Good afternoon, ladies and gentlemen, and welcome to the Emerald First Quarter 2020 Earnings Conference Call. During today's call, all parties will be in a listen-only mode. Following the prepared remarks, the conference will be opened for questions with instructions to follow at that time. As a reminder, this conference is being recorded.

I would now like to turn the conference over to Mr. David Doft, Chief Financial Officer. Please go ahead, sir..

Thank you, operator, and good afternoon, everyone. We appreciate your participation today in our first quarter 2020 earnings call. I'm very pleased to have Brian Field, Emerald's Interim President and Chief Executive Officer with me here today.

As a reminder, a replay of this call will be available on the Investors section of the company's website through 11:59 P.M. Eastern time on May 18, 2020. Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the applicable securities laws.

These include remarks about future expectations, beliefs, estimates, plans and prospects. Such statements are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements.

Such risks and other factors are set forth in the company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. We do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance.

The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release. Now, I'll turn the call over to Brian..

Thank you, David and good afternoon, everyone.

On today's call, I will review the steps that we've taken to ensure the health and safety of our employees and customers as COVID-19 has quickly spread across the country, as well as the actions that we are taking to ensure that we have the liquidity and resources necessary to manage through an extended downturn.

I will then briefly review our first quarter results before turning the call back to David, who will discuss our financials in more detail. We will then open the call to your questions. Before we begin, I would like to extend my deepest condolences to Sally Shankland's family, as Sally passed away on April 20.

Sally had been a mentor to me for many years, and was a great leader, colleague and friend. With relentless energy, curiosity, intelligence and empathy, she was a positive influence on many, her absence will be keenly felt.

Turning to today's announcement, I would like to start by thanking our employees for their tireless work and dedication during such a challenging time. The rapid spread of COVID-19 has had a severe and negative impact on our ability to deliver large in person experiences, including cancellations and substantial changes to our show calendar.

Our team has been working with our customers and partners to determine if and how best to reschedule our shows in the second half of the year, should conditions permit.

This has been a tremendous undertaking to accomplish in a very short period of time, and I'm deeply appreciative of our employees agility and focus as they have steadfastly supported our customer's needs. Through April, we have postponed 14 events to the second half of 2020, which equates to approximately $12 million of 2019 revenue.

In total, we now have 82 events scheduled from July through December, which in 2019, delivered total revenues of $124 million.

We have also made the decision to cancel 29 events, including the March Edition of ASD, JA New York Spring, Couture, Retail X, an outdoor retailer summer market, which in total accounted for approximately $118 million of 2019 revenue.

While these have been difficult decisions, we are very encouraged by the strong support that we have received from our customer communities, which demonstrates the importance of our shows to their respective markets.

Our customers consistently tell us how eager they are to get back to business, which is a strong indication that the demand for our marketplaces remains intact and should recover overtime. The commentary from our customers is not just anecdotal.

We have done some very recent survey work which bolsters our positive view on the long-term prospects for the tradeshow business.

The feedback we have received tells us the following; first, trade shows are a significant component of marketing spend for exhibitors, and most exhibitors have either increased or maintained their spend on trade shows over recent years.

Second, while exhibitors are suggesting a decrease in trade show related spend in the interim period, which is not surprising, they nonetheless continue to view trade shows as a key component of their marketing mix strategy post COVID-19 and expect to return to pre-COVID spending levels once the health situation has resolved.

Third, many exhibitors are eager to return to trade shows as soon as possible and practical.

While most exhibitors still see value of exhibiting at trade shows with reduced sizes, they are likely to prioritize larger industry shows such as those produced by Emerald as tightening budgets lead exhibitors to cut their participation in regional and smaller shows first.

And finally, four, exhibitors have stayed connected with customers during this time, primarily through virtual mediums, emails, webinars, digital products, etcetera.

But many recognize that these formats cannot replicate the value of face-to-face interactions in the long-term, especially as the building of new relationships or discovering new products requires the in-person interactions that trade shows bring.

Inherently, digital tools are limited given the lack of personal contact, the challenges in highlighting product quality, and the difficulty in gathering potential buyers. Next, I want to highlight our insurance coverage. As we have discussed on prior calls, Emerald maintains event cancellation insurance.

This policy provides coverage for the gross revenues, less avoided costs plus certain costs relating to the taking of remedial action for each of the company's individual events and conferences occurring within a calendar year.

