NEW YORK, July 31, 2019 /PRNewswire/ -- Today, Nielsen
Holdings plc (NYSE: NLSN) announced its second quarter 2019 results
and reaffirmed revenue, Adjusted EBITDA, and free cash flow
guidance for 2019. The company also raised adjusted EPS guidance to
$1.70-1.80 from $1.63-1.77 previously.
David Kenny, Chief Executive
Officer, commented, "Nielsen has evolved significantly over the
past year. Our second quarter results were once again slightly
ahead of our expectations. We continue to make progress on our
transformation into a product driven technology company, making
faster, bolder decisions that enhance value for our clients. We
were pleased with revenue trends in both Media and Connect and have
also demonstrated progress in moving towards a modern architecture,
highlighted by the successful transition of our National TV
measurement processing to the cloud. We have aligned our
organization around two industry-leading businesses serving the
media and fast moving consumer goods industries that are capable of
greater profitability, higher cash flow conversion, and delivering
strong shareholder value."
Kenny continued, "The strategic review continues and the Board
is focused on completing the process by the third quarter earnings
release. We will discuss the outcome and go-forward plan at the
conclusion of the process. In addition, we remain focused on
executing on our growth strategies and positioning the company to
maximize value for all of our shareholders."
Second Quarter 2019 Results
- 2nd quarter revenues were $1,628
million, down 1.2% reported, or up 1.2% on a constant
currency basis, compared to the prior year.
- Nielsen Global Media revenues increased 1.1% to $856 million, or 2.0% on a constant currency
basis, compared to the prior year.
-
- Audience Measurement revenues increased 3.5%, or 4.2% on a
constant currency basis, primarily due to continued client adoption
of our Total Audience Measurement system, partly offset by pressure
in local television measurement.
- Plan/Optimize revenues decreased 4.9%, or a decrease of 3.3% on
a constant currency basis primarily driven by historical data sales
related to a product category exit and pressure in Telecom,
partially offset by a recent acquisition.
- Nielsen Global Connect revenues decreased 3.5% to $772 million, or an increase of 0.4% on a
constant currency basis.
-
- Measure revenues decreased 2.5%, or an increase of 1.7% on a
constant currency basis, reflecting strong performance in retail
measurement services and improved trends in Emerging
Markets.
- Predict/Activate revenues decreased 5.8%, or 2.6% on a constant
currency basis, reflecting continued softness in areas such as
innovation and custom analytics.
- Net income increased 70.8% to $123
million, or 83.6% on a constant currency basis, compared to
$72 million in the prior year, due to
lower restructuring charges and lower tax expense, partially offset
by higher depreciation and amortization.
- Net income per share on a diluted basis was $0.34 per share, compared to $0.20 per share in the prior year.
- Adjusted earnings per share was $0.53 per share, compared to $0.47 per share in the prior year, driven by
higher operating profit and a lower effective tax rate.
- Adjusted EBITDA increased 0.4% to $470
million, or 2.0% on a constant currency basis, compared to
the prior year.
- Adjusted EBITDA margin increased 45 basis points to 28.9%, or
20 basis points on a constant currency basis compared to the prior
year, as productivity initiatives were partially offset by
investments in growth initiatives.
Financial Position
- As of June 30, 2019, Nielsen's
cash and cash equivalents were $393
million and gross debt was $8,645
million.
- Net debt (gross debt less cash and cash equivalents) was
$8,252 million and Nielsen's net debt
leverage ratio was 4.48x at the end of the quarter.
- Cash flow from operations decreased to $226 million for the second quarter of 2019, from
$242 million in the prior year. Cash
flow performance was primarily driven by working capital timing,
partially offset by lower interest, restructuring and tax
payments.
- Cash taxes were $76 million for
the second quarter of 2019, compared to $79
million in the prior year.
- Net capital expenditures were $108
million for the second quarter of 2019, compared to
$118 million in the prior
year.
- Free cash flow for the second quarter of 2019 decreased to
$118 million, compared to
$124 million in the prior year.
