EEX - NYSE

[Operator Instructions] And we have a question from Allen Klee [ph]. Your line is open.

This is Derek Greenberg on for Allen. My first question is if you could just provide a little more color maybe on the level of presenters and sponsors compared to pre-pandemic maybe on a percentage basis, and if you see potentially further recovery there.

Well, I think the best way to look at it is probably net square feet at our events because we generate the bulk of our revenue from exhibitors at the events as opposed to sponsors and speakers. And while revenues overall are tracking 70% to 75% of pre-pandemic, because of price increases, NSF is tracking more like 65%-ish or two-thirds to pre-pandemic. So what that means is there's actually a significant amount of incremental leverage to the recovery for us versus just looking at revenues relative to pre-pandemic.

Okay, great. And I was also wondering, with your recent acquisitions of Ad Week and Bulletin, maybe if you could just provide some color on the annualized financial impact you expect from those?

We haven't, at this time, disclosed the impact of that. The -- I think as we go into 2023 and present the formal full year guidance for 2023, we will give more color on the pro forma impact of the acquisition.

Okay, great. With your non-trade show segments compared to trade shows, how do you see the margins at scale between the two?

The trade show business is a really powerful financial model. And historically, as we run EBITDA margins of 35% to 45% at Emerald, depending on the year, we expect that the incremental offerings that we've added over time will be equivalent margins to the trade show margins, though the higher end of that historical margin range we don't think is reasonable because we prefer to optimize margin versus growth. And we invest in the business, in new launches, for example, that in year 1 and year 2 don't really make money or lose money. So -- but it's key to building long-term value for the business and for our shareholders. So we think we could operate 35% to 40% margins in time. We need to build back towards that, of course, given the pandemic impact on the business. And the other offerings we have should be equivalent to that.

Okay. That's very helpful. And then if you could maybe just discuss some of the actions you're taking to grow organic growth rates by 1% to 2% a year?

Well, I want to clarify, we expect to grow organic growth mid single digits or better as we normalize once we recover fully from the pandemic. Obviously, as you can see, we are growing at a much faster rate this year, and we would expect to grow at a much faster rate next year. The 1% to 2% is just for new event launches. And the other components of organic growth will be driven by the other initiatives that we talked about in customer centricity and driving retention and value-based pricing, which gives us leverage on both of our events, in addition to net square footage and on the 365 engagement strategy, which is providing other means to provide value to our customers and thus monetize for Emerald.

Okay. Thanks for clarifying that. I just have two more. The first is related to just the M&A environment, maybe some areas you would look to add potential accretive acquisitions to. And maybe just how you view valuations in the financial criteria you apply. And then maybe just how you integrate those acquisitions once the deal is done.

Okay, great. Thanks for the color. And I think just my last question is what you plan to use your proceeds from cash on hand. And maybe the insurance reimbursements, how they [indiscernible]?

Sure. As we indicated in the script, there are four areas that we balance in use of proceeds and with the, frankly, the strong cash that we expect to generate from the business. Well, surely, given the current environment, looking at our debt levels and whether debt reduction makes sense, we have a share buyback program that we've been active with. And given the trading liquidity of our stock, it is hard to buy a lot on that front, but it's really an arrow in our quiver. We are looking at acquisitions, for sure, in terms of the business, as we said about. And we are looking at organic investments into the business, in areas like Xcelerator, that might be a use of capital in the short-term, but creator of the value. And we literally, as we said before, yes, we are paying mid to high single digits for assets to acquire. But if we can successfully build those businesses ourselves. We can build it at 1x or 2x the EBITDA that will deliver in the last 3, 4 years from now, which is a great return for our shareholders and surely would be really attractive if we can find more opportunities to do that. And so we've definitely allocated, and we will continue to allocate some capital to that.