Q2 2020 Emerald Holding Inc Earnings Call
[music].
Good afternoon, ladies and gentlemen, and welcome to the Emerald Holdings second quarter 2020, <unk> earnings Conference call.
During today's call all parties will be in listen only mode.
Following the prepared remarks, the conference will be open for questions and instructions will follow.
As a reminder, this conference is being recorded.
Now I'd like to turn the call over to Mr. Davis, Chief Financial Officer. Please go ahead Sir.
Thank you operator, and good afternoon, everyone.
We appreciate your participation today in our second quarter, two talking 20 earnings call.
I'm very pleased to have brine field nimble interim president and Chief Executive Officer with me here today.
As a reminder, a replay of this call will be available on the Investor section of the company's website through a weapon 59 PM Eastern time on August 17 2020.
Before we begin.
Ill remind everyone that this call may contain certain statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1990 fives.
These include remarks about future expectations beliefs estimates plans and prospects such statements are subject to a variety of risks uncertainties and other factors that could cause actual results could differ materially from those indicated or implied by such statements.
Such risks and other factors are set forth in the Companys. Most recently filed periodic reports on form 10-K, and form 10-Q and subsequent filings.
We do not undertake any duty to update such forward looking statements.
Additionally, during today's call will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation that this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP reckon.
Kind of these non-GAAP measures and the most comparable GAAP measures can be found in our earnings release.
Now I'll turn the call over to Brian.
Thank you David.
This afternoon I will provide an update on the current state of our business.
As well as the significant progress that we have achieved implementing our strategic initiatives. Despite the significant challenges we continued to face due to the ongoing impact of cobot 19.
David will review, our second quarter results and be we'll then open the call to your questions.
On today's call. There are six main points I hope you take away.
First we remain confident and the quality and importance of our industry, leading events and have received consistent feedback from our customers through the pandemic as they wish to return to our live events as soon as they're able given the importance of our marketplaces to their businesses.
Second we have made significant progress implementing our strategic initiatives, which we believe will drive improved execution and accountability across the company.
Third as.
We are well underway in the process of building a centralized customer data hub, which will allow us to have a deep understanding of our customers interests and behaviors across the landscape of our products and services.
This will open the door to both cross selling as well as new product development led by customer insights and data.
Fourth.
We continue to reduce our expense structure through the second quarter, which positions emerald to conserve capital over the near term.
As expected to improve our profitability over the longer term that's the environment begins to normalize.
Yes.
We have adapted to the current environment by delivering successful Webinars and virtual trade shows which opened new revenue streams.
As well is the ability to engage with our customers year round.
And lastly, we raised $400 million through the issuance of convertible preferred stock. The final portion of which is scheduled to close later this month.
We believe this capital raise provides us with liquidity and flexibility to make the right decisions for the business during uncertain times.
Well, we remain confident that the exhibition industry will return to its former health and vitality overtime, we simply do not know how long that will take.
This equity raise provides the capital bridge to when defense industry returns to a more normal state.
Turning to our trade shows we have cancelled or rescheduled never the all of our shows that were to stage through the end of the third quarter and several beyond that given the rapid spread of cobot 19 across the country.
In total we have cancelled 60 events that accounted for approximately $197 million up 2019 revenues.
We have also postponed 14 events to the second half of this year, which accounted for approximately $8 million up 29 10 revenues.
We will continue to watch the environment very closely, especially given the recent surge of cobot 19 cases across much of the country.
Well make decisions that are in the best interest of our customers and employees, that's their health and safety or a paramount importance to us.
As you think about our shows Atlanta, Denver, Las Vegas, New York City, and Orlando or the cities, which are most relevant to our that schedule.
As David will touch on in more detail, we continued to make claims against our offense cancellation insurance policy, which includes coverage for communicable diseases.
We have submitted $89.1 billion and claims for cancer defense previously scheduled to take place in the first half of the year and I'm very pleased to report that we have already received $48.2 million interim pre payments through July.
Well, we brought to finalize those claims we're also processing the next wave of insurance submissions over the coming weeks.