Capital Allocation
Nielsen did not repurchase ordinary shares during the second
quarter of 2019. The company has a total of $228 million remaining for repurchases under the
existing share repurchase program as of June
30, 2019.
On July 18, 2019, our Board of
Directors approved our quarterly cash dividend of $0.35 per common share. The dividend is payable
on September 5, 2019 to shareholders
of record at the close of business on August
22, 2019.
2019 Full Year Guidance
The company is reiterating 2019 Revenue, Adj. EBITDA, and Free
Cash Flow guidance and raising Adj. EPS guidance as highlighted
below.
- Total revenue growth on a constant currency basis: Flat to
+1.5%
- Adjusted EBITDA margin: 28 - 29%
- Adjusted EBITDA: $1,800 -
$1,900 million
- Adjusted earnings per share: $1.70 - $1.80
(previously $1.63 - $1.77)
- Free cash flow: $525 -
$575 million
2019 Guidance Non-GAAP Reconciliations
The below table presents a reconciliation from forecasted
revenue to revenue on a constant currency basis for our 2019
guidance:
(IN
MILLIONS)
|
|
2019
Guidance
|
|
|
%
Variance
Constant
Currency
|
|
2018 Revenue
Constant
Currency
|
|
Total
Revenue
|
|
$
|
~6,485
|
|
|
Flat to
1.5%
|
|
$
|
6,435
|
|
|
|
|
|
|
|
|
|
|
|
|
The below table presents a reconciliation from Net Income to
Adjusted EBITDA for our 2019 guidance:
(IN
MILLIONS)
|
|
|
Net
income
|
|
$280 -
$340
|
Interest expense,
net
|
|
~400
|
Provision for income
taxes
|
|
~125
|
Depreciation and
amortization
|
|
~750
|
Restructuring
charges
|
|
~150
|
Share-based
compensation expense and Other
|
|
~120
|
Adjusted
EBITDA
|
|
$1,800 –
1,900
|
The below table presents a reconciliation from Net Income
Attributable to Nielsen Shareholders to Adjusted Net Income to
calculate Adjusted Earnings per Share (diluted) for our 2019
guidance:
(IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
|
|
|
Net income
attributable to Nielsen shareholders
|
|
$270 -
$320
|
Depreciation and
amortization associated with
acquisition-related tangible and intangible assets
|
|
~200
|
Restructuring
charges
|
|
~150
|
Share-based
compensation expense and Other
|
|
~120
|
Tax effect of above
items
|
|
~(140)
|
Adjusted
earnings
|
|
$605 -
$640
|
Adjusted earnings
per share
|
|
$1.70 –
$1.80
|
|
|
|
|
The below table presents a reconciliation from Net Cash Provided
by Operating Activities to Free Cash Flow for our 2019
guidance:
(IN
MILLIONS)
|
|
|
Net cash provided by
operating activities
|
|
$1,055 -
$1,105
|
Less: Capital
expenditures, net
|
|
~(530)
|
Free cash
flow
|
|
$525 -
$575
|
Conference Call and Webcast
Nielsen will hold a conference call to discuss today's
announcements at 8:00 a.m. U.S.
Eastern Time (ET) on July 31, 2019.
The audio and slides for the call can be accessed live by webcast
at http://nielsen.com/investors or by dialing +1-833-236-2755.
Callers outside the U.S. can dial +1-647-689-4180. The passcode for
the call is "9947836." An audio replay and transcript will be
available on the investor relations website after the
call.
Forward-looking Statements
This news release includes information that could constitute
forward-looking statements made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995.