This event cancellation insurance covers up to an aggregate limit of $191 million per year for each of 2020 and 2021, if losses arise for reasons within the scope of Emerald's policy. The coverage has no deductible and covers the cancellation, postponement and movement of an event, as well as [indiscernible] reduced attendance.

Importantly, our coverage expressly includes losses, resulting from the outbreak of communicable diseases.

While there is no assurance that the insurance carriers will agree that all of Emerald's claims are covered under the policy, we believe that all shows that have been canceled or postponed due to COVID-19 to-date should qualify as covered losses with respect to this event cancellation insurance.

Since the middle of March, our team has been assembling our insurance claims for each of our cancelled shows. This is an in-depth process that includes a variety of information, including our budget for the events, costs incurred and costs avoided.

Thus far, we have submitted $66 million of claims and expect to submit further claims representing an estimated $20 million to $30 million of losses over the coming weeks. These claims, if successful, would cover the loss-profit contribution that was expected for the impacted events.

We will remain transparent and plan to update the investment community as our claims are processed.

It is important to point out that while our policy covers 50% of our total portfolio revenues, we also have the ability to mitigate expenses, sometimes avoiding them altogether; for canceled events when there is adequate lead time to an event scheduled staging.

Examples of such avoidable expenses include freelance event personnel, general contractor expenses associated with the physical event space, along with food and beverage cost, to name just a few. As a result, when we submit a claim, we reflect all costs that have been mitigated.

This reduces the amounts we request as part of our claim, thus preserving our insurance dollars while maintaining our margin and cash flow from each event.

Though the economic environments in tradeshow industry remains very uncertain, we feel fortunate, both to have made the decision to purchase communicable disease coverage as part of our event cancellation insurance policy last year, and also that this coverage is bound and in effect through the end of 2021.

We expect this coverage will provide Emerald with critical cash flow until the environment begins to return to normal. Ahead of the COVID-19 outbreak this quarter, we successfully staged all of our events through early March, and they performed in line or better than our expectations.

This was largely driven by the new upfront rigor and data-led decision-making around our events. As we've noted in earlier calls, we have implemented event plans that have standardized our strategic planning around our markets, along with supporting marketing and sales strategy and tactics for each of our events across Emerald's entire portfolio.

Coupled with our enhanced customer research capabilities, we saw strong performance in customer sentiment in our Q1 shows that took place.

One particular call up here was the exhibitor feedback from our Surf Expo event in January, which given the prior summer's cancellation due to Hurricane Dorian, was particularly satisfying and validated our enhanced customer-centric approach.

Given the spread of the COVID-19 pandemic and it's impact on our business, we have maintained critical focus on our internal transformation initiatives to deliver our events in a more efficient way.

We have earlier outlined how we are integrating our customer data, enriching customer profiles with behavioral touch points and through intelligent automation creating more relevant and personalized experiences. This will allow us for the first time to effectively cross-sell across our brands, as well as at the enterprise level.

We believe this can be a meaningful driver of incremental revenue in coming years. We have maintained our investments in this important strategic growth initiative, and are on-schedule for rollout in the second half of this year. While we work to streamline our operations, we are also accelerating our digital product offerings during this pandemic.

These digital offerings provide value to our customers through education, networking and connecting our buying and selling customers; this in turn will strengthen our customer relationships by delivering valuable content and services.

These digital products are also driving new customers to us, which we will be able to nurture and we'll look to extend into our live events as they return. Of note, we have already grown net new customers by 15% over the same period last year through these initiatives and at a fraction of the cost per lead.

Some of these products include webinars, podcasts, ease-ins [ph], and paid research. We are also spending time refining our strategic priorities and innovating additional new revenue streams, which we look forward to updating you on in the future.

It is important to point out that these digital initiatives in no way suggest a change in our view or confidence in the viability and long-term outlook for the event industry. These are merely accelerations of our previously articulated strategy to provide year-round customer value and create new revenue streams.

We have been reviewing our operations and cost structure even before the outbreak of COVID-19 as part of our strategy to improve Emerald's execution, and have accelerated a variety of measures to reduce our cash burn, improve our financial flexibility, and successfully navigate the current environments while meeting all financial obligations.

David will go into more detail on our cost structure and the expense savings initiatives that we are implementing in a moment.

Before I hand off, I want to reaffirm our focus and commitment to the health and safety of our staff and our customers during this time, and also our resolve to listen to and understand the needs of our customer communities, to play a key role for them today and demonstrate valuable long-term partnership as we support the return to growth tomorrow.

