EMERALD HOLDING, INC. Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of Operations. (type 10-Ok)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This dialogue and evaluation of the monetary situation and outcomes of our
operations needs to be learn at the side of “Merchandise 6. Chosen Monetary and
Working Knowledge” and our consolidated monetary statements and associated notes of
Emerald Holding, Inc. included in Merchandise 15 of this Annual Report on Kind 10-Ok.
It’s best to overview “Merchandise 1A. Danger Elements” part of this submitting for a
dialogue of vital components that might trigger precise outcomes to vary
materially from the outcomes described in or implied by any forward-looking
statements contained within the following dialogue and evaluation.

This part of this Kind 10-Ok usually discusses 2021 and 2020 objects and
year-to-year comparisons between 2021 and 2020. Discussions of 2019 objects and
year-to-year comparisons between 2020 and 2019 that aren’t included on this
Kind 10-Ok might be present in “Administration’s Dialogue and Evaluation of Monetary
Situation and Outcomes of Operations” in Half II, Merchandise 7 of the Firm’s Annual
Report on Kind 10-Ok/A for the fiscal yr ended December 31, 2020.

Overview and Background

Emerald is a number one operator of business-to-business commerce exhibits within the United
States. Leveraging our exhibits as key market-driven platforms, we mix our
occasions with efficient trade insights, digital instruments, and data-focused
options to create uniquely wealthy experiences. Emerald strives to construct its
prospects’ companies by creating alternatives that ship tangible outcomes.

All of our commerce present franchises usually maintain market-leading positions inside
their respective trade verticals, with important model worth established
over a protracted time period. Every of our exhibits are scheduled to stage not less than
yearly, with sure franchises providing a number of editions per yr. As our
exhibits are incessantly the most important and most nicely attended of their respective
trade verticals, we’re in a position to entice high-quality attendees, together with
those that have the authority to make buying choices on the spot or
subsequent to the present. The participation of those attendees makes our commerce
exhibits “must-attend” occasions for our exhibitors, additional reinforcing the main
positions of our commerce exhibits inside their respective trade verticals. Our
attendees use our exhibits to meet procurement wants, supply new suppliers,
reconnect with current suppliers, determine traits, study new merchandise and
community with trade friends, which we consider are components that make our exhibits
tough to exchange with non-face-to-face occasions. Our portfolio of commerce exhibits
is well-balanced and diversified throughout each trade sectors and prospects.

Along with organizing our commerce exhibits, conferences and different occasions, we additionally
function content material and content-marketing web sites and associated digital merchandise, and
produce publications, every of which is aligned with a particular sector for which
we set up an occasion. We additionally supply B2B commerce and digital merchandising
options, serving the wants of producers and retailers, by means of our
lately acquired Elastic Suite and Flex platforms. Along with their
respective revenues, these merchandise complement our stay occasions and supply us
year-round channels of buyer acquisition and improvement.

Natural Progress Drivers

We’re primarily targeted on producing natural progress by understanding and
leveraging the drivers for elevated exhibitor and attendee participation at
commerce exhibits and offering year-round companies that present incremental worth to
these prospects. Creating new alternatives for exhibitors to affect their
market, have interaction with important patrons, generate incremental gross sales and broaden
their model’s consciousness of their trade builds additional demand for exhibit
house and strengthens the worth proposition of a commerce present, usually permitting
us to modestly improve sales space house pricing yearly throughout our portfolio. At
the identical time, our commerce exhibits present attendees with the chance to reinforce
their trade connectivity, develop relationships with focused suppliers and
distributors, uncover new merchandise, study new trade developments,
have a good time their trade’s achievements and, in sure circumstances, receive persevering with
skilled schooling credit, which we consider will increase their propensity to
return and, consequently, drives excessive recurring participation amongst our
exhibitors. By investing

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in and selling these tangible and return-on-investment linked outcomes, we
consider we can proceed to reinforce the worth proposition for our
exhibitors and attendees alike, thereby driving robust demand and premium
pricing for exhibit house, sponsorship alternatives and attendee registration.

Acquisitions

We’re additionally targeted on rising our nationwide footprint by means of the acquisition of
high-quality occasions which are leaders of their particular trade verticals. Since
the Onex Acquisition in June 2013, we have now accomplished 22 strategic acquisitions,
with buy costs, excluding the $335.Zero million acquisition of GLM, ranging
from roughly $5.Zero million to roughly $142.2 million, and annual
revenues starting from roughly $1.Three million to roughly $25.6 million.
Traditionally, we have now accomplished acquisitions at EBITDA buy multiples that
are usually within the mid-to-high single digits. Our acquisitions have
traditionally been structured as asset offers which have resulted within the technology
of long-lived tax property, which in flip have decreased our buy multiples when
incorporating the worth of the created tax property. Sooner or later, we intend to
search for acquisitions with equally engaging valuation multiples. The 22
acquisitions we have now accomplished are described as follows:
• GLM – Previous to its acquisition by Emerald in January 2014, GLM operated
roughly 20 commerce exhibits, together with 4 of the most important 100 commerce
exhibits in the US in line with TSE. These commerce exhibits serve

industries as numerous as house furnishings, house textiles, stationery and

paper merchandise, giftware, tabletop, connoisseur housewares, up to date

furnishings and interiors, artwork & design, antiques & jewellery, vogue,

board sports activities & resort life-style and eCommerce, and embody the
well-known NY NOW and Surf Expo manufacturers. The acquisition of GLM
considerably elevated the size and breadth of Emerald’s commerce present
portfolio.

• Healthcare Design Convention and Expo, Healthcare Design Journal,

Environments for Growing old and Development SuperConference (collectively,

“HCD Group”) – On February 27, 2015, we acquired these manufacturers, which
had been beforehand operated by the Healthcare Media division of Vendome
Group. Healthcare Design Convention and Expo is the trade’s greatest

attended and most revered commerce present/convention primarily targeted on

evidence-based design for healthcare services. Along with the

annual commerce present and convention, the model has a complementary

journal, Healthcare Design Journal, schooling and sponsored occasions and

a web-based presence that collectively have interaction the trade all yr spherical.
Environments for Growing old is a complementary area of interest occasion inside the broader

healthcare vertical, targeted on creating useful and engaging

residing environments that meet the wants of the growing older inhabitants.

Development SuperConference is an occasion for legal professionals offering companies

in industrial development markets.

• Worldwide Pizza Expo and Pizza As we speak journal (“Pizza Group”) – On

March 3, 2015, we acquired the Worldwide Pizza Expo, which was

beforehand operated by Macfadden Communications Group. The Worldwide

Pizza Expo is the most important commerce present for impartial pizzeria house owners and

operators in the US, and Pizza As we speak is the associate journal

and main publication on this trade. Working within the $40 billion

pizza restaurant trade, the Worldwide Pizza Expo ranks within the prime

250 largest commerce exhibits in the US in line with Commerce Present
Information Community (“TSNN”).

• HOW Design Reside (“HOW”) – On October 14, 2015, we acquired HOW, which

was beforehand operated by F+W Media, Inc. HOW is the most important graphic

design convention and expo within the nation, combining seven separate

conferences right into a single occasion targeted on creativity, enterprise and
inspiration for graphic designers.

• The Nationwide Industrial Fastener & Mill Provide Expo (“Fastener Expo”) –

On November 12, 2015, we acquired Fastener Expo from the present’s

co-founders. Fastener Expo brings collectively producers and grasp

distributors of commercial fasteners, precision shaped components, fastener

equipment and tooling and different associated services and products with
distributors and gross sales brokers within the distribution chain.

• The Worldwide Present Exposition within the Smokies and the Memento Tremendous

Present (“IGES”) – On August 1, 2016, we acquired IGES from M&M Present Reveals,

LLC. IGES is the most important devoted gathering of wholesale memento,

resort and present patrons in the US.

• The Swim Collective and Lively Collective commerce exhibits (“Collective”) –

On August 8, 2016, we acquired Collective from the present’s founder. Swim

Collective is the main swimwear commerce present on

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the West Coast, whereas Lively Collective is a extra recently-launched,

fast-growing present targeted on activewear.

• Digital Supplier Convention & Expo (“Digital Supplier”) – On October 11,

2016, we acquired Digital Supplier from its founder. Because the main

semi-annual commerce present targeted on the retail automotive trade’s

digital technique and operations, Digital Supplier is the premier venue to
discover the implementation of digital elements by auto sellers to

have interaction their automotive shopper. Along side the acquisition,

we additionally acquired Supplier Journal, a complementary journal for
automotive dealerships and franchises.

• Nationwide Pavement Expo (“NPE”) – On October 18, 2016, we acquired NPE,

which was beforehand operated by AC Enterprise Media. NPE is the most important

commerce present targeted on paving and pavement upkeep.

• RFID Journal LIVE! (“RFID LIVE!”) – On November 15, 2016, we acquired

RFID LIVE! from its founder. RFID LIVE! is the most important commerce present that
focuses on RFID applied sciences used to determine, monitor and handle
company property and stock throughout a variety of industries.

• American Craft Retailers Expo (“ACRE”) – On December 13, 2016, we

acquired ACRE from its founder. ACRE is a wholesale craft exposition,

consisting of two exhibits that happened yearly in Philadelphia and Las
Vegas on the time of acquisition.

• CEDIA Expo – On January 25, 2017, we acquired the commerce present CEDIA from

its namesake affiliation, Customized Digital Design & Set up

Affiliation. CEDIA is the most important commerce present within the house expertise

market, serving trade professionals that manufacture, design and
combine items and companies for the linked house.

• The Worldwide Drone Convention & Exposition – On March 10, 2017, we

acquired the commerce present InterDrone from BZ Media LLC. InterDrone is the
main industrial drone-focused present in the US.

• Snow Present – On Might 24, 2017, we acquired the commerce present Snow Present from

SnowSports Industries America. When acquired, Snow Present was the most important
snow sports activities trade occasion in North America and was ranked 67th within the
TSNN High 250 commerce exhibits in the US in 2016. Beginning in
January 2018, Snow Present merged with Outside Retailer to grow to be Outside

Retailer + Snow Present, endorsed and sponsored by SnowSports Industries

America and OIA.

• Connecting Level Advertising Group – On November 29, 2017, we acquired

CPMG from Hall Capital, LLC, mezzanine investor Aldine Capital

Companions and administration. CPMG organizes and hosts senior government degree

business-intensive commerce occasions targeted on innovation for the

hospitality, restaurant, healthcare, grocery and retail

industries. These occasions are highly-curated, invitation-only boards that

convey collectively leaders in every vertical market.

• Know-how Manufacturers – On August 21, 2018, we acquired the Know-how

Manufacturers from EH Media. The Know-how Manufacturers embody a number one expertise

occasion and a bunch of 4 complementary expertise intelligence manufacturers
targeted on the mixing of audio, video, communications, IT, safety
and vitality administration merchandise into buildings of all sorts. The
Know-how Manufacturers are additionally strategically aligned with our CEDIA Expo and
CPMG occasions.

• Boutique Design New York and associated property – On October 15, 2018, we

acquired BDNY and associated property from ST Media Group Worldwide and

Hospitality Media Group. BDNY is a number one commerce present and convention for

boutique hospitality design professionals, primarily serving the jap
United States, Canada and Europe. BDNY has been acknowledged among the many
fastest-growing commerce exhibits within the U.S. for the previous 5 years.

• G3 Communications – On November 1, 2019, we acquired G3. G3 is the

producer of the B2B Advertising Alternate occasion sequence and is a creator of

customized content material and lead technology companies. By means of its mixture of occasions,

digital publications and advertising and marketing companies, G3 helps B2B organizations

develop revenue-producing, complete campaigns by offering content material
ideation, creation and distribution companies.

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• EDspaces – On December 21, 2020, we acquired the commerce present EDspaces
from the Training Market Affiliation, Inc. EDspaces is likely one of the
nation’s largest occasions targeted on instructional areas and associated
tools.

• PlumRiver, LLC – On December 31, 2020, we acquired considerably all of

the property of PlumRiver. PlumRiver is a number one supplier of B2B
eCommerce software program options.

• Sue Bryce Training and The Portrait Masters – On April 1, 2021, we
acquired considerably the entire property of Sue Bryce Training and The
Portrait Masters. Sue Bryce Training and The Portrait Masters is a
subscription-based images enterprise schooling and e-learning service
with a images convention.

• MJBiz – On December 31, 2021, we acquired considerably the entire
property of MJBiz. MJBiz is a number one occasion producer and content material platform
serving the wide selection of corporations working within the quickly rising
hashish trade.

Tendencies and Different Elements Affecting Our Enterprise

There are a selection of current and growing components and traits which impression
the efficiency of our enterprise, and the comparability of our outcomes from yr
to yr and from quarter to quarter, together with:

• Extreme Impression of COVID-19 – In March 2020, the World Well being Group

categorized COVID-19 as a pandemic, and the President of the United

States declared the COVID-19 outbreak a nationwide emergency. In

conjunction with this declaration and the unfold of COVID-19 throughout the

United States, suggestions and mandates had been handed down by varied

native, state and federal authorities companies relating to social

distancing, containment areas and towards massive gatherings, in addition to

quarantine necessities. As well as, journey restrictions had been imposed

by the US and international governments, and by corporations with

respect to their staff, and varied occasion venues introduced

indefinite closures. On account of these and varied different components,

administration made the choice to cancel or postpone a good portion

of our occasion calendar for the rest of 2020 and the primary half of

2021. The continued results of COVID-19 on the Firm’s operations and
occasion calendar have had, and are anticipated to proceed to have, a
materials damaging impression on its monetary outcomes and liquidity. For

extra data, see “Danger Elements – The worldwide COVID-19 pandemic has

had a fabric detrimental impression on our enterprise, monetary outcomes and

liquidity, and such impression may worsen and final for an unknown interval
of time” and “-Liquidity and Capital Assets.”