These statements include those set forth above relating to the
expected completion of our strategic review and those set forth
above under "2019 Full Year Guidance," as well as those that may be
identified by words such as "will," "intend," "expect,"
"anticipate," "should," "could" and similar expressions. These
statements are subject to risks and uncertainties, and actual
results and events could differ materially from what presently is
expected. Factors leading thereto may include, without limitation,
our review of strategic alternatives, general economic conditions,
conditions in the markets Nielsen is engaged in, behavior of
customers, suppliers and competitors, technological developments,
as well as legal and regulatory rules affecting Nielsen's business
and other specific risk factors that are outlined in our disclosure
filings and materials, which you can find on
http://www.nielsen.com/investors, such as our 10-K, 10-Q and 8-K
reports that have been filed with the Securities and Exchange
Commission. Please consult these documents for a more complete
understanding of these risks and uncertainties. This list of
factors is not intended to be exhaustive. Such forward-looking
statements only speak as of the date of this press release, and we
assume no obligation to update any written or oral forward-looking
statement made by us or on our behalf as a result of new
information, future events, or other factors, except as required by
law.
About Nielsen
Nielsen Holdings plc (NYSE: NLSN) is a global measurement and
data analytics company that provides the most complete and trusted
view available of consumers and markets worldwide. Our approach
marries proprietary Nielsen data with other data sources to help
clients around the world understand what's happening now, what's
happening next, and how to best act on this knowledge. For more
than 90 years Nielsen has provided data and analytics based on
scientific rigor and innovation, continually developing new ways to
answer the most important questions facing the media, advertising,
retail and fast-moving consumer goods industries. An S&P 500
company, Nielsen has operations in over 100 countries, covering
more than 90% of the world's population. For more information,
visit www.nielsen.com.
From time to time, Nielsen may use its website and social media
outlets as channels of distribution of material company
information. Financial and other material information
regarding the company is routinely posted and accessible on our
website at http://www.nielsen.com/investors and our Twitter
account at http://twitter.com/Nielsen.
Results of Operations—(Three and
Six Months Ended June 30, 2019 and 2018)
The following table sets forth, for the periods indicated, the
amounts included in our condensed consolidated statements of
operations:
|
|
Three Months
Ended June
30, (Unaudited)
|
|
|
Six Months
Ended June
30, (Unaudited)
|
|
(IN MILLIONS, EXCEPT
SHARE AND PER SHARE DATA)
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenues
|
|
$
|
1,628
|
|
|
$
|
1,647
|
|
|
$
|
3,191
|
|
|
$
|
3,257
|
|
Cost of
revenues
|
|
|
699
|
|
|
|
698
|
|
|
|
1,394
|
|
|
|
1,417
|
|
Selling, general and
administrative expenses
|
|
|
483
|
|
|
|
494
|
|
|
|
963
|
|
|
|
987
|
|
Depreciation and
amortization (1)
|
|
|
185
|
|
|
|
162
|
|
|
|
364
|
|
|
|
329
|
|
Restructuring
charges
|
|
|
12
|
|
|
|
65
|
|
|
|
47
|
|
|
|
89
|
|
Operating
income
|
|
|
249
|
|
|
|
228
|
|
|
|
423
|
|
|
|
435
|
|
Interest
income
|
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
Interest
expense
|
|
|
(100)
|
|
|
|
(100)
|
|
|
|
(199)
|
|
|
|
(196)
|
|
Foreign currency
exchange transaction losses, net
|
|
|
(1)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
|
Other income/(expense),
net
|
|
|
-
|
|
|
|
(5)
|
|
|
|
5
|
|
|
|
(4)
|
|
Income from continuing
operations before income taxes and equity in
net loss of affiliates
|
|
|
149
|
|
|
|
121
|
|
|
|
228
|
|
|
|
235
|
|
Provision for income
taxes
|
|
|
(23)
|
|
|
|
(44)
|
|
|
|
(55)
|
|
|
|
(83)
|
|
Equity in net loss of
affiliates
|
|
|
-
|
|
|
|
(1)
|
|
|
|
-
|
|
|
|
(1)
|
|
Net income
|
|
|
126
|
|
|
|
76
|
|
|
|
173
|
|
|
|
151
|
|
Net income attributable
to noncontrolling interests
|
|
|
3
|
|
|
|
4
|
|
|
|
7
|
|
|
|
7
|
|
Net income attributable
to Nielsen shareholders
|
|
$
|
123
|
|
|
$
|
72
|
|
|
$
|
166
|
|
|
$
|
144
|
|