There is nothing we have heard or seen from our customers to change our view of the viability of and need for our events in the marketplace. In our view, the only question is when we will be able to safely stage them again, as the safety and wellbeing of our employees, customers and communities is our top priority.

Now, let me turn the call over to David..

Thank you, Brian and good afternoon. During the first quarter, revenues decreased by $37.7 million or 27.4% as compared to the first quarter of 2019. The decrease primarily reflected a $34.3 million reduction from the cancellation of seven first quarter events due to the COVID-19 crisis.

Most notable among these cancellations are ASD March, the International Pizza Expo and JA Spring. In addition, $3.6 million of the first quarter declining was due to the postponement of two first quarter 2020 events to the second half of the year.

Our first quarter results were also negatively impacted by $2.3 million as a result of discontinued loss-making print publications and events. Lastly, the G3 Communications acquisition was closed in the fourth quarter of 2019 contributed $3.9 million of revenues in the first quarter of 2020.

Organic revenues for the first quarter declined $2.6 million or 2.6% as compared to the prior year first quarter. Our adjusted EBITDA for the first quarter was $23.6 million as compared to $57.5 million in the same period last year, adjusted for show scheduling differences including the show postponements due to COVID-19.

The decrease in adjusted EBITDA was $33.9 million which was evenly related to the cancellation of seven first quarter events, representing prior year profit contribution of $27.5 million, as well as the acceleration of approximately $2 million of previously deferred [ph] expenses related to second quarter events, which was forced to cancel due to the COVID-19 crisis.

Our first quarter 2020 adjusted EBITDA also reflected the combined effect of the postponed events, lower organic revenues, incremental investments in events that took place in the quarter, and increased marketing costs. Next, impairment charges.

In the first quarter, we booked a $554 million non-cash goodwill impairment charge, and $59.4 million non-cash charge related to certain intangible assets in the first quarter in connection with a triggering event caused by the impact of the COVID-19 crisis on the travel and events industry; the company's forecasted results and it's market value.

Free cash flow for the first quarter was $7.7 million as compared to $11.3 million in the year ago our first quarter, and was aided by strong working capital management.

We finished the quarter with net debt of $549.5 million, representing a net leverage ratio of 4.1 times our TTM consolidated EBITDA of $127.7 million were the terms of our [indiscernible] agreement.

As a reminder, our credit agreement has a sprinting [ph] total net leverage covenant of no more than 5.5 times, which takes in only if borrowings under our credit facility exceed 35% of our revolver capacity of $150 million. At March 31, our borrowing levels were below that threshold, meaning that no covenant was in place.

Additionally, a definition of consolidated EBITDA in the agreement allows for various adjustments, including those for anticipated proceeds of insurance claims under our event cancellation policy, the impact of shifts in our event calendar, the ad backs in certain one-time costs, as well as the run rate savings on restructuring initiatives.

This serves to bolster our TTM consolidated EBITDA calculation in the face of COVID-related cancellations and postponements. As Brian has discussed, we are reviewing our ongoing expense structure to identify opportunities to optimize and further reduce our expenses.

To-date we have made significant progress; our cost structure is made up of the direct costs needed to execute events and the SG&A or overhead needed to run the company and manage our portfolio of assets. Direct costs were largely variable, typically 70%. However, with enough advanced notice almost all direct costs can be avoided.

Today, we avoided over $30 million of direct costs for events that we had to cancel, and we are carefully managing [indiscernible] in order to avoid further costs in these recurrent circumstances. Our overhead is more fixed.

Specifically, we estimated little over 50% of [indiscernible] during the leadership team, IT infrastructure, rent and public company requirements among other things. That said, we have reorganized how we operate in order to reduce the run rate of SG&A by over $15 million through beginning of the year.

This includes approximately 18% of our headcount through combination of staff reductions, reducing open positions and furloughs. We continue to look at areas where we can manage the business more efficiently, while also increasing our investment in growth and diversification initiatives.

We look forward to updating you on our progress in the coming months. One last item, our balance sheet looks a little different this quarter. Given the event cancellations, we have had a significant decline in deferred revenue.

Our business typically has favorable cash flow dynamics, with exhibitors paying for booth space ahead of the production events -- production of our events. When events are cancelled, we must refund those payments. Given the high volume of event cancellation, the amount of pending refunds is substantial.