• Market Fragmentation – The commerce present trade is extremely fragmented with

the three largest corporations, together with us, comprising solely 10% of the

wider U.S. market in line with the AMR Worldwide Globex Report 2018.

This has afforded us the chance to accumulate different commerce present

companies, a progress alternative we anticipate to proceed pursuing. These

acquisitions could have an effect on our progress traits, impacting the comparability

of our monetary outcomes on a year-over-year foundation.

• General Financial Atmosphere and Trade Sector Cyclicality – Our
outcomes of operations are correlated, partly, with the financial
efficiency of the trade sectors that our commerce exhibits serve, as nicely
because the state of the general financial system, which can be affected by components
akin to inflation and provide chain interruption.

• Lag Time – As nearly all of our exhibit house is offered in the course of the
twelve months prior to every commerce present, there’s usually a timing
distinction between adjustments within the financial situations of an trade
sector vertical and their impact on our outcomes of operations. This lag
time may end up in a counter-cyclical impression on our outcomes of
operations.

• Variability in Quarterly Outcomes – Our enterprise is seasonal, with commerce

present revenues usually reaching their highest ranges in the course of the first
quarter of every calendar yr, and their lowest degree in the course of the fourth

quarter, solely because of the timing of our commerce exhibits. This seasonality

is typical inside the commerce present trade. Nonetheless, because of occasion

cancellations resulting from COVID-19, outcomes for the years ended December 31,

2021 and December 31, 2020, in addition to future outcomes, could not align
with this historic pattern. Since occasion income is acknowledged when a
specific occasion is held, we may additionally expertise fluctuations in
quarterly income and money flows primarily based on the motion of annual commerce

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present dates from one quarter to a different. Our presentation of Adjusted
EBITDA accounts for these quarterly actions and the timing of exhibits,
the place relevant and materials.

How We Assess the Efficiency of Our Enterprise

In assessing the efficiency of our enterprise, we contemplate a wide range of
efficiency and monetary measures. The important thing indicators of the monetary
situation and working efficiency of our enterprise are revenues, Natural
income, price of revenues, promoting, basic and administrative bills,
curiosity expense, depreciation and amortization, earnings taxes, Adjusted EBITDA
and Free Money Movement.

Foundation of Presentation

As described in Observe 18, Phase Info, within the notes to our audited
consolidated monetary statements included elsewhere on this Annual Report on
Kind 10-Ok, our Chief Govt Officer, because the chief working decision-maker
(“CODM”), evaluates efficiency primarily based on the outcomes of six government model
portfolios, which characterize our six working segments. Primarily based on an analysis
of financial similarities and the character of companies and varieties of prospects, 4
of those working segments have been aggregated into two reportable segments,
the Commerce reportable phase and the Design and Know-how reportable
phase. The remaining two working segments don’t meet the quantitative
thresholds to be thought of reportable working segments and are included in
the “All Different” class. As well as, we have now a Company-Degree Actions
class consisting of finance, authorized, data expertise and administrative
capabilities.

The next dialogue gives further detailed disclosure for the 2
reportable segments, the All Different class and the Company-Degree Exercise
class:

Commerce: This phase consists of occasions and companies overlaying merchandising,
licensing, retail sourcing and advertising and marketing to allow professionals to make
knowledgeable choices and meet shopper calls for.

Design and Know-how: This phase consists of occasions and companies that assist a
broad number of industries connecting companies and professionals with
merchandise, operational methods, and integration alternatives to drive new
enterprise and streamline processes and artistic options.

All Different: This class consists of Emerald’s remaining working segments,
which offer numerous occasions and companies however aren’t aggregated with the
reportable segments.

Company-Degree Exercise: This class consists of Emerald’s finance, authorized,
data expertise and administrative capabilities.

Revenues

We generate revenues primarily from promoting commerce present exhibit house to
exhibitors on a per sq. foot foundation. Different commerce present income streams embody
sponsorship, charges for ancillary exhibition companies and attendee registration
charges. Moreover, we generate income by means of conferences, digital media and
print publications that complement our commerce exhibits. We additionally have interaction third-party
gross sales brokers to assist our advertising and marketing efforts.

We outline “natural income progress” and “natural income decline” as the expansion
or decline, respectively, in our income from one interval to the subsequent, adjusted
for the income impression of: (i) acquisitions and tendencies, (ii) discontinued
occasions, (iii) materials present scheduling changes and (iv) occasion cancellations
for which the Firm has acquired, or expects to obtain, declare proceeds from
its occasion cancellation insurance coverage coverage. We disclose adjustments in Natural income
as a result of we consider it assists traders and analysts in evaluating Emerald’s
working efficiency throughout reporting durations on a constant foundation by
excluding objects that we don’t consider mirror a real comparability of the traits
of the prevailing occasion calendar given adjustments in timing or technique. Administration
and Emerald’s Board of Administrators consider adjustments in Natural revenues to
perceive underlying income traits of its occasions. Natural income just isn’t
outlined below GAAP, and has limitations as an analytical device, and it’s best to
not contemplate such measure both in isolation or as an alternative to analyzing
our outcomes as reported below GAAP. A few of these limitations embody that
Natural income displays sure changes that we contemplate to not be
indicative of our ongoing working efficiency. As a result of not all corporations use
an identical calculations, our presentation of Natural income will not be
akin to different equally titled measures utilized by different corporations.

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Natural Income

Natural income is a supplemental non-GAAP monetary measure of efficiency and
just isn’t primarily based on any standardized methodology prescribed by GAAP. Natural income
shouldn’t be thought of in isolation or as a substitute for revenues or different
measures decided in accordance with GAAP. Additionally, Natural revenues just isn’t
essentially akin to equally titled measures utilized by different corporations.

Essentially the most immediately comparable GAAP measure to Natural income is revenues. For a
reconciliation of Natural revenues to revenues as reported, see footnote 6 to
the desk below the heading “Outcomes of Operations – Comparability of the 12 months
Ended December 31, 2021 to the 12 months Ended December 31, 2020”.

Different Earnings

We keep occasion cancellation insurance coverage to guard towards losses due the
unavoidable cancellation, postponement, relocation and enforced decreased
attendance at occasions resulting from sure coated causes. Particularly, these causes
embody occasion cancellation attributable to the outbreak of communicable illnesses,
together with COVID-19 for the years ended December 31, 2020 and 2021, in addition to
losses attributable to pure disasters akin to hurricanes. Nonetheless, Emerald’s
renewed occasion cancellation insurance coverage insurance policies for the calendar yr 2022 don’t
cowl losses resulting from occasion cancellations attributable to the outbreak of communicable
illnesses, together with COVID-19. Our Different Earnings is primarily comprised of
acquired or confirmed occasion cancellation insurance coverage declare proceeds.

Value of Revenues

• Adorning Bills. We work with basic service contractors to each
arrange communal areas of our commerce exhibits and supply companies to our
exhibitors, who primarily contract immediately with the overall service

contractors. We are going to normally choose a single basic service contractor

for a whole present, though it’s potential to bid out packages of labor

inside a single present on a piecemeal foundation to totally different task-specific

specialists. Adorning bills represented 16%, 10%, and 19% of our

complete price of revenues for the years ended December 31, 2021, 2020, and

2019, respectively, and 6%, 4%, and 6% of our complete revenues for every of

the years ended December 31, 2021, 2020, and 2019, respectively.

• Sponsorship Prices. We regularly enter into long-term sponsorship agreements

with trade commerce associations whereby the trade commerce affiliation

endorses and markets the present to its members in change for a

share of the present’s income. Sponsorship prices represented 9%, 34%,

and 17% of our complete price of revenues for the years ended December 31,

2021, 2020, and 2019, respectively, and three%, 15%, and 6% of our complete
revenues for the yr ended December 31, 2021, 2020, and 2019,
respectively.

• Venue Prices. Venue prices characterize rental prices for the venues, normally

conference facilities or motels, the place we host our commerce exhibits. On condition that

conference facilities are usually owned by native governments who’ve a

vested curiosity in stimulating enterprise exercise in and attracting

tourism to their cities, venue prices usually characterize a small

share of our complete price of revenues. Venue prices represented 13%,

9%, and 12% of our complete price of revenues for the years ended December

31, 2021, 2020, and 2019, respectively, 5%, 4% and 4% of our complete
revenues for every of the years ended December 31, 2021, 2020, and 2019.

• Prices of Different Advertising Providers. Prices of different advertising and marketing companies

characterize paper, printing, postage, contributor and different prices associated

to digital media and print publications. Prices of different advertising and marketing

companies represented 10%, 9%, and 6% of our complete price of revenues for

every of the years ended December 31, 2021, 2020, and 2019, respectively,

4%, 4%, and a couple of% of our complete revenues for every of the years ended
December 31, 2021, 2020, and 2019, respectively.

• Different Occasion-Associated Bills. Different event-related prices embody
non permanent labor for companies akin to safety, shuttle buses, speaker

charges, meals and beverage bills and occasion cancellation insurance coverage. Different

event-related bills represented 51%, 39%, and 46% of our complete price
of revenues for the years ended December 31, 2021, 2020, and 2019,
respectively, and 20%, 18%, and 16% of our complete revenues for the yr
ended December 31, 2021, 2020, and 2019, respectively.

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Promoting, Normal and Administrative Bills

• Labor Prices. Labor prices characterize the price of staff who’re

concerned in gross sales, advertising and marketing, planning and administrative actions.

The precise on-site set-up of the occasions is contracted out to third-party

distributors and is included in price of revenues. Labor prices represented

67%, 68%, and 61% of our complete promoting, basic and administrative

bills for the years ended December 31, 2021, 2020, and 2019, and 66%,

63%, and 22% of our complete revenues for every of the years ended December

31, 2021, 2020, and 2019, respectively.

• Miscellaneous Bills. Miscellaneous bills are comprised of a
number of different bills, together with promoting and advertising and marketing prices,
promotion prices, bank card charges, journey bills, printing prices,
workplace provides and workplace rental expense. Miscellaneous bills
represented 33%, 32%, and 39% of our complete promoting, basic and
administrative bills, for the years ended December 31, 2021, 2020,

and 2019, respectively, and 32%, 30%, and 15% of our complete revenues for

the years ended December 31, 2021, 2020, and 2019, respectively.

Curiosity Expense

Curiosity expense represents curiosity funds and refinancing charges paid to our
lenders. On Might 22, 2017, we refinanced our senior secured credit score services
with the Amended and Restated Senior Secured Credit score Amenities (the “2017
Refinancing”). We additional amended the Amended and Restated Senior Secured Credit score
Amenities in November 2017 to cut back the relevant rates of interest. Curiosity
expense for the years ended December 31, 2021, 2020, and 2019 principally
represented curiosity paid in respect of our Amended and Restated Senior Secured
Credit score Amenities.

Depreciation and Amortization

We’ve traditionally grown our enterprise by means of acquisitions and, in doing so,
have acquired important intangible property, the worth of a few of which is
amortized over time. These acquired intangible property, except decided to be
indefinite-lived, are amortized over prolonged durations of ten to thirty years
from the date of every acquisition for reporting below accounting ideas
usually accepted in the US of America (“GAAP”) functions, or fifteen
years for tax functions. This amortization expense reduces our taxable earnings.
Depreciation expense pertains to property and tools and represented
roughly 1%, 1%, and fewer than 1% of our complete revenues for the years ended
December 31, 2021, 2020, and 2019, respectively.

Earnings Taxes

Earnings tax expense consists of U.S. federal, state and native taxes primarily based on
earnings within the jurisdictions by which we function.

We file deferred tax costs or advantages primarily related to our
utilization or technology of internet working loss carryforwards and book-to-tax
variations associated to amortization of goodwill, amortization of intangibles
property, depreciation, stock-based compensation costs and deferred financing
prices.

Money Movement Mannequin

We’ve favorable money stream traits, as described under (see “-Liquidity
and Capital Assets-Money Flows”), because of our excessive revenue margins, low
capital expenditures and constantly damaging working capital, excluding money
available. Our working capital, excluding money available, is damaging as our present
property are usually decrease than our present liabilities. Present property
primarily embody accounts receivable and pay as you go bills, whereas present
liabilities primarily embody accounts payable, borrowings below our Amended and
Restated Revolving Credit score Facility (the “Amended and Restated Revolving Credit score
Facility”) and deferred revenues. Money acquired previous to an occasion is recorded as
deferred income on our stability sheet and acknowledged as income upon completion
of every commerce present. The implication of getting damaging working capital,
excluding money available, is that adjustments in working capital characterize a supply of
money as our enterprise grows. On account of COVID-19, the accounts receivable and
deferred income balances associated to cancelled occasions have been reclassified to
Cancelled occasion liabilities within the consolidated stability sheets, as the online
quantity represents balances which we anticipate will likely be

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refunded to our prospects. Whereas we consider that our enterprise interruption
insurance coverage proceeds will largely mitigate this legal responsibility, money outflows for
buyer refunds will possible exceed insurance coverage declare settlement money inflows for
the foreseeable future.