Net income per share of
common stock, basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Nielsen shareholders
|
|
$
|
0.35
|
|
|
$
|
0.20
|
|
|
$
|
0.47
|
|
|
$
|
0.40
|
|
Net income per share of
common stock, diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Nielsen shareholders
|
|
$
|
0.34
|
|
|
$
|
0.20
|
|
|
$
|
0.47
|
|
|
$
|
0.40
|
|
Weighted-average shares
of common stock outstanding, basic
|
|
|
355,630,327
|
|
|
|
355,773,490
|
|
|
|
355,539,038
|
|
|
|
356,115,127
|
|
Dilutive shares of
common stock
|
|
|
997,381
|
|
|
|
602,670
|
|
|
|
954,854
|
|
|
|
707,962
|
|
Weighted-average shares
of common stock outstanding, diluted
|
|
|
356,627,708
|
|
|
|
356,376,160
|
|
|
|
356,493,892
|
|
|
|
356,823,089
|
|
|
|
(1)
|
Depreciation and
amortization associated with tangible and intangible assets
acquired in business combinations were $53 million and $107
million, respectively, for the three and six months ended June 30,
2019 and $56 million and $112 million, respectively, for the three
and six months ended June 30, 2018.
|
Certain Non-GAAP Measures
We use the non-GAAP financial measures discussed below to
evaluate our results of operations, financial condition, liquidity
and indebtedness. We believe that the presentation of these
non-GAAP measures provides useful information to investors
regarding financial and business trends related to our results of
operations, cash flows and indebtedness and that when this non-GAAP
financial information is viewed with our GAAP financial
information, investors are provided with valuable supplemental
information regarding our results of operations, thereby
facilitating period-to-period comparisons of our business
performance and is consistent with how management evaluates the
company's operating performance and liquidity. In addition, these
non-GAAP measures address questions the Company routinely receives
from analysts and investors and, in order to assure that all
investors have access to similar data the Company has determined
that it is appropriate to make this data available to all
investors. None of the non-GAAP measures presented should be
considered as an alternative to net income or loss, operating
income or loss, cash flows from operating activities, total
indebtedness or any other measures of operating performance and
financial condition, liquidity or indebtedness derived in
accordance with GAAP. These non-GAAP measures have important
limitations as analytical tools and should not be considered in
isolation or as substitutes for an analysis of our results as
reported under GAAP. Our use of these terms may vary from the use
of similarly-titled measures by others in our industry due to the
potential inconsistencies in the method of calculation and
differences due to items subject to interpretation.
Constant Currency Presentation
We evaluate our results of operations on both an as reported and
a constant currency basis. The constant currency presentation,
which is a non-GAAP measure, excludes the impact of fluctuations in
foreign currency exchange rates. We believe providing constant
currency information provides valuable supplemental information
regarding our results of operations, thereby facilitating
period-to-period comparisons of our business performance and is
consistent with how management evaluates the Company's performance.
We calculate constant currency percentages by converting our
prior-period local currency financial results using the current
period exchange rates and comparing these adjusted amounts to our
current period reported results. No adjustment has been made to
foreign currency exchange transaction gains or losses in the
calculation of constant currency net income.
Organic Constant Currency Presentation
We define organic constant currency revenue as constant currency
revenue excluding the net effect of business acquisitions and
divestitures over the past twelve months. Refer to the Constant
Currency Presentation section above for the definition of constant
currency. We believe that this measure is useful to investors and
management in understanding our ongoing operations and in analysis
of ongoing operating trends.
The below table presents a reconciliation from revenue on a
reported basis to revenue on a constant currency basis and organic
constant currency basis for the three and six months ended
June 30, 2019.