Well, we have not been able to stage shows through the second quarter. This has allowed our team to accelerate the implementation of our strategic initiatives and I couldn't be more encouraged with the success that we're achieving.
When I first joined the Emerald a little over a year ago. It was clear to me that the company's challenges were largely the result of poor execution, a lack of accountability and aside load organizational structure all of which we have aggressively addressed.
As we execute upon our strategic initiatives, we're transforming the company and how we operate building the foundation for future growth and improved profitability.
One example of our progress can be seen in our approach to our marketing function, which like many functions Emerald was previously handled individually at the brand level.
As a results we could not scaled the benefits are best practices that clearly, it's just the cross portfolios, nor could we leveraged customer insights and data across shows products.
To solve this we've reorganized our brand marketing marketing operations functions into central teams to deliver more impactful marketing plans utilizing common processes technology and data, while allowing us to deliver more quantifiable value out of our marketing spend with 25% less stuff.
We have also commenced the reorganization of our sales teams at the pod structures focused on their specific end markets.
These new structures include specific rules for the development account management and customer success.
This structure a moves us away from generalist selling to a structure designed to improve sales velocity on the front end to the process with greater upselling product utilization deeper customer satisfaction and higher retention on the back end with our customer successful.
Central to both of these initiatives isn't improved deeper understanding of our customers their behaviors and designing ways to provide them value and engage with them year round.
This is delivered through a holistic view, our customers data footprint across our products and tying that into a cohesive sales and marketing technology stack.
I'm very excited that the first phase of our unified Technology initiative, we are calling smart tech will be completed this august with the goal of being fully functional in the first quarter of next year.
This will allow us to have all of our customer data information and one centralized customer data.
I love it needs to have a deep understanding of our customers' interest and behaviors what events. They attend what they do with those events, who they interact with the content. They read on lot. The webinars. They view among many other touch points.
We believe this will provide us with greater insight to what our customers care about their intent so to speak which will allow us to be more targeted and how we market and cell solutions to them and more effectively engage them year round.
As we continue to augment this customer data it should drive continued product and service innovation informed by deep customer insight.
Another area. We are very excited by one that is also growing out of the pandemic is the acceleration of our digital solutions, including content rich Webinars and virtual about.
Through the second quarter, we have hosted more than 140, Webinars and built an internal library of over 300 podcast, which offer a valuable content for our customers.
We also hosted a small number of successful virtual trade shows with several more scheduled in the second half the year.
These virtual shows have many of the same features founded or live events, including keynote speakers awards in virtual boots, allowing our exhibitors to load their products and host virtual meetings with buyers.
Well the feedback we've received from our customers as enthusiastic. They also note that they do not replaced the value found in face to face in traditional in person shows and our outspoken in their desire to return to live events once the media mistake.
That said, we believe that there is an emergent hybrid model whereby virtual shows will complement live events over the year.
Well, we project a modest revenue opportunity in the five to 10 billion dollar range at a strong contribution margin in the near term the more important value of these events is our ability to engage with our exhibitors year round and to provide then commercial solutions, particularly in today's environment.
These platforms also serve as meaningful new customer acquisition vehicles as well.
Over this past quarter, our webinars virtual event products generated over 50000, new customer prospects.
Our team will continue to innovate in the digital space as well as explore new products and services as we continue to expand the value that we provide to our customers.
Another key to our success with our recent capital raise which provides management with the flexibility and confidence that we can weather a prolonged downturn the events industry.
Well it is it's unclear when large U.S. trade shows might return to a more normalized level of business. Our top considerations are the health and safety, if our customers and ensuring that we continue to provide value during this challenging time.
Our capital raise provides us with liquidity to make the right decisions for our customers, while continuing to invest in the company and take advantage of opportunities that may present themselves as a result of the dislocation caused by the tender.
Before turning the call over to David I would also like to highlight the additions of Linda what reseal and David Levin to our board of directors.
Both Linda and David or accomplished executives with deep experience in the event sector digital media ecosystem.