The first driver for our damaging working capital, excluding money available, is
the gross sales cycle for a commerce present, which generally begins in the course of the twelve
months previous to a present. Within the interim interval between the present present and the
following present, we proceed to promote to new and previous exhibitors and acquire
funds on contracted exhibit house. Most of our exhibitors pay in full in
advance of every commerce present, whereas the majority of bills are paid near or
after the present. Money deposits begin to be acquired as early as twelve months
previous to a present happening and the stability of sales space house charges are usually
acquired in money one month previous to a present happening. This extremely environment friendly
money stream mannequin, the place money is acquired upfront of bills to be paid,
creates a working capital profit.

Free Money Movement

Along with internet money offered by working actions offered in accordance
with GAAP, we current Free Money Movement as a result of we consider it’s a helpful indicator
of liquidity that gives data to administration and traders concerning the
amount of money generated from our core operations that, after capital
expenditures, can be utilized for the reimbursement of indebtedness, paying of
dividends, repurchasing of shares of our frequent inventory and strategic initiatives,
together with investing in our enterprise and making strategic acquisitions.

Free Money Movement is a supplemental non-GAAP monetary measure of liquidity and is
not primarily based on any standardized methodology prescribed by GAAP. Free Money Movement
shouldn’t be thought of in isolation or as a substitute for internet money offered
by working actions or different measures decided in accordance with GAAP.
Additionally, Free Money Movement just isn’t essentially akin to equally titled measures
utilized by different corporations.

Essentially the most immediately comparable GAAP measure to Free Money Movement is internet money offered
by working actions. For a reconciliation of Free Money Movement to internet money
offered by working actions, see footnote 6 to the desk below the heading
“Outcomes of Operations – Comparability of the 12 months Ended December 31, 2021 to the
12 months Ended December 31, 2020”.

Adjusted EBITDA

Adjusted EBITDA is a key measure of our efficiency. We outline Adjusted EBITDA
as internet loss earlier than (i) curiosity expense, (ii) earnings tax (profit), (iii)
depreciation and amortization, (iv) stock-based compensation, (v) deferred
income adjustment, (vi) goodwill and different intangible asset impairment costs,
(vii) materials present scheduling changes, and (viii) different objects that
administration believes aren’t a part of our core operations. We current Adjusted
EBITDA as a result of we consider it assists traders and analysts in evaluating our
working efficiency throughout reporting durations on a constant foundation by
excluding objects that we don’t consider are indicative of our core working
efficiency.

Administration and our Board of Administrators use Adjusted EBITDA to evaluate our
monetary efficiency and consider it’s useful in highlighting traits as a result of
it excludes the outcomes of selections which are exterior the management of administration,
whereas different efficiency metrics can differ considerably relying on long-term
strategic choices relating to capital construction, the tax jurisdictions by which
we function and capital investments. We reference Adjusted EBITDA incessantly in
our decision-making as a result of it gives supplemental data that
facilitates inner comparisons to the historic working efficiency of
prior durations.

Adjusted EBITDA just isn’t outlined below GAAP, and has limitations as an analytical
device, and you shouldn’t contemplate such measure both in isolation or as a
substitute for analyzing our outcomes as reported below GAAP. A few of these
limitations embody that Adjusted EBITDA excludes sure regular recurring
bills and one-time money changes that we contemplate to not be indicative of
our ongoing working efficiency. As a result of not all corporations use an identical
calculations, our presentation of Adjusted EBITDA will not be akin to different
equally titled measures utilized by different corporations.

38
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Essentially the most immediately comparable GAAP measure to Adjusted EBITDA is internet loss. For a
reconciliation of Adjusted EBITDA to internet loss, see footnote Four to the desk below
the heading “Outcomes of Operations – Comparability of the 12 months Ended December 31,
2021 to the 12 months Ended December 31, 2020”.

Outcomes of Operations

Comparability of the 12 months Ended December 31, 2021 to the 12 months Ended December 31,
2020

The tables on this part summarize key elements of our outcomes of operations
for the durations indicated.

12 months Ended December 31,
2021 2020 Variance $ Variance %
({dollars} in thousands and thousands)
Assertion of loss and complete
loss knowledge:
Revenues $ 145.5 $ 127.4 $ 18.1 14.2 %
Different earnings 77.4 107.0 (29.6 ) (27.7 )%
Value of revenues 55.5 57.6 (2.1 ) (3.6 )%
Promoting, basic and administrative
bills(1) 143.0 118.6 24.4 20.6 %
Depreciation and amortization expense 47.6 48.6 (1.0 ) (2.1 )%
Goodwill impairments(2) 7.2 603.4 (596.2 ) (98.8 )%
Intangible asset impairments(3) 32.7 76.8 (44.1 ) (57.4 )%
Working loss (63.1 ) (670.6 ) 607.5 (90.6 )%
Curiosity expense 15.8 20.6 (4.8 ) (23.3 )%
Loss on disposal of mounted property 0.5 – 0.5 NM
Loss earlier than earnings taxes (79.4 ) (691.2 ) 611.8 (88.5 )%
Profit from earnings taxes (1.3 ) (57.6 ) 56.3 (97.7 )%
Internet loss and complete loss $ (78.1 ) $ (633.6 ) $ 555.5 (87.7 )%

Different monetary knowledge (unaudited):
Adjusted EBITDA(4) $ 45.7 $ 71.9 $ (26.2 ) (36.4 )%
Free Money Movement(5) $ 83.4 $ (41.1 ) $ 124.5 (302.9 )%
Natural income(6) $ 43.8 $ 44.1 $ (0.3 ) (0.7 )%

(1) Promoting, basic and administrative bills for the years ended December

31, 2021 and 2020 included $9.Four million and $7.Zero million, respectively, in

contract termination, acquisition-related transaction, transition and

integration prices, together with authorized and advisory charges. Additionally included in

promoting, basic and administrative bills for every of the years ended

December 31, 2021 and 2020 had been stock-based compensation bills of $10.4

million and $6.7 million, respectively.

(2) Goodwill impairments for the yr ended December 31, 2021 represents

non-cash impairment of $7.2 million in reference to our October 31, 2021

goodwill impairment testing. Goodwill impairments for the yr ended

December 31, 2020 represents non-cash impairments of $588.2 million and

$15.2 million in reference to our March 31, 2020 and October 31, 2020

goodwill impairment testing, respectively. See Observe 6, Intangible Property and

Goodwill, within the notes to our monetary statements included elsewhere in

this Annual Report on Kind 10-Ok for added data with respect to

our non-cash goodwill impairments.

(3) Intangible asset impairments for the yr ended December 31, 2021 included

non-cash impairments of $21.Zero million and $11.7 million for sure buyer

relationship intangible property and definite-lived commerce names, and sure

indefinite-lived commerce names, respectively, in reference to our October

31, 2021 testing of intangible property. Intangible asset impairments for the

yr ended December 31, 2020 included non-cash impairments of $13.2 million

and $46.2 million for sure buyer relationship intangible property and

definite-lived commerce names, and sure indefinite-lived commerce names,

respectively, in reference to our March 31, 2020 testing of intangible

property. As well as, non-cash impairments of $16.Eight million and $0.6 million

for sure buyer relationship intangible property and definite-lived commerce

names, and sure indefinite-lived commerce names, respectively, in connection

with our October 31, 2020 testing of intangible property. See Observe 6,

Intangible Property and Goodwill, within the notes to our consolidated monetary

statements

39
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included elsewhere on this Annual Report on Kind 10-Ok for added
data with respect to our non-cash intangible asset impairments.

(4) Along with internet loss offered in accordance with GAAP, we use Adjusted

EBITDA to measure our monetary efficiency. Adjusted EBITDA is a

supplemental non-GAAP monetary measure of working efficiency and isn’t

primarily based on any standardized methodology prescribed by GAAP. Adjusted EBITDA

shouldn’t be thought of in isolation or as options to internet loss, money

flows from working actions or different measures decided in accordance

with GAAP. Additionally, Adjusted EBITDA just isn’t essentially akin to equally

titled measures offered by different corporations.

We outline Adjusted EBITDA as internet loss earlier than (i) curiosity expense (profit),
(ii) earnings tax expense, (iii) goodwill impairments, (iv) intangible asset
impairments, (v) depreciation and amortization, (vi) stock-based compensation,
(vii) deferred income adjustment and (viii) different objects that administration
believes aren’t a part of our core operations. Administration and our Board of
Administrators use Adjusted EBITDA to evaluate our monetary efficiency and consider
they’re useful in highlighting traits as a result of it excludes the outcomes of
choices which are exterior the management of administration, whereas different efficiency
metrics can differ considerably relying on long-term strategic choices
relating to capital construction, the tax jurisdictions by which we function and
capital investments. We reference Adjusted EBITDA incessantly in our
decision-making as a result of it gives supplemental data that facilitates
inner comparisons to the historic working efficiency of prior durations.
Adjusted EBITDA just isn’t outlined below GAAP and has limitations as an analytical
device, and you shouldn’t contemplate such measure both in isolation or as a
substitute for analyzing our outcomes as reported below GAAP. A few of these
limitations embody that Adjusted EBITDA excludes sure regular recurring
bills and one-time money changes that we contemplate to not be indicative of
our ongoing operative efficiency. As a result of not all corporations use an identical
calculations, our presentation of Adjusted EBITDA will not be akin to different
equally titled measures utilized by different corporations.

12 months Ended December 31,
2021 2020
(unaudited)
({dollars} in thousands and thousands)
Internet loss $ (78.1 ) $ (633.6 )
Add (Deduct):
Curiosity expense 15.8 20.6
Profit from earnings taxes (1.3 ) (57.6 )
Goodwill impairments(a) 7.2 603.4
Intangible asset impairments(b) 32.7 76.8
Depreciation and amortization 47.6 48.6
Inventory-based compensation expense(c) 10.4 6.7
Deferred income adjustment(d) 2.0 –
Different objects(e) 9.4 7.0
Adjusted EBITDA $ 45.7 $ 71.9

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

(b) Represents the non-cash intangible asset impairments described in
footnote Three above.

(c) Represents prices associated to stock-based compensation related to
sure staff’ participation within the 2013 Inventory Choice Plan (“2013
Plan”), the 2017 Omnibus Fairness Plan (the “2017 Plan”) and the 2019
Worker Inventory Buy Plan (the “ESPP”).

(d) Deferred income balances within the opening stability sheet of acquired

property and liabilities for PlumRiver and EDspaces mirrored the honest
worth of the assumed deferred income efficiency obligations on the
acquisition date. If the companies had been constantly owned by us
all through the years offered, the deferred income honest worth
adjustment of $2.Zero million, wouldn’t have been required and the

revenues for the yr ended December 31, 2021 would have elevated by

$2.Zero million.

(e) Different objects embody quantities administration believes aren’t consultant

of our core operations. Different objects for the yr ended December 31, 2021
included: (i) $3.1 million in transition prices, together with one-time
severance expense of $1.Three million and prices related to lease
abandonment of $1.2 million, (ii)

40

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$2.7 million in non-recurring authorized, audit and consulting charges (iii)

$1.Four million in transaction prices in reference to sure acquisition

transactions and (iv) $2.2 million in expense associated to the

remeasurement of contingent consideration. For the yr ended December

31, 2020, the $7.Zero million included: (i) $4.6 million in transition

prices, together with one-time severance expense of $2.Eight million, (ii) $2.2

million in non-recurring authorized, audit and consulting charges and (iii) $1.7

million in transaction prices in reference to sure acquisition

transactions offset by (iv) $1.5 million discount to expense associated to

the remeasurement of contingent consideration.

(5) Along with internet money offered by working actions offered in

accordance with GAAP, we current Free Money Movement as a result of we consider it’s a

helpful indicator of liquidity that gives data to administration and

traders about the amount of money generated from our core operations that,

after capital expenditures, can be utilized for the reimbursement of indebtedness

and strategic initiatives, together with investing in our enterprise, fee of

dividends, making strategic acquisitions and strengthening our stability
sheet. Free Money Movement is a supplemental non-GAAP monetary measure of
liquidity and isn’t primarily based on any standardized methodology prescribed by
GAAP. Free Money Movement shouldn’t be thought of in isolation or as an
various to money flows from working actions or different measures

decided in accordance with GAAP. Additionally, Free Money Movement just isn’t essentially

akin to equally titled measures utilized by different corporations.

12 months Ended December 31,
2021 2020
(unaudited)
({dollars} in thousands and thousands)

Internet Money Offered by (Utilized in) Working Actions $ 90.0 $

(37.1 )
Much less:
Capital expenditures 6.6 4.0
Free Money Movement $ 83.4 $ (41.1 )

(6) Along with revenues offered in accordance with GAAP, we current

Natural income as a result of we consider it assists traders and analysts in

evaluating Emerald’s working efficiency throughout reporting durations on a

constant foundation by excluding objects that we don’t consider mirror a real

comparability of the traits of the prevailing occasion calendar given adjustments in

timing or technique. Administration and Emerald’s Board of Administrators consider

adjustments in Natural income to know underlying income traits of its
occasions. Our presentation of Natural income adjusts income for (i)
acquisition income, (ii) discontinued occasions and (iii) COVID-19
cancellations.

41

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Natural income is a supplemental non-GAAP monetary measure of efficiency and
just isn’t primarily based on any standardized methodology prescribed by GAAP. Natural
income shouldn’t be thought of in isolation or as a substitute for revenues
or different measures decided in accordance with GAAP. Additionally, Natural income is
not essentially akin to equally titled measures utilized by different corporations.

12 months
Ended December 31, Change
2021 2020 $ %
(unaudited)
({dollars} in thousands and thousands)
Revenues $ 145.5 $ 127.4 $ 18.1 14.2 %
Add (deduct):
Acquisition revenues (16.6 ) –
Discontinued occasions – (7.6 )
COVID-19 prior yr
cancellations(1) (85.1 ) –
COVID-19 present yr
cancellations(2) – (75.7 )
Natural income $ 43.8 $ 44.1 $ (0.3 ) (0.7 %)

(1) Represents the rise in 2021 revenues attributable to occasions that
staged within the present yr and had been cancelled resulting from COVID-19 within the
prior yr.