As a result, we have broken out the refund or cancelled event liability of $72 million on our balance sheet. We believe that the anticipated proceeds of our event cancellation insurance claims will offset the pending refunds.

And when combined with the cost saving moves I just discussed, should provide the company with ample liquidity to manage through the current environment. With that, I'll now turn the call back to Brian..

Thank you, David. While the first quarter was off to a strong start with our events delivering results in line to better than expectations, the global economy and the events industry along with it has encountered severe headwinds as a result of the COVID-19 pandemic.

Our team has done an incredible job rescheduling many of our shows to the second half of the year, accelerating into our digital product offering while nurturing our existing customers and growing new customer relationships. I am very proud of our employees for their efforts in such a challenging environment.

I'm also very confident in our expected insurance coverage, our solid liquidity position, and the future viability of our industry. While there is clearly much uncertainty in the world today, I'm confident that we at Emerald have the financial flexibility to weather this unprecedented time while maintaining our industry leadership.

Thank you, once again for your time today. Operator, please open the call for questions..

Certainly. At this time, we will be conducting a question-and-answer session. [Operator Instructions] The first question is from Seth Webber of RBC Capital Markets. Please go ahead..

Hi, this is Emily McLaughlin on for Seth tonight.

My first question is just in a scenario where the world reopens but people remain vary about traveling; will Emerald still put on the show if it looks like participation levels are going to be significantly lower than prior additions? I guess we assume there'd be some impact to exhibitor ROIs in the event of materially lower attendance; so just wondering how you're thinking about managing that, particularly, as you move towards more sophisticated value-based pricing models?.

Sure. So, it's very much going to be a case of the facts and circumstances as we get closer to a particular show staging, and the amount of customer interest and the viability of the event. I think at this point most customers, as our survey has indicated, aren't expecting that we're going to return overnight to pre-COVID levels of participation.

And in fact, as I mentioned on the call just a moment ago, most of them expect that there'll be less attendance.

That said, the question is really around the value that a particular brand has, the kind of customers both buying and attending, attach the quality of events, the quality of the brands that come together that result in a meaningful connection and transactions essentially, people are really hungry to do business.

And so, while the attendance may come up or down, but a lot of that expectation is to the type of business that can be done.

Secondly, I want to point out that as David mentioned, a lot of our costs are scalable and as we begin to get closer to the anticipated volume of overall participation, we'll be able to scale a lot of those variable costs accordingly so that we're not planning for an event of 100,000 people when we know that far fewer may show up.

So, we're going to try to manage the margin to each one of these shows as they come closer, so that in the end what we're trying to really manage is customer expectation and customer experience because that over the long-term is going to be the thing that is a long-term and endurance aspect to the business..

Okay, that's helpful. And just switching over to the insurance side of things, we understand that the cancellation insurance is bound through 2021; I'm not sure when the discussions take place as you look to roll policies to 2022.

So I just want to get your thoughts and the ability to obtain the same breadth of coverage in the future, ensuring such circumstances as pandemic, any impact on policy pricing, and if any inflation there is something that could materially affect profitability as you look several years ahead?.

Thank you, this is David. The total unknown at this point is the reality. I think that we need to wait and see how the next few months play out and how much impact that it's had on our industry and others to understand yet what the ability onboard or cost of that type of insurance is for 2022 and beyond.

We're very pleased that we're already locked in for 2021 but it's unclear what that's going to look like. If that insurance is still available to us, it will surely cost more but there is no certainty it will be available beyond our current contract..

Okay, thanks very much. That was helpful. I'll pass it on..

[Operator Instructions] The next question is from Ryan Leonard of Barclays. Please go ahead..

Hey, guys. Thanks. I was just wondering if you could try [ph] maybe a little bit more near-term liquidity update; you mentioned the revolver at the end of March but through April.

And I guess what are the assumptions you make in terms of when -- show -- you start hosting shows again that underlie your confidence in liquidity in the near-term?.

Sure. So at the end of the quarter, our net revolver balance was essentially zero, right, we drew down proactively in order to have the cash on the balance sheet.

And while we've used a little bit of cash since quarter-end, it's not meaningfully different at this point in time as we have begun to send some refunds and we'll continue to as we move through the quarter. And then ultimately, our belief is insurance proceeds will come and offset those refunds and replace that cash with the company.

We've run scenarios that have no shows the rest of the year, and shows in 2021 down significantly, and are building scenarios around all of that, of what we would look like, what moves we would make etcetera.