Notably Linda previously served as the President at U.S. Media Nielsen and David formally served as the CEO of you'd be yet where I had the pleasure working with him for several years.
They are industry knowledge and expertise is going to be great value as we continue to strive to unleash the vast potential that exists within emerald today.
Hi, I'm looking forward to working with each of them.
Now, let me turn the call over to David.
Thank you, Brian and good afternoon.
One of the second quarter, we reported revenues of $7 million, which compares to $103 million and a year ago corner.
The decrease was primarily due to the cancellation of 20 events due to cope with 19, most notably all our summer market HD Expo retail acts and it could tour collection show and the postponement of eight events to the second half a year.
Our adjusted EBITDA for the second quarter was $33.2 million as compared to $36.5 million in the same period last year.
Adjusted for show scheduling differences, including the event postponement due to coping 19th.
The decrease in adjusted EBITDA of $3.3 million was mainly due to the Kobin 19 related event cancellations, representing prior year second quarter, adjusted EBITDA of $56.3 million.
This was partially offset by the recognition of $48.2 million in other income related to event cancellation insurance claim proceeds.
Second quarter 2020, adjusted EBITDA also reflected the combined effect of lower organic revenues offset by the continued cost savings measures that we are implementing and which I will discuss further in a moment.
One item to note is the accounting treatment of our convertible preferred offering on getting.
The 7% coupon will accrete quarterly and there will be net income appropriated to preferred holders you can see a very minor amount in our financial results for the second quarter. As there were two days of accretion from the first tranche of the offering that onyx participated in.
This will become more pronounced in the third quarter.
Pro forma for the offering Onyx its ownership is 85.3% of the company on an as converted basis.
Free cash flow for the second quarter, when do you use a $32 million, which includes $27 million of customer refunds for canceled events.
The underlying business trends reflected approximately $27 million of cash outflows for expenses, including payroll and severance offset by $12 million of cash collected for future events and media as well its $15 million up insurance proceeds at June 30, we have a refund device.
Ability of $45 million for canceled show, which we expect will largely be paid out in the third quarter.
Additionally, we have an incremental $30 million of customer prepayment on hand for all future events, including many that are scheduled to stage in 2021.
As Brian touched on we have had seven canceled events approved for reimbursement by our event cancellation insurance carrier and have received $48 million a pre payments against the expected full claim value of $66 million for those events.
We have submitted an incremental $23 million of claims that are pending for events through June 30, and another $6 million for events in the third quarter.
We are further preparing another approximately $40 million of insurance claims for canceled shows, which we expect it sitting there in the coming weeks.
Upon submission of those claims we expect to have approximately $87 million claimed value pending.
Given our success that cost avoidance for canceled could that.
We anticipate that even if we have to cancel all events for the remainder of 2020 the amount of our event cancellation insurance claims for 2020 will fall within the $191 million limits of our primary event cancellation churns policy as was the separate 6 million dollar.
Limit specific to our 2020 summer surf export ban.
At quarter end, we had $218.6 million of cash on hand, which reflects proceeds from onyx. His initial purchase of convertible preferred stock.
Also have full access to our $150 million revolver as we paid down the $100 million that was drawn on at the peak in the corner.
Post quarter end, we've received a further $9.7 million from our rights offering and $33 million in proceeds in the form of prepayments against our insurance claims.
Over the next couple of weeks, we expect to close the Onyx backstop on our rights offering which will bring in an incremental $126 million, which completes the 400 million dollar convertible preferred stock financing.
That would leave us with approximately $380 million of cash on our balance sheet.
As a proxy for cash we would expect insurance proceeds to more than offset the remaining cash refunds for exhibitor deposits.
We finished the second quarter with net debt of $309.5 million, representing a net leverage ratio of 2.3 times, our TTM consolidated EBITDA of $136.9 million per the terms of our credit agreement.
As a reminder, our credit agreement has a springing total net leverage covenant no more than 5.5 times, which kicks in if borrowings under our credit facility exceed 35% of our revolver capacity of $150 million.
At June 30, we had no borrowings under our revolver.
And do not expect to draw on our revolver in the near term given our recent capital raise.