(IN MILLIONS)
(UNAUDITED)
|
|
Three
Months Ended
June 30,
2019
Reported
|
|
|
Three
Months Ended
June 30,
2018
Reported
|
|
|
% Variance
2019 vs. 2018
Reported
|
|
|
Three
Months Ended
June 30,
2018
Constant
Currency
|
|
|
% Variance
2019 vs. 2018
Constant
Currency
|
|
|
Three
Months Ended
June 30,
2019
Organic
|
|
|
Three
Months Ended
June 30,
2018
Organic
Constant
Currency
|
|
|
% Variance
2019 vs. 2018
Organic
Constant
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by
segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measure
|
|
$
|
546
|
|
|
$
|
560
|
|
|
|
(2.5)
|
%
|
|
$
|
537
|
|
|
|
1.7
|
%
|
|
$
|
546
|
|
|
$
|
537
|
|
|
|
1.7
|
%
|
Predict/Activate
|
|
|
226
|
|
|
|
240
|
|
|
|
(5.8)
|
%
|
|
|
232
|
|
|
|
(2.6)
|
%
|
|
|
223
|
|
|
|
229
|
|
|
|
(2.6)
|
%
|
Connect
|
|
$
|
772
|
|
|
$
|
800
|
|
|
|
(3.5)
|
%
|
|
$
|
769
|
|
|
|
0.4
|
%
|
|
$
|
769
|
|
|
$
|
766
|
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audience
Measurement
|
|
$
|
622
|
|
|
$
|
601
|
|
|
|
3.5
|
%
|
|
$
|
597
|
|
|
|
4.2
|
%
|
|
$
|
620
|
|
|
$
|
597
|
|
|
|
3.9
|
%
|
Plan/Optimize
|
|
|
234
|
|
|
|
246
|
|
|
|
(4.9)
|
%
|
|
|
242
|
|
|
|
(3.3)
|
%
|
|
|
227
|
|
|
|
242
|
|
|
|
(6.2)
|
%
|
Media
|
|
$
|
856
|
|
|
$
|
847
|
|
|
|
1.1
|
%
|
|
$
|
839
|
|
|
|
2.0
|
%
|
|
$
|
847
|
|
|
$
|
839
|
|
|
|
1.0
|
%
|
Total
|
|
$
|
1,628
|
|
|
$
|
1,647
|
|
|
|
(1.2)
|
%
|
|
$
|
1,608
|
|
|
|
1.2
|
%
|
|
$
|
1,616
|
|
|
$
|
1,605
|
|
|
|
0.7
|
%
|
(IN MILLIONS)
(UNAUDITED)
|
|
Six
Months Ended
June 30,
2019
Reported
|
|
|
Six
Months Ended
June 30,
2018
Reported
|
|
|
% Variance
2019 vs. 2018
Reported
|
|
|
Six
Months Ended
June 30
2018
Constant
Currency
|
|
|
% Variance
2019 vs. 2018
Constant
Currency
|
|
|
Six
Months Ended
June 30,
2019
Organic
|
|
|
Six
Months Ended
June 30,
2018
Organic
Constant
Currency
|
|
|
% Variance
2019 vs. 2018
Organic
Constant
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by
segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measure
|
|
$
|
1,085
|
|
|
$
|
1,123
|
|
|
|
(3.4)
|
%
|
|
$
|
1,067
|
|
|
|
1.7
|
%
|
|
$
|
1,084
|
|
|
$
|
1,067
|
|
|
|
1.6
|
%
|
Predict/Activate
|
|
|
424
|
|
|
|
463
|
|
|
|
(8.4)
|
%
|
|
|
444
|
|
|
|
(4.5)
|
%
|
|
|
419
|
|
|
|
438
|
|
|
|
(4.3)
|
%
|
Connect
|
|
$
|
1,509
|
|
|
$
|
1,586
|
|
|
|
(4.9)
|
%
|
|
$
|
1,511
|
|
|
|
(0.1)
|
%
|
|
$
|
1,503
|
|
|
$
|
1,505
|
|
|
|
(0.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audience
Measurement
|
|
$
|
1,227
|
|
|
$
|
1,197
|
|
|
|
2.5
|
%
|
|
$
|
1,189
|
|
|
|
3.2
|
%
|
|
$
|
1,224
|
|
|
$
|
1,189
|
|
|
|
2.9
|
%
|
Plan/Optimize
|
|
|
455
|
|
|
|
474
|
|
|
|
(4.0)
|
%
|
|
|
465
|
|
|
|
(2.2)
|
%
|
|
|
441
|
|
|
|
465
|
|
|
|
(5.2)
|
%
|
Media
|
|
$
|
1,682
|
|
|
$
|
1,671
|
|
|
|
0.7
|
%
|
|
$
|
1,654
|
|
|
|
1.7
|
%
|
|
$
|