(2) Represents discount in revenues attributable to sure occasions that
had been cancelled in fiscal 2021 resulting from COVID-19, in comparison with all occasions
that staged in 2020. The Firm believes the monetary impression, internet of
prices saved, will likely be partially offset by occasion cancellation insurance coverage
proceeds from pending claims.

Revenues

Whole revenues of $145.5 million for the yr ended December 31, 2021 elevated
$18.1 million, or 14.2%, from $127.Four million for the yr ended December 31,
2020. See “Commerce Phase – Revenues,” “Design and Know-how Phase –
Revenues,” and “All Different Class – Revenues” under for a dialogue of the
components contributing to the adjustments in complete revenues.

Different Earnings

Whole different earnings of $77.Four million for fiscal 2021 decreased by $29.6 million,
from $107.Zero million for fiscal 2020. See “Commerce Phase – Value of Revenues,”
“Design and Know-how Phase – Value of Revenues” and “All Different Class –
Value of Revenues” under for a dialogue of the components contributing to the
adjustments in complete price of revenues.

Value of Revenues

Whole price of revenues of $55.5 million for fiscal 2021 decreased by $2.1
million, or 3.6%, from $57.6 million for fiscal 2020. See “Commerce Phase –
Value of Revenues,” “Design and Know-how Phase – Value of Revenues” and “All
Different Class – Value of Revenues” under for a dialogue of the components
contributing to the adjustments in complete price of revenues.

Promoting, Normal and Administrative Bills

Whole promoting, basic and administrative bills consist primarily of
compensation and employee-related prices, gross sales commissions and incentive plans,
stock-based compensation expense, advertising and marketing bills, data expertise
bills, journey bills, services prices, consulting charges and public
reporting prices. Whole promoting, basic and administrative bills of $143.0
million for the yr ended December 31, 2021 elevated $24.Four million, or 20.6%,
from $118.6 million for the yr ended December 31, 2020. See “Commerce Phase
– Promoting,

42
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Normal and Administrative Bills”, “Design and Know-how Phase – Promoting,
Normal and Administrative Bills”, “All Different class – Promoting, Normal and
Administrative Bills” and “Company – Promoting, Normal and Administrative
Bills” under for a dialogue of the components contributing to the adjustments in
complete promoting, basic and administrative bills.

Depreciation and Amortization Expense

Whole depreciation and amortization expense of $47.6 million for the yr ended
December 31, 2021 decreased $1.Zero million, or 2.1%, from $48.6 million for the
yr ended December 31, 2020. See “Commerce Phase – Depreciation and
Amortization Expense,” “Design and Know-how Phase – Depreciation and
Amortization Expense,” “All Different Class – Depreciation and Amortization
Expense” and “Company – Depreciation and Amortization Expense” under for a
dialogue of the components contributing to the adjustments in complete depreciation and
amortization expense.

Goodwill Impairments

On account of our annual goodwill impairment evaluation, administration recorded a
$7.2 million non-cash cost associated to the impairment of goodwill as of October
31, 2021.

On account of the COVID-19 pandemic and the measures carried out to forestall its
unfold, in the course of the first quarter of 2020, we decided that the COVID-19
outbreak would proceed to have a fabric damaging impression on our monetary
outcomes even following the time when the outbreak is contained. These components,
in addition to uncertainty round after we would have the ability to resume regular operations,
brought about a major and extended decline in our inventory value, leading to our
market capitalization falling under the Firm’s carrying worth. In consequence,
we decided {that a} triggering occasion occurred and carried out a quantitative
evaluation of the Firm’s honest worth as of March 31, 2020. In reference to
this evaluation administration recorded a $588.2 million non-cash cost associated to
the impairment of goodwill. As well as, because of our annual goodwill
impairment evaluation, administration recorded a further $15.2 million non-cash
cost associated to the impairment of goodwill as of October 31, 2020.

Intangible Asset Impairments

On account of our annual impairment evaluation as of October 31, 2021,
administration recorded a non-cash impairment cost of $32.7 million, which
included non-cash impairment costs of $21.Zero million and $11.7 million for
sure buyer relationship intangible property and definite-lived commerce names,
and sure indefinite-lived commerce names, respectively.

Because of the triggering occasion within the first quarter of 2020 described above,
administration carried out impairment assessments of our long-lived property and
indefinite-lived property. The assessments resulted within the recognition of a
non-cash impairment cost of $59.Four million, which included non-cash impairment
costs for sure of our long-lived buyer relationship and commerce title
intangible property, and sure of our indefinite-lived commerce title intangible
property of $13.2 million and $46.2 million, respectively. On account of our
annual impairment evaluation as of October 31, 2020, administration recorded a
non-cash impairment cost of $17.Four million, which included non-cash impairment
costs for sure of our long-lived buyer relationship and commerce title
intangible property, and sure of our indefinite-lived commerce title intangible
property of $16.Eight million and $0.6 million, respectively.

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Commerce Phase

12 months Ended December 31,
2021 2020 Variance $ Variance %
({dollars} in thousands and thousands)

Revenues $ 57.3 $ 56.9 $ 0.4 0.7 %
Different earnings 59.3 70.3 (11.0 ) (15.6 )%
Value of revenues 18.1 24.6 (6.5 ) (26.4 )%
Promoting, basic and administrative bills 24.9 27.8 (2.9 ) (10.4 )%
Depreciation and amortization expense 24.0 21.9 2.1 9.6 %
Goodwill impairments 7.2 367.5 (360.3 ) NM
Intangible asset impairments 30.1 45.9 (15.8 ) (34.4 )%
Working earnings (loss) $ 12.3 $ (360.5 ) $ 372.8 NM

Revenues

Through the yr ended December 31, 2021, revenues for the Commerce phase of
$57.Three million elevated by $0.Four million, or 0.7% from $56.9 million for the yr
ended December 31, 2020. The first driver of the rise was $44.6 million in
revenues associated to stay occasions that staged primarily within the second half of 2021
however had been cancelled resulting from COVID-19 within the prior yr. This improve was offset
by a $38.7 million discount from the cancellation of practically all occasions
scheduled to stage within the first half of 2021 resulting from COVID-19. The remaining $5.6
million decline in revenues was primarily resulting from a $4.1 million, or 43.4%,
lower in revenues from two occasions that staged in each 2021 and 2020. This
decline was largely attributable to 1 occasion that staged pre-COVID in January
2020 and was the Firm’s solely massive occasion to stage within the first half of
2021. This lower was offset by a $1.1 million improve in print and digital
promoting and digital occasion revenues. Discontinued different advertising and marketing companies
representing $2.7 million of 2020 revenues additionally impacted the present yr
outcomes.

Different Earnings

Different earnings of $59.Three million was recorded for the Commerce phase associated to
occasion cancellation insurance coverage proceeds in the course of the yr ended December 31,
2021. All $59.Three million was acquired throughout 2021.

Different earnings of $70.Three million was recorded for the Commerce phase associated to
occasion cancellation insurance coverage proceeds in the course of the yr ended December 31,
2020. Of the $70.Three million, $61.Three million was acquired and $9.Zero million was
confirmed by the insurance coverage supplier throughout 2020. All $9.Zero million of insurance coverage
receivables for the Commerce phase as of December 31, 2020 had been acquired in
January 2021.

Value of Revenues

Through the yr ended December 31, 2021, price of revenues for the Commerce
reportable phase decreased $6.5 million, or 26.4%, to $18.1 million from $24.6
million for the yr ended December 31, 2020. The first drivers of the
lower had been a $12.Eight million decline in expense from occasions that had been cancelled
resulting from COVID-19 in 2021, however staged in 2020, a $1.7 million decline from occasions
that had been cancelled in each years resulting from COVID-19 and $1.Zero million in price
financial savings from a number of small discontinued occasions. These declines had been offset by
$9.Zero million in price of revenues associated to stay occasions that staged in 2021 however
had been cancelled in 2020 resulting from COVID-19.

Promoting, Normal and Administrative Bills

Through the yr ended December 31, 2021 promoting, basic and administrative
bills for the Commerce reportable phase decreased $2.9 million, or 10.4%,
to $24.9 million from $27.Eight million for the comparable interval in 2020. The
lower was primarily associated to decrease compensation and advantages expense
attributable to the centralization initiatives carried out over the prior yr,
decrease gross sales commissions associated to decrease revenues, prevented promotional and
journey prices associated to cancelled occasions, in addition to bank card price financial savings
in the course of the yr ended December 31, 2021.

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Depreciation and Amortization Expense

Depreciation and amortization expense attributable to the Commerce phase of
$24.Zero million for the yr ended December 31, 2021 elevated $2.1 million, or
9.6%, from $21.9 million for the yr ended December 31, 2020. The rise was
resulting from increased amortization on the definite-lived commerce title and buyer
relationship intangible property.

Goodwill Impairments

In reference to our 2021 annual impairment evaluation, administration recorded a
$7.2 million non-cash goodwill impairment cost associated to reporting models
below the Commerce phase.

Throughout 2020, we recorded $367.5 million non-cash goodwill impairment costs in
reference to reporting models below the Commerce phase in relation to our
interim and annual impairment assessments. Discuss with the consolidated goodwill
impairment dialogue below the heading, Goodwill Impairment, above on this
Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations for additional dialogue on goodwill impairment.

Intangible Asset Impairments

In reference to our 2021 annual impairment evaluation, administration recorded a
non-cash impairment cost of $30.1 million for intangible property associated to the
Commerce phase. The non-cash costs included $21.Zero million for sure
definite-lived buyer relationship and commerce names intangible property, and $9.1
million for sure indefinite-lived commerce title intangible property.

In reference to the triggering occasion within the first quarter of 2020 described
above, we carried out impairment assessments of long-lived property and
indefinite-lived property and recorded non-cash impairment costs associated to
long-lived property and indefinite-lived intangible property below the Commerce
phase of $6.7 million and $24.Zero million, respectively. In relation to our
annual impairment evaluation carried out as of October 31, 2020, we recorded
further non-cash impairment costs associated to associated to long-lived property
below the Commerce phase of $15.2 million. Throughout 2020, we recorded complete
non-cash impairment costs associated to long-lived property and indefinite-lived
intangible property below the Commerce phase of $21.9 million and $24.Zero million,
respectively.

Design and Know-how Phase

12 months Ended December 31,
2021 2020

Variance $ Variance %

({dollars} in thousands and thousands)
Revenues $ 55.4 $ 51.2 $ 4.2 8.2 %
Different earnings 12.3 32.5 (20.2 ) (62.2 )%
Value of revenues 27.0 25.7 1.3 5.1 %
Promoting, basic and administrative bills 22.4 23.0 (0.6 ) (2.6 )%
Depreciation and amortization expense 14.9 16.4 (1.5 ) (9.1 )%
Goodwill impairments – 205.7 (205.7 ) NM
Intangible asset impairments 2.6 24.9 (22.3 ) NM
Working earnings (loss) $ 0.8 $ (212.0 ) $ 233.0 NM

Revenues

Through the yr ended December 31, 2021, revenues for the Design and Know-how
phase of $55.Four million elevated by $4.2 million, or 8.2%, from $51.2 million
for the yr ended December 31, 2020. The first drivers of the rise had been
$34.1 million in revenues associated to stay occasions that staged primarily within the
second half of 2021 however had been cancelled resulting from COVID-19 within the prior yr and an
improve of $0.7 million, or 20.9%, for stay occasions that staged in each years.
These will increase had been partially offset by a $30.Three million discount from the
cancellation of practically all stay occasions scheduled to stage within the first half of
2021 resulting from COVID-19.

45
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Different Earnings

Different earnings of $12.Three million was recorded for the Design and Know-how phase
associated to occasion cancellation insurance coverage claims in the course of the yr ended December
31, 2021. All $12.Three million was acquired throughout 2021.

Different earnings of $32.5 million was recorded for the Design and Know-how phase
associated to occasion cancellation insurance coverage claims proceeds in the course of the yr ended
December 31, 2020. Of the $32.5 million, $24.Eight million was acquired and $7.7
million was confirmed by the insurance coverage supplier throughout 2020. All $7.7 million of
insurance coverage receivables for the Know-how and Design phase as of December 31,
2020 had been acquired in January 2021.

Value of Revenues

Through the yr ended December 31, 2021, price of revenues for the Design and
Know-how phase of $27.Zero million elevated by $1.Three million, or 5.1%, from
$25.7 million for the yr ended December 31, 2020. The first drivers of the
improve had been $15.Eight million associated to stay occasions that staged primarily within the
second half of 2021 however had been cancelled resulting from COVID-19 within the prior yr. These
will increase had been partially offset by a $14.Three million discount from the
cancellation of practically all occasions scheduled to stage within the first half of 2021
resulting from COVID-19.

Promoting, Normal and Administrative Bills

Through the yr ended December 31, 2021, promoting, basic and administrative
bills for the Design and Know-how phase of $22.Four million decreased by
$0.6 million, or 2.6%, from $23.Zero million for the yr ended December 31, 2020.
The lower was primarily associated to decrease compensation and advantages expense
attributable to the centralization initiatives carried out over the prior yr,
decrease exterior fee expense, in addition to bank card price financial savings in the course of the
yr ended December 31, 2021, partly offset by increased advertising and marketing prices.