Turning to expenses our cost structure is made up the direct cost needed to execute events and the S. Gionee, we're overhead needed to run the company and manage our portfolio of assets.
Direct costs are largely variable typically 70%.
However, with enough advance notice almost all direct costs can be avoided which you can fall we see in our results this quarter.
To date, we've avoided over $62 million of direct cost for banks that we have had the cancel and we're carefully managing commitments for those yet to stage in order to maximize our ability to avoid further clock given the current circumstances.
When you think about our business model, we'd be very flexible expense structure, which were in the process of reviewing from the ground up to understand every line item.
As part of this we have closed three of our 14 office it and we'll continue to evaluate our real estate footprint as appropriate or rent expense is now less than $3 million annually.
We have also been aggressively reducing our operating expenses, having furloughed are permanently reduced approximately 20% of our staff.
And consolidated functions like our marketing and sales groups, which Brian touched on.
This is contributed to a significant decline in our monthly expense run rate from approximately $10 million at the beginning of the year to $7 million at June Thirtyth.
That said, we're spending money on important initiatives to ensure we are cultivating the business such as the technology initiatives that Brian earlier outlined.
Also beginning to accrue sales commissions and bonuses like insurance proceeds come it.
Overall, we are driving a culture of accountability as it relates to expenses and spending.
As part of this we've established a procurement department this quarter, whose mandate is to further drive efficiencies used the company's scale to better drive terms and pricing from our vendor and ensure we maximize value for the dollars we spent.
We will remain very focused as we streamline our operations.
Given the success that we've achieved reducing our expense base and raising capital. We feel we have a long runway to continue to invest in the business further execute our strategic initiatives and determine when the environment has sufficient we normalize to begin staging shows.
We believe we're in a good position as we exit the second quarter.
With that I'll now turn the call back the Brian for his concluding remarks.
Thank you David.
Well the environment remained extremely challenging for the exhibition industry globally through the second quarter I'm pleased with the progress that we have achieved positioning emerald for the future highlighted by our capital raise which will provide important financial flexibility to make the right decisions for our business and our portfolios industry leading shows.
This flexibility will allow our team to continue to implement our strategic initiatives designed to improve all aspects of the customer experience that our events, while also investing in new digital offerings.
These digital offerings will allow us to engage with our customers year round, well opening new high return revenue streams that if not existed before.
Lastly, we have reduced our cost structure by more than $15 billion year to date, and we see opportunities to reduce costs further.
When events begin to stage once again, we expect Emerald will be more profitable company with a foundation to drive organic growth.
To conclude I would like to thank all of our employees for their tireless work and dedication during such a challenging time.
We remain committed to the health and safety of our staff and customers.
Thank you again for your time today.
Operator, please open the call for questions [noise].
Thank you well now be conducting a question and answer session.
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One moment, please what we call for your question.
Our first question, it's come from a line of Japanese Polar Bears. Please proceed with your questions.
Yeah. Good afternoon burden the David Thanks for taking my question can you just help me understand direct costs. It looks like they were kind of a negative or a death benefit in the quarter. So I don't know if there are some refund or just can you just help me understand the.
What drove that and then you know looking out over the next quarter's next few quarters, if you're not I mean, the scenario that you may not be staging any shows would you continue to expect direct costs to run around zero.
Thanks, Jeff Good afternoon, so I'd direct cost in the quarter, you're right. It's a small credit and we had a lot of success aggressively.
Avoiding our costs that were tied to the events in the quarter. Oh. We also were very successful I'll because of the conditions around coded hard to get out of our contracts and cancellation fees that we might otherwise be subject to if it were not for say the force majeure Oh the cold.
Situation, where venues were forced to be shot by local government and so that helped us have to a direct cost line be almost entirely on variable all burst is having a little bit of fixed when we talk about a 70% variable were generally looking at the other 30% of around contracts that are a little harder.
To get out of bought with enough time, we're in a certain we're under certain circumstances, we can and Twoq was a great example of that the credit comes down to something odd negotiations around a certain contracts, where we were able to.