1,665
|
|
|
$
|
1,654
|
|
|
|
0.7
|
%
|
Total
|
|
$
|
3,191
|
|
|
$
|
3,257
|
|
|
|
(2.0)
|
%
|
|
$
|
3,165
|
|
|
|
0.8
|
%
|
|
$
|
3,168
|
|
|
$
|
3,159
|
|
|
|
0.3
|
%
|
The below table presents a reconciliation of Net Income and
Adjusted EBITDA on a reported basis to a constant currency basis
for the three and six months ended June 30,
2019.
(IN MILLIONS)
(UNAUDITED)
|
|
Three
Months Ended
June 30,
2019
Reported
|
|
|
Three
Months Ended
June 30,
2018
Reported
|
|
|
% Variance
2019 vs. 2018
Reported
|
|
|
Three
Months Ended
June 30,
2018
Constant
Currency
|
|
|
% Variance
2019 vs. 2018
Constant
Currency
|
|
Net Income attributable
to Nielsen
Shareholders
|
|
$
|
123
|
|
|
$
|
72
|
|
|
|
70.8
|
%
|
|
$
|
67
|
|
|
|
83.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
470
|
|
|
$
|
468
|
|
|
|
0.4
|
%
|
|
$
|
461
|
|
|
|
2.0
|
%
|
(IN MILLIONS)
(UNAUDITED)
|
|
Six
Months Ended
June 30,
2019
Reported
|
|
|
Six
Months Ended
June 30,
2018
Reported
|
|
|
% Variance
2019 vs. 2018
Reported
|
|
|
Six
Months Ended
June 30,
2018
Constant
Currency
|
|
|
% Variance
2019 vs. 2018
Constant
Currency
|
|
Net Income attributable
to Nielsen
Shareholders
|
|
$
|
166
|
|
|
$
|
144
|
|
|
|
15.3
|
%
|
|
$
|
132
|
|
|
|
25.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
885
|
|
|
$
|
891
|
|
|
|
(0.7)
|
%
|
|
$
|
874
|
|
|
|
1.3
|
%
|
Adjusted EBITDA
We define Adjusted EBITDA as net income or loss from our
consolidated statements of operations before interest income and
expense, income taxes, depreciation and amortization, restructuring
charges, impairment of goodwill and other long-lived assets,
share-based compensation expense and other non-operating items from
our consolidated statements of operations, as well as certain other
items that arise outside the ordinary course of our continuing
operations specifically described below.
Restructuring charges: We exclude
restructuring expenses, which primarily include employee severance,
office consolidation and contract termination charges, from our
Adjusted EBITDA to allow more accurate comparisons of the financial
results to historical operations and forward-looking guidance. By
excluding these expenses from our non-GAAP measures, management is
better able to evaluate our ability to utilize our existing assets
and estimate the long-term value these assets will generate for us.
Furthermore, we believe that the adjustments of these items more
closely correlate with the sustainability of our operating
performance.
Impairment of goodwill and other
long-lived assets: We exclude the impact of charges related to the
impairment of goodwill and other long-lived assets. We believe that
the exclusion of these impairments, which are non-cash, allows for
more meaningful comparisons of operating results to peer companies.