Depreciation and Amortization Expense

Through the yr ended December 31, 2021, depreciation and amortization expense
for the Design and Know-how phase of $14.9 million decreased $1.5 million,
or 9.1%, from $16.Four million for the yr ended December 31, 2020. The lower
was resulting from decrease amortization on the definite-lived commerce title and buyer
relationship intangible property which had been impaired within the first and fourth
quarters of 2020.

Goodwill Impairments

Throughout 2020, we recorded $205.7 million non-cash goodwill impairment costs in
reference to reporting models below the Design and Know-how phase in
relation to our interim and annual impairment assessments. Discuss with the
consolidated goodwill impairment dialogue below the heading, Goodwill
Impairment, above on this Administration’s Dialogue and Evaluation of Monetary
Situation and Outcomes of Operations for additional dialogue on goodwill
impairment.

Intangible Asset Impairments

In reference to our 2021 annual impairment evaluation, administration recorded a
non-cash impairment cost of $2.6 million for intangible property associated to the
Design and Know-how phase. The non-cash costs included a $2.6 million for
sure indefinite-lived commerce title intangible property.

In reference to the triggering occasion within the first quarter of 2020, we
carried out impairment assessments of long-lived property and indefinite-lived
property and recorded non-cash impairment costs associated to long-lived property and
indefinite-lived intangible property below the Design and Know-how phase of
$5.7 million and $17.Zero million, respectively. In relation to our 2020 annual
impairment evaluation carried out as of October 31, 2020, we recorded further
non-cash impairment costs of $1.6 million and $0.6 million, in reference to
long-lived property and indefinite-lived intangible property, respectively, below
the Design and Know-how phase. Throughout 2020, we recorded complete non-cash
impairment costs associated to long-lived property and indefinite-lived intangible
property below the Design and Know-how phase of $7.Three million and $17.6
million, respectively.

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All Different Class

12 months Ended December 31,
2021 2020 Variance $ Variance %
({dollars} in thousands and thousands)
Revenues $ 32.8 $ 19.3 $ 13.5 69.9 %
Different earnings 5.8 4.2 1.6 38.1 %
Value of revenues 10.4 7.3 3.1 42.5 %
Promoting, basic and administrative bills 27.4 13.3 14.1 NM
Depreciation and amortization expense 6.3 7.4 (1.1 ) (14.9 )%
Goodwill impairments – 30.2 (30.2 ) NM
Intangible asset impairments – 6.0 (6.0 ) NM
Working loss $ (5.5 ) $ (40.7 ) $ 35.2 (86.5 )%

Revenues

Through the yr ended December 31, 2021, income attributable to the All Different
class of $32.Eight million elevated by $13.5 million, or 69.9%, from $19.3
million for the yr ended December 31, 2020. The first drivers of the
improve had been incremental revenues of $14.Four million from the acquisitions of
PlumRiver and Sue Bryce, which closed in December 2020 and April 2021,
respectively, $6.Three million of income from occasions that staged throughout 2021, however
had been cancelled resulting from COVID-19 within the prior yr, and a $1.Three million natural
revenues improve, primarily associated to print and digital promoting enterprise.
These will increase had been offset by $6.7 million for occasions that staged in 2020 however
had been cancelled resulting from COVID-19 in 2021 and a $1.6 million decline attributable
to discontinued different advertising and marketing companies.

Different Earnings

Different earnings of $5.Eight million was recorded for the All Different class associated to
occasion cancellation insurance coverage claims proceeds in the course of the yr ended December 31,
2021. All $5.Eight million was acquired throughout 2021.

Different earnings of $4.2 million was recorded for All Different class associated to
occasion cancellation insurance coverage claims proceeds in the course of the yr ended December 31,
2020. Of the $4.2 million, $3.Zero million was acquired and $1.2 million was
confirmed by the insurance coverage supplier throughout 2020. All $1.2 million of insurance coverage
receivables for the All Different class as of December 31, 2020 had been acquired in
January 2021.

Value of Revenues

Through the yr ended December 31, 2021, price of revenues attributable to the
All Different class of $10.Four million elevated by $3.1 million, or 42.5%, from
$7.Three million for the yr ended December 31, 2020. The first drivers of the
improve had been $2.Three million in further expense for occasions that staged throughout
the present yr, however had been cancelled resulting from COVID-19 in 2020, and incremental
prices of $2.Zero million from the acquisitions of PlumRiver and Sue Bryce, which
closed in December 2020 and April 2021, respectively. These will increase had been
partly offset by decreases of $0.6 million in expense associated to occasions that
had been both cancelled resulting from COVID-19 in the course of the present yr, however staged in
2020 or cancelled in each years resulting from COVID-19, and a lower of $0.5 million
in expense associated to discontinued digital occasions and different advertising and marketing companies.

Promoting, Normal and Administrative Bills

Through the yr ended December 31, 2021, promoting, basic and administrative
bills for the All Different class of $27.Four million elevated by $14.1 million,
from $13.Three million for the yr ended December 31, 2020. The rise in
promoting, basic and administrative expense was primarily pushed by the
acquisitions of PlumRiver and Sue Bryce in December 2020 and April 2021,
respectively.

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Depreciation and Amortization Expense

Depreciation and amortization expense for the All Different class of $6.Three million
for the yr ended December 31, 2021 decreased $1.1 million, or 14.9%, from $7.4
million for the yr ended December 31, 2020. The lower was resulting from decrease
amortization on the definite-lived commerce title and buyer relationship
intangible property which had been impaired within the first and fourth quarters of 2020.

Goodwill Impairments

Throughout 2020, we recorded non-cash goodwill impairment costs of $30.2 million
in reference to reporting models below the All Different class in relation to
our interim and annual impairment assessments. Discuss with the consolidated
goodwill impairment dialogue below the heading, Goodwill Impairment, above in
this Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations for additional dialogue on goodwill impairment.

Intangible Asset Impairments

In reference to the triggering occasion within the first quarter of 2020 described
above, we carried out impairment assessments of long-lived property and
indefinite-lived property and recorded non-cash impairment costs associated to
long-lived property and indefinite-lived intangible property below the All Different
class of $0.Eight million and $5.2 million, respectively.

Company

12 months Ended December 31,
2021 2020 Variance $ Variance %
({dollars}

in thousands and thousands)
Promoting, basic and administrative bills $ 68.3 $ 54.5 $ 13.8

25.3 %
Depreciation and amortization expense 2.4 2.9 (0.5 ) (17.2 )%
Whole working bills $ 70.7 $ 57.4 $ 13.3 23.2 %

Promoting, Normal and Administrative Bills

Through the yr ended December 31, 2021, promoting, basic and administrative
bills of $68.Three million for corporate-level exercise elevated by $13.8
million, or 25.3%, from $54.5 million for the yr ended December 31, 2020. The
improve in promoting, basic and administrative expense was primarily pushed by
increased compensation and advantages expense, increased stock-based compensation prices
and better transition prices, together with one-time severance expense.

Depreciation and Amortization Expense

Depreciation and amortization expense regarding corporate-level exercise of
$2.Four million for the yr ended December 31, 2021 decreased $0.5 million, or
17.2%, from $2.9 million for the yr ended December 31, 2020.

Curiosity Expense; Profit from Earnings Taxes; Internet Loss; Adjusted EBITDA

Curiosity Expense

Curiosity expense of $15.Eight million for the yr ended December 31, 2021 decreased
$4.Eight million, or 23.3%, from $20.6 million for the yr ended December 31, 2020.
The lower was primarily attributable to a lower within the variable curiosity
fee on our Amended and Restated Time period Mortgage Facility, for which the typical fee
throughout 2021 was 2.60%, in comparison with 3.28% throughout 2020, and a $0.9 million
lower in curiosity expense associated to decrease borrowings below the Amended and
Restated Revolving Credit score Facility.

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Profit from Earnings Taxes

For the years ended December 31, 2021 and 2020, we recorded a profit from
earnings taxes of $1.Three million and $57.6 million, respectively. The lower in
our profit from earnings taxes of $56.2 million for the yr ended December 31,
2021 in comparison with the prior yr was primarily attributable to the impression of
decrease non-cash costs associated to goodwill and intangible asset impairments,
offset by decrease different earnings and better working losses incurred because of
the continued impression of the COVID-19 pandemic.

Internet Loss

Internet lack of $78.1 million for the yr ended December 31, 2021 decreased $555.5
million from internet lack of $633.6 million for the yr ended December 31, 2020.
The important thing drivers of the lower in internet loss had been the decreases in non-cash
goodwill and intangible asset impairment costs and curiosity expense, partly
offset by the upper company overhead expense and decrease advantages from earnings
taxes described above.

Adjusted EBITDA

Whole Adjusted EBITDA of $45.7 million for the yr ended December 31, 2021
decreased $26.2 million, or 36.4%, from $71.9 million for the yr ended
December 31, 2020. The lower in Adjusted EBITDA was primarily attributable to
decrease different earnings associated to occasion cancellation insurance coverage proceeds acquired or
confirmed in the course of the yr in addition to decrease working income because of the
continued impression of the COVID-19 pandemic.

Adjusted EBITDA is a monetary measure that isn’t calculated in accordance with
GAAP. For a dialogue of our presentation of Adjusted EBITDA, see footnote Four to
the desk below the heading “Outcomes of Operations – Comparability of the 12 months
Ended December 31, 2021 to the 12 months Ended December 31, 2020”.

Liquidity and Capital Assets

Liquidity describes the flexibility of an organization to generate adequate money flows
to fulfill the money necessities of its enterprise operations, together with working
capital wants, debt service, acquisitions, different commitments and contractual
obligations. We contemplate liquidity by way of money flows from operations and
their sufficiency to fund our working and investing actions.

In March 2020, the World Well being Group categorized the Coronavirus Illness
2019 (“COVID-19”) as a pandemic, and the President of the US declared
the COVID-19 outbreak a nationwide emergency. Along side this declaration
and the unfold of COVID-19 throughout the US, suggestions and
mandates had been handed down by varied native, state and federal authorities
companies relating to social distancing, containment areas and towards massive
gatherings, in addition to quarantine necessities. As well as, journey restrictions
had been imposed by the US and international governments, and by corporations with
respect to their staff, and varied occasion venues introduced indefinite
closures. On account of these and varied different components, administration made the
resolution to cancel considerably all of our face-to-face occasions scheduled
by means of the tip of 2020. As well as, starting in October 2020, administration
introduced the cancellation or postponement of quite a few stay occasions that had been
scheduled for the primary half of 2021, together with all however a number of comparatively small
stay occasions staging within the first six months of 2021. Following the reopening of
most main municipalities in the US in June 2021, we traded 56
in-person occasions. As anticipated, the continued results of COVID-19 associated points
akin to worldwide journey restrictions and the necessity to postpone a number of
occasions, negatively impacted the monetary outcomes of the Firm’s fiscal yr
2021. Whereas journey restrictions on worldwide vacationers to the US
had been lifted within the fourth quarter of 2021, the continued results of COVID-19 on
the Firm’s operations and occasion calendar have had, and can proceed to have,
a fabric damaging impression on its monetary outcomes and liquidity, and such
damaging impression could proceed past the containment of such outbreak.

The assumptions used to estimate our liquidity are topic to higher
uncertainty as a result of we have now by no means beforehand cancelled or postponed all upcoming
occasions for a interval of over a yr resulting from a pandemic the place the timing for
decision and supreme impression of the pandemic stays unsure. Administration
can not estimate with certainty (i) when we can resume full occasion
operations and, as soon as resumed, (ii) whether or not occasion exhibitors and attendees will
attend our occasions. Subsequently, present estimates of revenues and the related
impression on liquidity

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may differ materially sooner or later. As a consequence, administration can not
estimate the last word impression on our enterprise, monetary situation or close to or
long term monetary or operational outcomes. Through the years ended December
31, 2020 and 2021, we carried out a number of actions to protect money and
strengthen the Firm’s liquidity place, together with, however not restricted to:

• Finishing the sale of its 7% Sequence A Convertible Redeemable Most well-liked

Inventory, producing internet proceeds of $382.7 million;

• Decreasing its expense construction throughout all key areas of discretionary

spending;

• Considerably decreasing the usage of exterior contractors; and

• Suspending the earlier quarterly money dividend.

Additional, Emerald maintains occasion cancellation insurance coverage to guard towards
losses because of the unavoidable cancellation, postponement, relocation and
enforced decreased attendance at occasions resulting from sure coated occasions.
Particularly, for the insurance policies overlaying calendar years 2021 and 2020, Emerald is
insured for losses resulting from occasion cancellations attributable to the outbreak of
communicable illnesses, together with COVID-19. Nonetheless, Emerald’s renewed occasion
cancellation insurance coverage insurance policies for the calendar yr 2022 don’t cowl losses
resulting from occasion cancellations attributable to the outbreak of communicable illnesses,
together with COVID-19. As well as, protection for every of our occasion cancellation
insurance coverage insurance policies extends to incorporate further promotional and advertising and marketing
bills essentially incurred by us ought to a coated loss happen. These insurance policies
additionally embody a terrorism endorsement overlaying an act of terrorism and/or risk
of terrorism directed on the insured occasion or inside the US or its
territories. The mixture restrict below these occasion cancellation insurance coverage
insurance policies is roughly $191.1 million in 2020, $191.Four million in 2021 and
$100.Zero million in 2022 if losses come up for causes inside the scope of those
insurance policies.