Until while we take -- taking significant amount of costs out of the system already and materially reduced our cash burns, especially when you combine with the suspension of our dividend and the elimination of our share buyback program, there are other moves that we could and will make if necessary, if this looks like it's going to extend well into 2021..

And I guess maybe on that survey, can you give us more information on your cash burn today? What that looks like if events don't come back into the third quarter? And then, just on the insurance piece specifically, you have filed claims before they typically been passed [ph]; I mean, I know these were different times but what is the timeline if this takes a year? If we have to go through legal proceedings, how does that kind of alter some of the math you just gave us?.

Sure. Well, I think we'll start with we don't expect to take a year and our scenarios do not contemplate insurance taking a year, we have already submitted a substantial amount of claims and do not believe that it will drag out like that.

I think when you look at the circumstances going on in the near-term, the events in which our -- the venues in which our events we're supposed to stage in March and then April, they're all closed.

And every single government authority in those work house has made it illegal to have gatherings; sometimes more than five people, sometime more than 10 people, and sometimes little bit more. In our mind, that's pretty clear. And I think, in our view, why would someone pay for this insurance if that did not qualify; I mean that's our view.

Now ultimately, they are total guarantee and there might be different levels that might ultimately be covered but I do surely believe near-term events, we would have a hard time believing you would extend out like that.

If it did, then we'd have to potentially take incremental moves to produce cash further in order to ensure that we can get to that point where that money comes in.

In the short-term, we have taken on the cash burn; as I said, if you look at the direct cost line of our [Technical Difficulty], you should assume on those shows at stadium that that goes to essentially zero.

And while their show is planned to begin in July, we're being very careful about commitments and annual expenses given the uncertainty that those will face. Hopefully, they do but they may not and so we're going to manage that as appropriate.

Ultimately, shows that have not yet staged, that are still in the calendar to be staged; you'll have tens of million dollars of direct costs that we're looking to avoid in order to minimize the cash burn versus what otherwise might have been in a normal year.

And at the same time, our SG&A is down meaningfully, during some of the moves to the short-term, we've been able to reduce Q2 SG&A by 25%-30% type levels; and depending on how the rest of the year plays out, we'd be willing to make moves that similarly reduce the rest of the year..

Got it, thanks..

[Operator Instructions] The next question is from Jeff Meuler of Baird. Please go ahead..

Yes, thank you.

This might be already covered by saying that your insurance covers communicable disease but is there any pandemic exclusion in your policy?.

No, I want to be very clear. We paid extra for a rider that specifically covers pandemic..

Got it, that's helpful. And then, you're kind of breaking up at least for me; can you just run through the expense base again? There were something about over I think 50% of SG&A is fixed or variable; and you gave us something on like direct expenses.

Could you just -- David, just break that down again for us, please? That wasn't coming through clearly to me..

Sure, sorry about that. We're all remote, so I'm doing the best thing on a cell phone. We -- so we basically see, or generally look at our direct costs to put in on an event is about 30% fixed and 70% variable. But that's how you get closer to -- closer and closer to an event.

Ultimately if there are -- if you have visibility well ahead of time around an event not happening or be snore [ph], even at 30% calling fixed can't be variable, right. That's kind of initial marketing spend, the rent on the facility, things like that where there is a certain amount you're just going to spend that you're putting on the event.

And in my mind, I fixed that -- but if you know you're not happy then also that can become variable if your [Technical Difficulty].

And can become more variable if you hadn't been on a show that could be small or you can commit to a smaller amount of space, you can have a smaller marketing plan from day one where you're never getting ahead of yourself from that. And so that's what I was talking about in terms of direct costs.

On SG&A, the way we look at it, it's more than half is fixed cost of the senior team, IT, rights; [Technical Difficulty] costs are generally the things that fall within that.

And rest we look at it more variable, and again, is scaling around the number of shows we produced, the amount of marketing that we spend, the effort we put time sales, etcetera, are all things that are a bit more variable in nature and with proper planning can be reduced if you foresee revenue is going to be lower than you plan or if you foresee producing less events overtime..

Okay. And then, on the insurance policy, you gave us the amount and put it into context of revenue but it's -- I am not interpreting it that revenue or shows that account for half of your revenue are covered.

It sounds like -- correct me if I'm wrong, like all of your revenue is covered, but then there is a maximum depending upon -- I guess stripping out the direct or avoidable costs, and that's structured that way to incent [ph] you to get rid of those costs? Can you just maybe let me know if I'm interpreting that correctly or not; where is my error?.