Benefit from some things that we booked as expenses in one Q, but ultimately we're able to get out of the contracts through negotiation until we reversed some of those expenses for the credit a into Q.
Okay, and then I hate to make you go through the accounting but.
Just I guess can what is the pro forma interest expense now between the term loan and the convertible preferred once that all closes and if you could maybe just give us a little bit more detail on what you hit on the in the pair remarks about the.
The 7% coupon Accreting quarterly and how that all close to the piano [noise].
[noise] of course, so I to be clear the convertible preferred <unk>. It's a piece of the equity I'm not that so nothing from that security flows through interest expense. So interest expense will entirely be tied to our term loan or any potential borrowings under the revolver, but as I say.
I don't their prepared remarks, we don't expect any anytime soon.
We have a floating rate on the term loan or that is LIBOR, plus 275, or so right now we're paying about 3% give or take a on a aren't as an annual rate on our borrowings the coupon related to the convertible preferred stock which.
Century is a dividend is actually booked a below net income.
And so that net income would then have a an additional expense after it before it nets down to the net income available to common shareholders and so what you would do is take the odd quarterly accretion.
For the coupon and it would be an expense below net income you would also take the portion of net income <unk>.
Allocated on an as converted basis do you assume number of shares tied to the preferred shares soon number of common shares tied to the preferred shares and you would allocate that per cent of net income.
To the preferred shares would also be expense before net income to common shares.
Okay, and then maybe just one on kind of like show planning just.
As you kind of obviously mentioned the co, but its spread and there's more geographies and there's more I guess travel restrictions I'm, including in some states where you typically host shows so I guess just.
What's the update on how you're thinking about planning out the calendar.
How far in advance your canceling or where you have shows on the calendar just I guess, how you're assessing the probability of those actually occurring or Brooklyn and business operations around that thanks.
Yeah, Thanks, Jeff Brian here.
So it isn't really as you pointed out you know the the way that states are approaching this is on a very [laughter] state by state, sometimes even city by city basis [noise].
And so in some cases you know there are cases for example in Chicago. For example, you know that have very stringent types of expectations around when they might be a available at open for business in some cases, it's very.
Kind of flexible and changes almost from a from day to day and so what we're doing is looking at the show schedule and.
You are trying to take a a a reason that balanced approach that's aid because our customers by and large our AR.
[noise] urgently.
I'm, hoping to be able to do business as soon as possible and while we have to take that into account on one hand be all swept to take into account. So the safety and the health of those customers as well as our SAP that might be brought to bear does actually stage the shows so.
You know, we're looking out over the you know really over the next few months you know to see where there's still a viable show a that can take place safely.
And you know working with the the local venue management as to how we might be able to design that we actually created a preparedness prevention. The response plan that takes into account many of these things everything from communication to a local restrictions.
To the the P.E. that might be necessary at any given show.
And so we're overlaying that upon every single show still on the schedule from here do you on beer and even beyond.
And we have to you don't make a call as we get closer and closer up you know one thing that David mentioned is that there are certain levers and the cost base that or kind of big milestones and wouldn't be Cds that there is a significant [noise] cost that's about to come due.
Two.
You know that becomes a real focal point for us that's too.
Whether or not we can meaningfully stage that show.
With those other conditions are also being accounted for so and we're trying to take a very holistic and balanced approach. This as I'm sure. You can appreciate the landscape is continuously shifting to.
Yep got it okay. Thank you.
Thank you. Our next question it's come from the line of Ryan Leonard of Barclays. Please proceed with your question.
Yeah, Hi, guys. Thanks for the time.
You know looking at the the calendar on your website I guess it looks like almost most if not all shares have been canceled for Threeq. You. So just want to confirm that and I guess if that is the cases, the 7 million dollar revenue number kind of the right number based on publications and maybe some of their virtual events Youre talking about.
In an event where everything gets cancelled.
Sure. So its correct most events through the end of September have been canceled, but not all <unk> and we even had some that have been canceled beyond September.