Along with these main insurance policies, Emerald maintains separate occasion
cancellation insurance coverage insurance policies for the Surf Expo Summer season 2020, Surf Expo Winter
2021, Surf Expo Winter 2022 and Surf Expo Summer season 2022 exhibits, with respective
protection limits of $6.Zero million, $7.7 million, $8.Four million and $6.5 million.
Just like the first occasion cancellation insurance coverage insurance policies, protection for the
outbreak of communicable illness, together with COVID-19, is included for the
insurance policies overlaying Surf Expo Summer season 2020 and Surf Expo Winter 2021, however not
included for the insurance policies overlaying Surf Expo Winter 2022 and Surf Expo Summer season
2022.

We’re within the technique of pursuing claims below the 2021 and 2020 occasion
cancellation insurance coverage insurance policies to offset the monetary impression of cancelled and
postponed occasions because of COVID-19. To this point, we have now submitted claims
associated to impacted or cancelled occasions beforehand scheduled to happen in
2020 and 2021 of roughly $167.Zero million and $82.Three million,
respectively. Different earnings acknowledged up to now, associated to insurance coverage proceeds
acquired or confirmed on the claims associated to occasions beforehand scheduled to
happen in 2021 and 2021, totaled $43.Zero million and $141.Four million,
respectively. Through the years ended December 31, 2021 and 2020, the Firm
recorded Different earnings of $77.Four million and $107.Zero million, respectively, associated
to occasion cancellation insurance coverage declare proceeds deemed to be realizable. All of
the $77.Four million in Different earnings was acquired in 2021. Excellent claims are
topic to overview and adjustment and there’s no assure or assurance as to
the quantity or timing of future recoveries from Emerald’s occasion cancellation
insurance coverage insurance policies.

On March 27, 2020, the U.S. authorities enacted the Coronavirus Support, Reduction, and
Financial Safety Act (“CARES Act”), which gives for the flexibility of employers
to delay fee of employer payroll taxes throughout 2020 after the date of
enactment. In consequence, the fee roughly $1.Eight million of our employer
payroll taxes in any other case due in 2020 will likely be delayed, with 50% due by December
31, 2021 and the remaining 50% due by December 31, 2022. The Firm paid $0.9
million of the deferred employer payroll taxes in December 2021.

As of December 31, 2021, we had $519.7 million of borrowings excellent below
the Amended and Restated Time period Mortgage Facility, which included unamortized deferred
financing charges of $1.9 million and unamortized unique subject low cost of $1.4
million, with a further $109.Zero million out there to borrow (after giving
impact to $1.Zero million letters of credit score excellent) below the Amended and
Restated Revolving Credit score Facility. Borrowings below our Amended and Restated
Time period Mortgage Facility are topic to necessary prepayments below specified
circumstances, together with 50.0% of Extra Money Movement, topic to step-downs to 25%
and 0% of extra money stream at sure leverage primarily based thresholds, and with 100%
of the online money proceeds of asset gross sales and casualty occasions in

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extra of sure thresholds (topic to sure reinvestment rights). If these
thresholds are triggered, we might be required to make these necessary
prepayments. See “–Lengthy-Time period Debt-Amended and Restated Senior Secured Credit score
Amenities” under for extra element relating to the phrases of our Amended and
Restated Senior Secured Credit score Amenities.

Primarily based on these actions, assumptions relating to the impression of COVID-19, and
anticipated insurance coverage recoveries, we consider that the Firm’s present monetary
sources will likely be adequate to fund its liquidity necessities for not less than the
subsequent twelve months.

Dividend Coverage

We paid a dividend of $0.0725 per share within the first quarter of 2019 and $0.0750
per share in every of the second, third and fourth quarters of 2019 and first
quarter of 2020. On March 20, 2020, because of the damaging impression of COVID-19 on
our enterprise, our Board of Administrators quickly suspended the Firm’s common
quarterly money dividend on its frequent inventory. The fee of any such dividend in
future quarters is topic to the discretion of our board of administrators and
relying upon our outcomes of operations, money necessities, monetary
situation, contractual restrictions, restrictions imposed by relevant legal guidelines and
different components that our board of administrators could deem related, and the quantity of
any future dividend fee could also be modified or terminated sooner or later at any
time and for any purpose with out advance discover.

Our enterprise is performed by means of our subsidiaries. Dividends, distributions and
different funds from, and money generated by, our subsidiaries will likely be our
principal sources of money to repay indebtedness, fund operations and pay
dividends. Accordingly, our capacity to pay dividends to our stockholders is
depending on the earnings and distributions of funds from our subsidiaries. In
addition, the covenants within the agreements governing our current indebtedness,
together with the Amended and Restated Senior Secured Credit score Amenities,
considerably prohibit the flexibility of our subsidiaries to pay dividends or
in any other case switch property to us. See “-Lengthy-Time period Debt”, “Danger Elements-Dangers
Regarding Possession of Our Frequent Inventory-As a result of we’re a holding firm with
no operations of our personal, we depend on dividends, distributions, and transfers of
funds from our subsidiaries” and “Danger Elements-Dangers Regarding Possession of
Our Frequent Inventory-We can not guarantee you that we are going to proceed to pay dividends on
our frequent inventory, and our indebtedness may restrict our capacity to pay dividends
on our frequent inventory.”

Share Repurchases

Our Board of Administrators authorised a $30.Zero million share repurchase program within the
third quarter of 2019. We settled the repurchase of 853,557 shares of our frequent
inventory for $8.Three million in the course of the yr ended December 31, 2019. The $30.0
million share repurchase program was discontinued within the first quarter of 2020.

On October 5, 2020, our Board of Administrators approved and authorised a brand new $20.0
million share repurchase program (the “October 2020 share repurchase program”.
Share repurchases could also be made once in a while by means of and together with December
31, 2021, topic to early termination or extension by the Board of Administrators,
by means of open market purchases, block transactions, privately negotiated
purchases or in any other case. The Firm repurchased 2,498,118 shares for $12.4
million in the course of the yr ended December 31, 2021 below this repurchase program.
There was $6.Eight million remaining out there for share repurchases below the
October 2020 Share Repurchase Program as of December 31, 2021.

On October 29, 2021, our Board of Administrators authorised extension and growth of
the October 2020 share repurchase program, which permits for the repurchase of
$20.Zero million of our Frequent Inventory by means of December 31, 2022, topic to early
termination or extension by the Board of Administrators. The share repurchase program
could also be suspended or discontinued at any time with out discover.

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Money Flows

The next desk summarizes the adjustments to our money flows for the durations
offered:

12 months Ended December 31,
2021 2020 2019
(unaudited)
Assertion of Money Flows Knowledge ({dollars} in thousands and thousands)

Internet money offered by (utilized in) working actions $ 90.0 $ (37.1 ) $ 67.8
Internet money utilized in investing actions

$ (131.9 ) $ (37.3 ) $ (16.7 )
Internet money (utilized in) offered by financing actions $ (22.2 ) $ 360.1 $ (62.0 )

Working Actions

Working actions consist primarily of internet loss adjusted for noncash objects
that embody goodwill and intangible asset impairments, depreciation and
amortization, deferred earnings taxes, amortization of deferred financing charges and
debt low cost, share-based compensation, plus the impact of adjustments in the course of the
interval in our working capital.

Internet money offered by working actions for the yr ended December 31, 2021
elevated $127.1 million to $90.Zero million offered by working actions, from
$37.1 million utilized in working actions in the course of the yr ended December 31,
2020. The rise was primarily resulting from a $150.Eight million improve in money
generated by working capital, from $62.9 million in money generated by working
capital in the course of the present yr in comparison with the usage of $87.9 million in money for
working capital in the course of the yr ended December 31, 2020. This improve was
primarily attributable to increased deferred revenues, partially offset by increased
accounts receivable, associated to elevated gross sales exercise as our stay occasions
start to emerge from the COVID-19 pandemic in addition to the receipt of occasion
cancellation insurance coverage declare proceeds in the course of the present yr. These working
capital enhancements had been partially offset by refunds paid to prospects for stay
occasions that had been cancelled or postponed resulting from COVID-19 throughout 2020 and
2021. Internet loss and non-cash changes to internet loss generated $27.1 million in
money in the course of the yr ended December 31, 2021 in comparison with $50.Eight million in money
generated in the course of the prior yr. The first driver of this decline was decrease
non-cash goodwill and impairment addbacks offset by decrease internet loss and deferred
earnings tax profit addbacks in the course of the present yr.

Internet money utilized in working actions for the yr ended December 31, 2020
decreased $104.9 million to $37.1 million utilized in working actions, from
$67.Eight million offered by working actions in the course of the yr ended December
31, 2019. The lower was primarily resulting from a $583.6 million improve in internet
loss and a $70.1 million improve in money used for working capital. These had been
partially offset by a $548.Eight million improve in non-cash reconciling
changes pushed by will increase in non-cash goodwill and intangible asset
impairment costs of $534.Three million and $59.Eight million, respectively, partly
offset by decreases of $42.7 million for deferred earnings taxes and $3.Four million
for depreciation and amortization.

Investing Actions

Investing actions include enterprise acquisitions and purchases of different
productive property, investments in data expertise and capital
expenditures to furnish or improve our workplaces.

Internet money utilized in investing actions for the yr ended December 31, 2021
elevated $94.6 million to $131.9 million from $37.Three million within the yr ended
December 31, 2020. The rise was primarily resulting from elevated mixture money
used for enterprise acquisitions in the course of the yr ended December 31, 2021 of $125.3
million in comparison with $33.Three million within the prior yr. The Firm accomplished two
enterprise acquisitions in every of the years ended December 31, 2021 and 2020. Internet
money utilized in investing actions for the yr ended December 31, 2020 elevated
$20.6 million, or 123.4%, to $37.Three million from $16.7 million within the yr ended
December 31, 2019. The rise was resulting from elevated money used for enterprise
acquisitions in the course of the yr ended December 31, 2020 in comparison with the

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prior yr. Within the yr ended December 31, 2020, we accomplished two acquisitions
for money consideration of $33.Three million, whereas in the course of the yr ended December
31, 2019, we accomplished one acquisition within the prior yr for mixture money
consideration of $12.Eight million. Internet money utilized in investing actions for the
yr ended December 31, 2019 decreased $58.Zero million, or 77.6%, to $16.7 million
from $74.7 million within the yr ended December 31, 2018. See Observe 4, Enterprise
Acquisitions, within the notes to the audited consolidated monetary statements
included elsewhere on this Annual Report on Kind 10-Ok for added data
with respect to the acquisitions. We’ve minimal capital expenditure
necessities. Capital expenditures totaled $6.6 million, $4.Zero million and $3.9
million within the years ended December 31, 2021, 2020 and 2019, respectively.

Financing Actions

Financing actions primarily include borrowing and repayments on our debt
to fund enterprise acquisitions and our operations.

Internet money utilized in financing actions for the yr ended December 31, 2021 was
$22.2 million, comprised of $12.Four million in share repurchases related to
our publicly introduced share repurchase applications, $5.7 million in repayments of
principal on our Amended and Restated Time period Mortgage Amenities and $4.2 million in
funds of deferred consideration associated to enterprise acquisitions. Internet money
offered by financing actions for the yr ended December 31, 2020 was $360.1
million, comprised of $382.7 million of internet proceeds for issuance of redeemable
convertible most well-liked inventory, partly offset by $10.Zero million in repayments internet of
borrowings on our Amended and Restated Senior Revolving Credit score Facility, $5.4
million in money dividend funds, $0.9 million in share repurchases related
with our publicly introduced share repurchase applications, $5.7 million in
repayments of principal on our Amended and Restated Time period Mortgage Amenities and a
$0.Eight million fee of deferred consideration associated to a enterprise
acquisition. Internet money utilized in financing actions for the yr ended December
31, 2019 was $62.Zero million, comprised of $46.Zero million in repayments of
borrowings on our Amended and Restated Senior Revolving Credit score Facility, $21.3
million in quarterly money dividend funds, $8.Three million in share repurchases
related to our publicly introduced share repurchase applications, $5.7 million
in repayments of principal on our Amended and Restated Time period Mortgage Amenities and
a $1.Zero million fee of deferred consideration associated to a enterprise
acquisition. These had been offset by internet proceeds of $16.Zero million borrowings on
our Amended and Restated Senior Revolving Credit score Facility and $4.Three million in
proceeds from frequent inventory issuances associated to the train of worker fairness
awards.

Free Money Movement

Free Money Movement of $83.Four million for the yr ended December 31, 2021 elevated
$124.5 million, from outflow of $41.1 million for the yr ended December 31,
2020. Free Money Movement of damaging $41.1 million for the yr ended December 31,
2020 decreased $105.Zero million, from influx of $63.9 million for the yr ended
December 31, 2019.

Free Money Movement is a monetary measure that isn’t calculated in accordance with
GAAP. For a dialogue of our presentation of Free Money Movement, see footnote 5 to
the desk below the heading “Outcomes of Operations – Comparability of the 12 months
Ended December 31, 2021 to the 12 months Ended December 31, 2020”.

Off-Stability Sheet Commitments

We’re not celebration to, and don’t usually enter into any, off-balance sheet
preparations.

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Lengthy-Time period Debt

Amended and Restated Senior Secured Credit score Amenities

On February 14, 2020, Emerald Occasions Holding, Inc., the borrower below the
Amended and Restated Senior Secured Credit score Amenities, was renamed Emerald X,
Inc (“Emerald X”). The Amended and Restated Time period Mortgage Amenities embody a
seven-year $565.Zero million senior secured time period mortgage facility, scheduled to mature
on Might 22, 2024 (the “Amended and Restated Time period Mortgage Facility”) and an Amended
and Restated Revolving Credit score Facility (as outlined under).

