 2019 we recorded no unrealized or realized gains or losses on our former interest rate swap and floor agreement. For the year ended December 31, 2018 we recorded an unrealized gain of $0.8 million and a realized net loss of $0.5 million on our interest rate swap and floor agreement in the consolidated statement of loss and comprehensive loss. The impact of the gains and losses on the interest rate swap and floor agreement were recorded in interest expense. The interest rate swap and floor contracts were designated as Level 2 financial instruments. At December 31, 2020 and 2019 the liability related to the swap and floor financial instruments was zero.

Inflation rates may impact the financial statements and operating results in several areas. Inflation influences interest rates, which in turn impact the fair value of our investments and yields on new investments. Operating expenses, including payrolls, are impacted to a certain degree by the inflation rate. We do not believe that inflation has had a material effect on our results of operations for the periods presented.

Item 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm 75

Consolidated Balance Sheets as of December 31, 2020 and 2019 76

Notes to Consolidated Financial Statements 80

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Emerald Holding, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Emerald Holding, Inc. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of loss and comprehensive loss, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 8 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Irvine, California

February 23, 2021

We have served as the Company's auditor since 2015.

Emerald Holding, Inc.

Consolidated Balance Sheets

December 31, 2020 and 2019

(dollars in millions, share data in thousands, except par value) 2020 2019

Assets

Current assets

Cash and cash equivalents $ 295.3 $ 9.6

Insurance receivables 17.8 —

Noncurrent assets

Property and equipment, net 3.9 4.2

Right-of-use lease assets 16.0 18.3

Other noncurrent assets 2.9 1.4

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable and other current liabilities $ 31.1 $ 22.2

Cancelled event liabilities 25.9 —

Revolving credit facility — 10.0

Right-of-use lease liabilities, current portion 4.3 4.1

Term loan, current portion 5.7 5.7

Noncurrent liabilities

Term loan, net of discount and deferred financing fees 515.3 519.7

Deferred tax liabilities, net 1.9 60.0

Right-of-use lease liabilities, noncurrent portion 13.4 15.7

Other noncurrent liabilities 13.7 6.8

Commitments and contingencies (Note 16)

Stockholders’ equity

Accumulated deficit (695.2 ) (61.6 )

Total liabilities and stockholders’ equity $ 1,054.4 $ 1,471.7

The accompanying notes are an integral part of these consolidated financial statements.

Emerald Holding, Inc.

Consolidated Statements of Loss and Comprehensive Loss

Years Ended December 31, 2020, 2019 and 2018

Selling, general and administrative expense 118.6 133.4 121.8

Depreciation and amortization expense 48.6 52.0 46.8

Benefit from income taxes (57.6 ) (5.0 ) (8.3 )

Net loss and comprehensive loss (633.6 ) (50.0 ) (25.1 )

Accretion on 7% Series A Convertible Participating Preferred stock (14.1 ) — —

Basic loss per share $ (9.07 ) $ (0.70 ) $ (0.34 )

Diluted loss per share $ (9.07 ) $ (0.70 ) $ (0.34 )

The accompanying notes are an integral part of these consolidated financial statements.

Emerald Holding, Inc.

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 2020, 2019 and 2018

Stock-based compensation — — 13 — 6.1 — 6.1

Dividends on common stock — — — — — (21.0 ) (21.0 )

Issuance of common stock under equity plans — — 601 — 6.5 — 6.5

Repurchase of common stock — — (1,627 ) — — (19.4 ) (19.4 )

Net loss and comprehensive loss — — — — — (25.1 ) (25.1 )

EEX US Equity

EEX · 10-K · period ended 2020-12-31

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data.

EEX US Equity☆

EEX · 10-K · period ended 2020-12-31

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data.

EEX US Equity