At this point based on our understanding of round availability of venues different no way to different circumstances in different municipalities. The 7 million then is in the quarter, our media business plus a little bit of revenue from a webinars <unk> the the business as you've seen the organic growth.
Well I in the media business is down about 30%. It it's generally taking a hit from the covert environment, especially the publication that specifically the issues that surround an event that tend to have that are at their peak of revenue I surrounding events of the events not happening a lot about sponsorship dollars.
Aren't there.
We're not guiding any aspect of 2020, so I'm not going tell you whether that's what the next quarter in next quarter will look like but.
Given the percent change year over year within that you can look at our historical numbers and.
Make an assumption often times.
Got it and then well Nit picky modeling one so I guess what is the right share count to think about with the everything fully converted I forgot to come out around 185 million, but I'm not sure if that'll take till fourth quarter to really flow through the numbers.
So oh hundred 85 million Oh 0.1.
Is he adds converted a share count if all the preferred shares a convert on day one of the offering you're right in terms of the weighted average shares outstanding in in our share count well.
Not fully even out but keep in mind the preferred shares don't show up in the weighted average shares outstanding if they're not converted to common owing to common shares are there I, so you're not going to see much of an impact where you will see the impact is in the the accretion line.
As I indicated below net income and before net income to common shareholders. The other thing to keep in mind, it's not.
The amount of shares got the.
Convertible preferred stock converts into the amount of common shares does go up by the amount of the accretion.
So you have to Rhonda.
In theory, a model around the 7% coupon.
To see the changing nature of what the ads converted number of shares would be at any point in time.
Okay got it and then I guess, a bigger picture one if I could yeah.
Exhibitors are attendees potentially go.
Assuming the this grows ours impact last if they skip two consecutive events, yeah, I guess based on either your experience or data that you tracker clients that he talked to what are the odds. They come back I'm just trying to think if there's really four out of this last into 2021, how exhibitors and attendees will think about event.
If they haven't gone and two two versions of it or two years.
Yeah, It's a it's a good question actually this is very much.
One of the reasons why we're looking at the.
Virtual or events in the virtual offensive digital offerings as real companions to the shows.
Because there are going to be those customers, both the exhibitors and attendees who for whatever reason can't make that next addition to the show or maybe even the additions following that.
And that could be reasons for for example for a corporate travel restrictions or maybe there just scared right and they don't want to get on the plane that they don't want to go to a large gathering.
And so one of the things that we've done to you know to help satisfy those customers who.
Perhaps wants to but are afraid is to look at our virtual off for instance, those companion those companion elements to the show so now they're not going to be as robust certainly as a live event, they're not going to have the the wide variety of discovery and that sort of serendipitous.
Encountering new colleagues and new products that they might see on a on a typical live event show floor.
But they'll still have the ability to.
Interact browse new products online.
Scheduled appointments find some learning as well some of those key elements of a live show up that isn't necessarily a you know the the live show itself.
So of course, no one knows having never gone through this before you know if they're going to come back the third fourth fifth and time, but this is certainly one of the reason why did that one of the pieces at the plant that we have in place.
To ensure that there's as much continuity customer continuity as possible well, we're going through this is Todd.
Got it thank you.
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Our next question that's come from a line of Seth Weber of RBC capital markets. Please proceed with your question.
Hey, guys. Good afternoon, I hope you're doing well.
I wanted to just stick on that or the emerging hybrid model point for a second I think you said something like five to 10 million of revenue near term do you have it you know a bench.
An idea what you think that.
Could represent over than I'd say the next three to five years as a percentage of your revenue. So I assume it's a it's a pretty attractive margin. Thanks.
Sure. Thanks.
So you're you're right it is a fairly attractive margin.
To execute those shows even at smaller size is one their online and we do think it's something that could actually scale quite meaningfully right. Now is very much in the kind of innovation slashed experimentation phase and not just for us or other event providers frankly for our customers and.
And a lot of them are are willing to take a chance in tried out and I didn't want to wait and see how the first one goes for others before they tried out but at the same time, we got to work out the Kinks going forward.
I'd say, it's so far so good you know we've had some successful events I and events that generally.