Sure. So, I'm going to try to simplify it. We have $191 million of coverage in 2020 for events cancelled, for events damaged or for enforced reduced attendance due to things out of the company's control that are laid out in the insurance policy; one of those items is the impact of a pandemic.

And -- so ultimately, what is covered then with that $191 million run rate is the loss to Emerald from those circumstances, right. So, that's what you think about the asset contribution or gross profit of that show to Emerald is what's covered.

Heading into a year, we supplied budgets for our events through the insurance carriers that is what -- how the premium is determined that we pay for coverage, right.

So that's how we come up with the amount of $191 million, that's how we come up with the premium that we paid for that insurance based on $191 million, and now we have $191 million of coverage over the course of the year across any and all events that are potentially impacted and fall under the circumstances that would trigger the policy. .

Okay.

And then, a different variation of an earlier question but -- if the show attendance remains depressed, intermediate term; so -- like I don't know if this is an attendees per show or revenue per show kind of in 2022 is a particular number, 25% or 40% or whatever percent below the 2019 revenue level for that same show, whatever kind of numbers you've run through some of your sensitivity analysis.

What would that imply for gross profit or EBITDA kind of added a show level like it's -- if revenue is down 25%, is EBITDA down 50% or just any sort of sensitivity around what the financial implications would be if you wouldn't have shown revenue return to 100% of prior baseline anytime soon? Thanks..

Yes. I don't think I'm going to start playing the scenario game about what percent it was for 2022, which is a long time from now. And hopefully there is the popular pharmaceutical reaction to this problem at that time. Ultimately, we just talked about a fixed versus variable component of our events.

And I think if you use that as a starting point, you can run some scenarios of what things could look like if revenues are hit looking out a couple of years and when insurers [ph] are saying -- staging again, and might not be back to full force.

But one thing I do want to reinforce right is, with enough lead time that 30% that I am saying said is fixed on a show, it can be more variable.

And so, if it becomes clear that events are coming back at levels lower than we anticipate, we can book store venues, we can adjust our costs around pay on the event, but in order to protect the margin a bit more, of any surprise shortfall of revenue at the last minute would otherwise allow us to commence..

Okay, thank you for taking the questions..

The next question is from Robert Leaver [ph] of International FCStone. Please go ahead..

Hi guys, thank you for taking like my question. I know there has been a lot of questions asked on the insurance but just -- I'll take one more stab at it. Basically, you're covered at $191 million of lost revenue; it is -- the purpose of the insurance is to cover the gross profit effectively associated with that lost revenue.

After the -- like you're saying you have to pay back the deferred revenue, the pre-payments; after all that is done, the gross profit from that $191 million in revenue should be protected, is that the correct way to look at that?.

That is essentially how the policy is constructed..

Okay.

And then, on your revolver utilization; I don't know if it's too much of a projection to ask but given these -- given the expected proceeds that you can get from the insurance coverage; do you think you would have availability beyond the current draw which I understand is $50 million beyond the current $50 million draw going forward like let's say past 2Q?.

I'm sorry, I'm not -- to be honest, I'm not quite sure what you're asking..

You've noticed that you have the spring in financial covenant on your revolver..

Yes..

But the financial covenant takes into account expected insurance proceeds as well as deferrals of events or costs associated -- one-time cost associated with deferral of events.

Given all those expectations, do you think you would have availability on that revolver greater than the current amount that you've drawn down? Like, you did note that you're below the amount of the springing financial covenant right now? Do you think you could take it up beyond that at any point in this year, even if for one quarter or so?.

Sure. It's surely possible, everything depends on the amount and timing of insurance recoveries. So, there are surely scenarios depending on the flow of insurance proceeds assuming that they're coming, like we expect that could lead us to be borrowing above the threshold for the covenant to kick in..

Okay, thank you very much. Appreciate it..

Sure..

This concludes the question-and-answer session. I would like to turn the floor back over to Mr. Brian Field for closing comments..

Yes, I'd just like to thank everyone for joining us today and reaffirming our confidence in Emerald over the long-term.

And the kind of attention that we're delivering to our customers and through all of our staff activity in support of that attention to our customers is something that I am deeply grateful for and that I am confident will pay dividends over the long-term as we keep those customer relationships very close to us and nurtured. Thank you very much..

This concludes today's conference. And you may disconnect your lines at this time. Thank you for your participation..