The Amended and Restated Senior Secured Credit score Amenities permits for Emerald X
to select from the next two rate of interest choices:

– Alternate Base Charge (“ABR”) loans bear curiosity at a fee equal to a
unfold, or relevant margin, above the best of (i) the
administrative agent’s prime fee, (ii) the Federal Funds Charge plus 50
foundation factors, and (iii) the one month London Interbank Provided Charge
(“LIBOR”) plus 1.00%.

or

-LIBOR loans bear curiosity at a fee equal to a ramification, or relevant margin,
over the LIBOR fee.

The unfold, or relevant margin, was 1.75% for ABR loans and a couple of.75% for LIBOR
loans by means of August 6, 2020. Starting within the first quarter of 2018, (i) the
relevant margin steps down by 0.25% if Emerald X’s Whole First Lien Internet
Leverage Ratio (as outlined within the Amended and Restated Senior Secured Credit score
Amenities) is decrease than 2.75 to 1.00 and (ii) the relevant margin below the
Amended and Restated Revolving Credit score Facility (however not the Amended and Restated
Time period Mortgage Facility) steps down by a further 0.25% if Emerald X’s Whole First
Lien Internet Leverage Ratio is lower than 2.50 to 1.00. On account of Firm’s
Whole First Lien Internet Leverage Ratio reducing under 2.50 to 1.00 (as outlined
under), from August 7, 2020 by means of December 31, 2020, borrowings below the
Revolving Credit score Facility had been topic to an rate of interest equal to LIBOR plus
2.25% or ABR plus 1.25%.

The Amended and Restated Senior Secured Credit score Amenities additionally embody an
uncommitted incremental facility which, topic to sure situations, gives
for added time period loans within the sum of:

(X) (i) if the incremental loans are first lien loans, an quantity such
that the Whole First Lien Internet Leverage ratio doesn’t exceed
4.00:1.00,

(ii) if the incremental loans are junior lien loans, an quantity such that the
Whole Internet Secured Leverage Ratio (as outlined within the Amended and Restated Senior
Secured Credit score Amenities) doesn’t exceed 4.00:1.00,

(iii) if the incremental loans are unsecured, an quantity such that both the
Whole Internet Leverage Ratio doesn’t exceed 5.00:1.00 or the Fastened Cost Protection
Ratio (as outlined within the Amended and Restated Senior Secured Credit score Amenities)
just isn’t lower than 2.00:1.00, or, in every case, if the incremental loans are
incurred with a permitted acquisition, an quantity such that the relevant
leverage ratio is not going to improve because of the permitted acquisition (on a
professional forma foundation giving impact to the incremental loans); plus

(Y)an quantity equal to sure prior voluntary prepayments, mortgage buybacks and
dedication reductions of loans below the Amended and Restated Senior Secured
Credit score Amenities, plus

(Z)an quantity equal to the higher of $160 million and 100% of Acquisition
Adjusted EBITDA (which is outlined as “Consolidated EBITDA” within the credit score
settlement governing the Amended and Restated Senior Secured Credit score Amenities).

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On June 25, 2021, Emerald X entered right into a Third Modification to Amended and
Restated Credit score Settlement (the “Modification”), by and amongst Emerald X, as
Borrower, the guarantors celebration thereto, the lenders celebration thereto and Financial institution of
America, N.A., as administrative agent, which amends that sure Amended and
Restated Credit score Settlement, dated as of Might 22, 2017. Pursuant to the Modification,
the prevailing Credit score Settlement was modified as follows:

• The maturity of the revolving commitments below the Credit score Settlement

was prolonged by 18 months to November 23, 2023;

• The mixture revolving commitments below the Credit score Settlement was

decreased from $150,000,00Zero to $110,000,000;

• A situation to future revolving advances was added such that the
Borrower is barely permitted to borrow new revolving loans if the
mixture quantity of unrestricted money of the Borrower and its
consolidated subsidiaries is not more than $40,000,000 (topic to
sure exceptions and exclusions); and

• From and after the efficient date of the Modification, sure dividends

and distributions to stockholders will likely be restricted to the

higher of

(i) $40,000,00Zero and (ii) 35% of the cumulative quantity of

Consolidated

EBITDA (excluding proceeds of occasion cancellation insurance coverage), with
quantities incurred in reliance on clause (i) above to not exceed
$20,000,00Zero in anyone fiscal yr.

Emerald X is required to pay a quarterly dedication price in respect of the
unutilized commitments below the Amended and Restated Revolving Credit score Facility
in an quantity equal to 0.50% each year, calculated on the unused portion of the
facility, which can be decreased to 0.375% upon achievement of a Whole First Lien
Ratio of three.50 to 1.50. Upon the issuance of letters of credit score below the Amended
and Restated Revolving Credit score Facility, Emerald X is required to pay fronting
charges, customary issuance and administration charges and a letter of credit score price
equal to the then-applicable margin (as decided by reference to LIBOR) for
the Amended and Restated Revolving Credit score Facility.

The Amended and Restated Time period Mortgage Facility requires reimbursement in equal
quarterly installments of 0.25% of the $565.Zero million, with the stability due at
maturity. Installment funds on the Amended and Restated Time period Mortgage Facility
are due on the final enterprise day of every quarter, commencing on September 29,
2017.

Topic to the sure customary exceptions and limitations, Emerald X. is
required to prepay quantities excellent below the Amended and Restated Time period Mortgage
Facility below specified circumstances, together with 50.0% of Extra Money Movement
(“ECF”), topic to step-downs to 25% and 0% of extra money stream at sure
leverage primarily based thresholds, and with 100% of the online money proceeds of asset gross sales
and casualty occasions in extra of sure thresholds (topic to sure
reinvestment rights).

All obligations below the Amended and Restated Senior Secured Facility are
assured by Emerald X’s direct dad or mum firm and, topic to sure
exceptions, by all of Emerald X’s direct and oblique wholly owned home
subsidiaries. As of December 31, 2021, all of Emerald X’s subsidiaries and
Emerald X’s direct dad or mum have offered ensures.

Topic to sure limitations, the obligations below the Amended and Restated
Senior Secured Credit score Amenities are secured by a perfected first precedence
safety curiosity in considerably all tangible and intangible property owned by
Emerald X or by any guarantor.

The Amended and Restated Senior Secured Credit score Amenities comprise a variety of
customary incurrence-based covenants imposing sure restrictions on our
enterprise, together with limitations on indebtedness; limitations on liens;
limitations on sure elementary adjustments (together with, with out limitation,
mergers, consolidations, liquidations and dissolutions); limitations on asset
gross sales; limitations on dividends and different restricted funds; limitations on
investments, loans and advances; limitations on sure repayments of
subordinated indebtedness; limitations on transactions with associates;
limitations on adjustments in fiscal durations; limitations on agreements limiting
liens and/or dividends; and limitations on adjustments in traces of enterprise.

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Sure of those incurrence-based covenants prohibit, topic to numerous
exceptions, our capacity to take sure actions (akin to incurring further
secured and unsecured indebtedness, ensuring investments and paying
sure dividends) except we meet sure minimal Fastened Cost Protection Ratio or
most Whole First Lien Internet Leverage Ratio and/or Whole Internet Secured Leverage
Ratio requirements. These ratios are calculated on the idea of our Acquisition
Adjusted EBITDA (which is outlined as “Consolidated EBITDA” within the credit score
settlement governing the Amended and Restated Senior Secured Credit score Amenities),
calculated on a trailing four-quarter foundation.

As well as, the Amended and Restated Revolving Credit score Facility incorporates a
monetary upkeep covenant (the “Monetary Covenant”) requiring Emerald X to
adjust to a 5.50 to 1.00 Whole First Lien Internet Leverage Ratio, which is outlined
because the ratio of Consolidated Whole Debt (as outlined within the Amended and Restated
Senior Secured Credit score Amenities) secured on a primary lien foundation, internet of
unrestricted money and money equivalents (“Whole First Lien Internet Debt”) to
Acquisition Adjusted EBITDA. This monetary covenant is examined quarterly provided that
the mixture quantity of revolving loans, swingline loans and letters of credit score
excellent below the Amended and Restated Revolving Credit score Facility (internet of up
to $10.Zero million of excellent letters of credit score) exceeds 35% of the entire
commitments thereunder. We weren’t required to check the Monetary Covenant at
December 31, 2021 or 2020.

Occasions of default below the Amended and Restated Senior Secured Credit score
Amenities embody, amongst others, nonpayment of principal when due; nonpayment
of curiosity, charges or different quantities; cross-defaults; covenant defaults; materials
inaccuracy of representations and warranties; sure chapter and insolvency
occasions; materials unhappy or unstayed judgments; sure ERISA occasions; change
of management; or precise or asserted invalidity of any assure or safety
doc.

As of December 31, 2021, we had been in compliance with the phrases of the Amended and
Restated Senior Secured Credit score Amenities.

Modifications to our Debt Agreements

We could, once in a while, repurchase or in any other case retire or prolong our debt
and/or take different steps to cut back our debt, decrease our curiosity funds or
in any other case enhance our monetary place. These actions could embody open market
debt repurchases, negotiated repurchases, different retirements of excellent debt
and/or opportunistic refinancing, modification or repricing of debt. The quantity of
debt that could be repurchased or in any other case retired or refinanced, if any, will
depend upon market situations, buying and selling ranges of our debt, our money place,
compliance with debt covenants and different concerns. Our associates may additionally
buy our debt once in a while, by means of open market purchases or different
transactions. In such circumstances, our debt will not be retired, by which case we might
proceed to pay curiosity in accordance with the phrases of the debt, and we’d
proceed to mirror the debt as excellent in our consolidated stability sheets.

Contractual Obligations and Business Commitments

The desk under summarizes our contractual obligations as of December 31, 2021.

Funds Due By Interval
Much less Than Extra Than
Whole 1 12 months 1-Three Years 3-5 Years 5 Years
({dollars} in thousands and thousands)
Contractual obligations(1) $ 81.5 $ 44.3 $ 33.2 $ 4.0 $ –
Lengthy-term debt obligations(2) 519.7 5.7 514.0 – –
Brief-term debt obligations(3) – – – – –
Working lease obligations(4) 20.2 4.7 8.4 7.1 –
Curiosity on long-term debt
obligations(5) 32.5 13.7 18.8 – –
Totals: $ 653.9 $ 68.4 $ 574.4 $ 11.1 $ –

(1) We’ve entered into sure contractual obligations to safe commerce present

venues. These agreements aren’t unilaterally cancellable by us, are legally

enforceable and specify mounted or minimal quantities or portions of products or

companies at mounted or minimal costs.

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(2) Represents principal obligations with respect to borrowings below the
Amended and Restated Time period Mortgage Facility.

(3) Represents principal obligations with respect to borrowings below the
Amended and Restated Revolving Credit score Facility.

(4) We’ve entered into sure working leases for actual property services.

These agreements aren’t unilaterally cancellable by us, are legally

enforceable and specify mounted or minimal quantities of rents payable at mounted

or minimal costs.

(5) Represents curiosity expense on borrowings below the Amended and Restated

Time period Mortgage Facility utilizing the rates of interest in impact at December 31, 2021.

Precise money flows could differ considerably resulting from adjustments in underlying

estimates.

Important Accounting Insurance policies and Estimates

The preparation of monetary statements in conformity with accounting ideas
usually accepted in the US requires the suitable software of
sure accounting insurance policies, a few of which require us to make estimates and
assumptions about future occasions and their impression on quantities reported in our
consolidated monetary statements. Since future occasions and their impression can not
be decided with absolute certainty, the precise outcomes will inevitably differ
from our estimates.

We consider the applying of our accounting insurance policies, and the estimates
inherently required therein, are affordable. Our accounting insurance policies and
estimates are reevaluated on an ongoing foundation and changes are made when
info and circumstances dictate a change.

The insurance policies and estimates mentioned under contain the choice or software
of other accounting insurance policies which are materials to our consolidated
monetary statements. With respect to vital accounting insurance policies, even a
comparatively minor variance between precise and anticipated expertise can doubtlessly
have a materially favorable or unfavorable impression on subsequent outcomes of
operations.

Our accounting insurance policies are extra totally described in Observe 1, Description of
Enterprise and Abstract of Vital Accounting Insurance policies, within the notes to our
audited consolidated monetary statements included elsewhere on this Annual
Report on Kind 10-Ok. Administration has mentioned the choice of these vital
accounting insurance policies and estimates with members of our board of administrators.

We’ve sure accounting insurance policies that require extra important administration
judgment and estimates than others. These embody our accounting insurance policies with
respect to income recognition, goodwill and indefinite-lived intangibles,
definite-lived intangibles, share-based compensation and accounting for earnings
taxes, that are extra totally described under.

Income Recognition, Deferred Income and Allowance for Credit score Losses

Commerce Reveals and Different Occasions Income

A good portion of our annual income is generated from the manufacturing of
commerce exhibits and convention occasions, together with sales space house gross sales, registration
charges and sponsorship charges. We acknowledge income within the interval the commerce present or
different occasion phases because the Firm’s efficiency obligations have been happy.
On account of the COVID-19 associated present cancellations described above, commerce
present revenues declined considerably in the course of the years ended December 31, 2021
and 2020. Commerce present and different occasions generated roughly 71%, 79% and 92%
of revenues for the years ended December 31, 2021, 2020 and 2019, respectively.