People were pleased with had strong reviews of we know we have some things to work on or we can make them better and so while five to 10 million. It's what we believe we'll be able to generate this year as we move forward. Our there's no reason why I'm you know over the next couple of years, we can't double or Triple bad and could this be 10% of our revenue two to three years from now.
I think it could be as part of a hybrid model.
Okay. That's interesting thanks, and I was I was pretty interested in your comments around this.
Customer data hub or that you're developing you know can you just talked a little bit more about that.
You know what type of investment are you, making in this and it sounds like you know kind of first kick off is like first quarter of 2021, but I assume that's.
You know pretty early stages. So can you just talking about how hum to runway you feel like you have what the product how much you expect to invest in it and you know just some of the benefits that you think you get out of it. Thanks.
Sure absolutely. So this isn't a.
Kind of a flip the light switch and suddenly it's on and I'm going away. A this is something that we were actually beginning to roll out this month.
And it'll be a leased this version of it will be fully in place by the end of first quarter of next year. This is really a consolidation of.
All of these different sets, we adapt dozens and dozens of pockets of data around the world and one of the things that we saw when we first certainly when I first came in a little over a year ago now is that there's tremendous opportunity to bring all of the state. It together because individual show teams. We're just looking at.
What customers told US you know you tell us your Oh.
Wedding photographer and your wedding photographer and that's just exactly how we're going to treat you are going to send you wedding photographer newsletters, [laughter], whether or not you opened them.
And so when we begin to bring together not just the explicitly told to us information from customers as part of about registration or signing up for up a newsletter for example, but but actually bring in some of the information about the behavioral footprint of a particular customer.
They're doing online what they're doing at our shows a whats tracks that are going what conference Fracs and go and you know suddenly a wedding photographers not just the weapons toddler anymore. Because we see this wedding photographer is actually going to conference tracks about starting up her own business for example.
Selling CRM solutions are we realized that she's reading increasing amounts of content about drones and photography or through the downloads of white papers that she has been doing up and suddenly what used to be just a wedding photographer now is someone a customer who might be very well primed for our drone.
For example, and so if we begin to understand those types of dynamics of what customers are doing a very kind of our historically myopic view suddenly becomes much more expensive and allows us to market and sell a whole new set of different opportunities. So it's a it's a very.
Setting opportunity because it gives a so much more depth around what our customers are doing nd interactions there have been with our content than things all of our products basically and how they interact with each other to.
Okay, that's pretty interesting and then just if I could just.
Clarification on the 15 million cost save year to date is that are those all permanent cost cuts or do you think some of that will come back a you know as the shows come back on and.
Should we think of that number going higher here in the second half you know assuming the shows tend to be camp cancelled or postpone thanks.
Sure. So 15 million it is about the run rate or on an ongoing basis. We've we've taken out are there is some incremental temporary cost a we've taken out as well that well continue to flax depending on.
How the odd event landscape looks really they called it. So are we have a bunch of levers at our disposal.
Both around temporary and permanent cost depending on how things play out, but the 15 million. It's a pretty good a run rate proxy of what were down if you're.
<unk> part of the dynamic of makes a little bit to talk about public. We it's because we never gave guidance. This year I can't really talk to what an original budget wise saw et cetera.
Doug Needless to say you know we've made it very significant progress off the run rate cost structure that we had coming into the year.
Okay, and just but you you're kind of characterize knows as permanent cuts. So even if shows come back those costs won't come back.
There's about 15 million that we expect will not come back.
The underlying cost what we're not doing is promising we may not invest in some other things as we look to that you're part of our planning, but I, but there is that there is a hard 15 million that that's out of the cost structure on an ongoing debate.
Okay.
We should it be and help them. Thank you very much like.
There are no further questions at this time I would now like to turn the call back over to management for any closing remarks.
Thank you I would like to thank you all for joining us today, and we look forward to our next opportunity to share our further growth and continued progress with you. Thank you very much everyone.
This does conclude todays conference you may disconnect. Your lines at this time. Thank you for your participation have a great day.