Exhibitors contract for his or her sales space house and sponsorships as much as a yr in
advance of the commerce present. Charges are usually invoiced and picked up in-full
previous to the commerce present or occasion and deferred till the occasion takes place and
all promised companies have been offered and efficiency obligations are met.
Equally, attendees register and are usually certified for attendance prior
to the present staging. Attendee registration revenues are additionally collected previous to
the present and deferred till the present phases. Income is acknowledged when our
buyer receives the good thing about the promised companies and all efficiency
obligations are met. Income is acknowledged at an quantity that displays the

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consideration we anticipate to obtain in change for these companies. Prospects
obtain the good thing about our companies over the course of every commerce present or different
occasion for our commerce exhibits and convention occasions. We acknowledged $103.5 million,
$101.2 million and $330.7 million of commerce present and different occasion income for the
years ended December 31, 2021, 2020 and 2019, respectively.

As a result of we acquire our sales space house, sponsorship and attendee registration
income previous to the commerce present staging, we don’t incur substantial dangerous debt
expense, or have publicity to credit score losses with relation to those income
streams. Any commerce present associated receivables excellent 60 days following the
month by which a commerce present phases are totally reserved within the allowance for
credit score losses. Unhealthy debt expense is acknowledged within the consolidated statements of
loss and complete loss as promoting, basic and administrative expense.
Accounts receivable are offered on the face of the consolidated stability sheet,
internet of an allowance for credit score losses in 2020 and 2021.

Subscription software program and companies

We additionally supply B2B ecommerce and digital merchandising options, serving the
wants of producers and retailers, by means of our Elastic Suite platform. In
addition to their respective revenues, these merchandise assist our stay occasions by
delivering year-round channels for buyer acquisition and improvement. Income
consists of subscription income, implementation charges {and professional} companies.
Charges related to implementation are deferred and acknowledged over the
anticipated buyer life, which is 4 years. Subscription income is usually
acknowledged over the time period of the contract. The Firm’s contracts related
with the subscription software program and companies are usually three-year phrases with
one-year renewals. We acknowledged $11.1 million, zero and nil of subscription
software program and companies income for the years ended December 31, 2021, 2020 and
2019, respectively.

Different Advertising Providers Income

The remaining portion of our revenues primarily include promoting gross sales for
trade publications and digital merchandise, that are acknowledged within the interval
by which the publications are issued or digital merchandise are offered.
Usually, the charges we cost are collected after the publications are issued.
We acknowledged $30.9 million, $26.2 million and $30.2 million of different advertising and marketing
companies income for the years ended December 31, 2021, 2020 and 2019,
respectively.

Deferred Income

Our deferred revenues usually include sales space house gross sales, registration charges
and sponsorship charges which are invoiced previous to the commerce present or different occasion
and subscription income, implementation charges {and professional} companies
related to the Firm’s subscription software program and companies. Whole deferred
revenues, together with the present and non-current parts, had been $118.Three million
and $48.6 million, as of December 31, 2021 and 2020, respectively.

Goodwill and Indefinite-Lived Intangible Property

Goodwill

Goodwill is recorded because the distinction, if any, between the mixture
consideration paid for an acquisition and the honest worth of the property acquired
and liabilities assumed ensuing from acquisitions. Goodwill just isn’t amortized
however as an alternative examined for impairment not less than yearly or extra incessantly ought to an
occasion or circumstances point out {that a} discount in honest worth of the reporting
unit could have occurred. We take a look at for impairment on October 31 of every yr, or
extra incessantly if occasions and circumstances warrant. Such occasions and
circumstances could also be a major change in our enterprise local weather, financial and
trade traits, authorized components, damaging working efficiency indicators,
important competitors or adjustments in technique. We carry out our goodwill
impairment take a look at on the reporting unit degree, utilizing a good worth methodology primarily based on
administration’s judgments and assumptions or third celebration valuations. The honest worth
of a reporting unit refers back to the value that might be anticipated to be acquired to
promote the reporting unit in an orderly transaction between market individuals at
the measurement date.

In testing goodwill for impairment, we first assess qualitative components to
decide whether or not the existence of occasions or circumstances results in a
willpower that it’s extra possible than not that the honest worth of a reporting
unit is lower than its carrying quantity. If, after assessing the totality of
occasions or circumstances, we decide it isn’t extra possible than not that the
honest worth of a reporting unit is lower than its carrying quantity, then further
impairment testing just isn’t required. If the carrying quantity of goodwill exceeds
the honest worth, an impairment loss is acknowledged in

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an quantity equal to the surplus of the carrying quantity over the honest worth of the
reporting unit. We might even be required to cut back the carrying quantities of the
associated property on our stability sheet.

Figuring out the honest worth of a reporting unit requires the applying of
judgment and entails the usage of important estimates and assumptions
together with, projections of future money flows, income progress charges, weighted
common price of capital, forecasting future gross sales and bills, deciding on
acceptable low cost charges and different components which might be affected by adjustments in
enterprise local weather, financial situations, the aggressive setting and different
components. We base these honest worth estimates on assumptions our administration
believes to be affordable however that are unpredictable and inherently unsure.
A change in underlying assumptions would trigger a change within the outcomes of the
checks and, as such, may trigger honest worth to be lower than the carrying quantities
and lead to an impairment of goodwill sooner or later. Moreover, if precise
outcomes aren’t in line with the estimates and assumptions or if there are
important adjustments to our deliberate technique, it might trigger honest worth to be much less
than the carrying quantities and lead to further impairments of goodwill in
the long run. We corroborate the reasonableness of the entire honest worth of the
reporting unit with our market capitalization. Our market capitalization is
calculated utilizing the variety of shares excellent and inventory value of our
publicly traded shares. Within the occasion of a goodwill impairment, we might be
required to file an impairment, which might impression earnings and cut back the
carrying quantities of goodwill on the consolidated stability sheet.

We additionally contemplate the quantity of headroom for our reporting models when figuring out
whether or not an impairment existed. Headroom is the distinction between the honest worth
of a reporting unit and its carrying worth. In performing our annual impairment
evaluation as of October 31, 2021, the honest values of the reporting models which
weren’t impaired exceeded their carrying values by quantities starting from zero to
458%. Of the $400.7 million of goodwill, the carrying worth equals the honest
worth for $6.7 million as of October 31, 2021. The honest values of the respective
reporting models had been decided primarily by discounting estimated future money
flows, which had been decided primarily based on income and expense long-term progress
assumptions starting from zero to progress of three.5%, at a weighted common price of
capital (low cost fee) starting from 12.0% to 13.5%.

Accordingly, a comparatively small change within the underlying assumptions, together with
if the monetary efficiency of the reporting unit doesn’t meet expectations in
future years or a decline happens out there value of our publicly traded
inventory, could trigger a change within the outcomes of the impairment evaluation in future
durations and, as such, may lead to an impairment of goodwill, for which the
carrying quantity is $514.2 million as of December 31, 2021. The mixture
remaining goodwill carrying worth of reporting models with impairment was $6.7
million as of December 31, 2021.

Indefinite-Lived Intangible Property

The annual analysis for impairment of indefinite-lived intangible property is a
two-step course of. Step one is to carry out a qualitative impairment
evaluation. If this qualitative evaluation signifies that, extra possible than not,
the indefinite lived intangible property aren’t impaired, then no additional testing
is carried out. If the qualitative evaluation signifies that, extra possible than
not, the indefinite lived intangible property are impaired, then the honest worth of
the indefinite lived intangible property have to be calculated. If the carrying worth
exceeds the honest worth, an impairment loss is recorded for that extra.

Indefinite-lived intangible property aren’t amortized however as an alternative examined for
impairment not less than yearly or extra incessantly ought to an occasion or circumstances
point out {that a} discount in honest worth could have occurred. We take a look at for
impairment on October 31 of every yr, or extra incessantly if occasions and
circumstances warrant. Such occasions and circumstances could also be a major change
in our enterprise local weather, financial and trade traits, authorized components, damaging
working efficiency indicators, important competitors or adjustments in
technique. We carry out testing of indefinite-lived intangible property, apart from
goodwill, on the asset group degree utilizing the aid from royalty methodology. If the
carrying worth exceeds the honest worth, an impairment loss is recorded for that
extra. We might even be required to cut back the carrying quantities of the associated
property on our stability sheet.

See Observe 6, Intangible Property and Goodwill, within the notes to the consolidated
monetary statements included elsewhere on this Annual Report on Kind 10-Ok for
further data with respect to goodwill and indefinite-lived intangible
property.

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Particular-Lived Intangible Property

Particular-lived intangible property include sure commerce names, acquired
expertise, buyer relationships and different amortized intangible property.
Particular-lived intangible property are amortized over their estimated helpful lives
primarily based on the sample of anticipated financial profit. Intangible property with finite
lives are acknowledged at price, much less accrued amortization and impairment losses,
if any.

2021
Estimated Weighted
Helpful Life Common
Buyer relationship intangibles 4-10 years 9 years
Particular-lived commerce names 10-30 years 23 years
Acquired expertise 7 years 7 years
Laptop software program 3-7 years 5 years

With respect to enterprise acquisitions, the honest values of acquired
definite-lived intangibles are estimated utilizing a aid from royalty methodology.
Enter assumptions relating to future money flows, progress charges, low cost charges and
tax charges utilized in growing the current worth of future money stream projections
are the idea of the honest worth calculations.

Impairment of Lengthy-Lived Property

We overview long-lived property, together with tangible property and different intangible
property with definitive lives, for impairment every time occasions or adjustments in
circumstances point out that the carrying quantity of the property will not be
recoverable. We conduct our long-lived asset impairment evaluation by grouping
property and liabilities on the lowest degree for which identifiable money flows are
largely impartial of the money flows of different property and liabilities and
consider the asset group towards the sum of the undiscounted future money flows.
If the undiscounted money flows don’t point out the carrying quantity of the asset
group is recoverable, an impairment is measured as the quantity by which the
carrying quantity of the asset group exceeds its honest worth primarily based on the
discounted money stream evaluation. If the carrying quantity of an intangible asset
exceeds its honest worth, we acknowledge an impairment loss in an quantity equal to
that extra. We might even be required to cut back the carrying quantities of the
associated property on our stability sheet.

See Observe 6, Intangible Property and Goodwill, within the notes to the consolidated
monetary statements included elsewhere on this Annual Report on Kind 10-Ok for
further data with respect to impairments of long-lived property.

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Inventory-Primarily based Compensation

We use share-based compensation, together with inventory choices and restricted inventory
models, to supply long-term efficiency incentives for our staff and
non-employee administrators. We calculate stock-based compensation expense for every
vesting tranche of inventory choices utilizing the Black-Scholes possibility pricing mannequin
and acknowledge such prices, internet of forfeitures, inside the consolidated statements
of loss and complete loss; nonetheless, no expense is acknowledged for awards
that don’t finally vest. The willpower of the grant date honest worth of
inventory choices utilizing an option-pricing mannequin is affected by a variety of
assumptions, such because the honest worth of the underlying inventory, our anticipated inventory
value volatility over the anticipated time period of the choices, inventory possibility forfeiture
behaviors, risk-free rates of interest and anticipated dividends, which we estimated
as follows:
• Truthful Worth of our Frequent Inventory – The honest worth per share of frequent
inventory for functions of figuring out share-based compensation is the
closing value of our frequent inventory as reported on the New York Inventory
Alternate on the relevant grant date.

• Anticipated Time period – The anticipated possibility time period represents the time period
the choice is anticipated to be excellent. The simplified methodology is used

to estimate the time period as we don’t have adequate train historical past to

calculate the anticipated time period of inventory choices.

• Volatility – The anticipated volatility relies on contemplating our restricted

publicly traded inventory value and historic common volatilities of

comparable publicly traded corporations equivalent to the anticipated time period of

the awards.

• Danger-Free Charge – The danger-free fee relies on the yields of United

States Treasury securities with maturities just like the anticipated time period

of inventory possibility for every inventory possibility grant.

• Forfeiture Charge – Estimates of pre-vesting forfeitures, or forfeiture

charges, had been primarily based on our inner evaluation, which primarily considers

the award recipients’ place inside the Firm.

• Dividend Yield – Previous to the IPO, we had by no means declared or paid any

money dividends and had no intention to pay money dividends. Consequently,

we used an anticipated dividend yield of zero with respect to pre-IPO

choices. In reference to our IPO, we adopted a coverage of paying

quarterly money dividends on our frequent inventory. Our post-IPO inventory possibility

grants embody an anticipated dividend yield which is commensurate with the

annual dividends we had been paying because the IPO, till the dividend

was suspended within the first quarter of 2020.

See Observe 12, Inventory-Primarily based Compensation, within the notes to the consolidated
monetary statements included elsewhere on this Annual Report on Kind 10-Ok for
further data with respect to stock-based compensation.

Earnings Taxes

We offer for earnings taxes using the asset and legal responsibility methodology of
accounting. Underneath this methodology, deferred earnings taxes are recorded to mirror the
tax penalties in future years of variations between the tax bases of property
and liabilities and their monetary reporting quantities at every stability sheet
date, primarily based on enacted tax legal guidelines and statutory tax charges relevant to the
durations by which the variations are anticipated to have an effect on taxable earnings. Whether it is
decided that it’s extra possible than not that future tax advantages related
with a deferred tax asset is not going to be realized, a valuation allowance is
offered. The impact on deferred tax property and liabilities of a change within the
tax charges is acknowledged within the consolidated statements of loss and complete
loss as an adjustment to earnings tax expense within the interval that features the
enactment date.

We file a legal responsibility for unrecognized tax advantages ensuing from unsure tax
positions taken or anticipated to be taken in a tax return. We acknowledge curiosity
and penalties, if any, associated to unrecognized tax advantages in earnings tax
expense. See Observe 15, Earnings Taxes, within the notes to our audited consolidated
monetary statements included elsewhere on this Annual Report on Kind 10-Ok.

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