We believe that this increases period-to-period comparability and
is useful to evaluate the performance of the total company.
Share-based compensation expense:
We exclude the impact of costs relating to share-based
compensation. Due to the subjective assumptions and a variety of
award types, we believe that the exclusion of share-based
compensation expense, which is typically non-cash, allows for more
meaningful comparisons of operating results to peer companies.
Share-based compensation expense can vary significantly based on
the timing, size and nature of awards granted.
Other non-operating expenses, net:
We exclude foreign currency exchange transaction gains and losses
primarily related to intercompany financing arrangements as well as
other non-operating income and expense items, such as, gains and
losses recorded on business combinations or dispositions, sales of
investments, net income attributable to noncontrolling interests
and early redemption payments made in connection with debt
refinancing. We believe that the adjustments of these items more
closely correlate with the sustainability of our operating
performance.
Other items: To measure operating
performance, we exclude certain expenses and gains that arise
outside the ordinary course of our continuing operations. Such
costs primarily include legal settlements, acquisition related
expenses, business optimization costs and other transaction costs.
We believe the exclusion of such amounts allows management and the
users of the financial statements to better understand our
financial results.
Adjusted EBITDA is not a presentation made in accordance with
GAAP, and our use of the term Adjusted EBITDA may vary from the use
of similarly-titled measures by others in our industry due to the
potential inconsistencies in the method of calculation and
differences due to items subject to interpretation. Adjusted EBITDA
margin is Adjusted EBITDA for a particular period expressed as a
percentage of revenues for that period.
We use Adjusted EBITDA to measure our performance from period to
period both at the consolidated level as well as within our
operating segments, to evaluate and fund incentive compensation
programs and to compare our results to those of our competitors. In
addition to Adjusted EBITDA being a significant measure of
performance for management purposes, we also believe that this
presentation provides useful information to investors regarding
financial and business trends related to our results of operations
and that when non-GAAP financial information is viewed with GAAP
financial information, investors are provided with a more
meaningful understanding of our ongoing operating performance.
Adjusted EBITDA should not be considered as an alternative to
net income or loss, operating income, cash flows from operating
activities or any other performance measures derived in accordance
with GAAP as measures of operating performance or cash flows as
measures of liquidity. Adjusted EBITDA has important limitations as
an analytical tool and should not be considered in isolation or as
a substitute for analysis of our results as reported under
GAAP.
Adjusted Earnings per Share
We define Adjusted Earnings per Share as net income attributable
to Nielsen shareholders per share (diluted) from continuing
operations from our consolidated statements of operations,
excluding depreciation and amortization associated with acquired
tangible and intangible assets, restructuring charges, impairment
of goodwill and other long-lived assets, share-based compensation
expense, other non-operating items from our consolidated statements
of operations and certain other items considered unusual or
non-recurring in nature, adjusted for income taxes related to these
items. Management believes that this non-GAAP measure is useful in
providing period-to-period comparisons of the results of the
Company's ongoing operating performance.
The below table presents reconciliations from net income to
Adjusted EBITDA for the three and six months ended June 30, 2019 and 2018:
|
|
Three Months
Ended June
30, (Unaudited)
|
|
|
Six Months
Ended June
30, (Unaudited)
|
|
(IN
MILLIONS)
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net income
attributable to Nielsen shareholders
|
|
$
|
123
|
|
|
$
|
72
|
|
|
$
|
166
|
|
|
$
|
144
|
|
Interest expense,
net
|
|
|
99
|
|
|
|
98
|
|
|
|
196
|
|
|
|
192
|
|
Provision for income
taxes
|
|
|
23
|
|
|
|
44
|
|
|
|
55
|
|
|
|
83
|
|
Depreciation and
amortization
|
|
|
185
|
|
|
|
162
|
|
|
|
364
|
|
|
|
329
|
|
EBITDA
|
|
|
430
|
|
|
|
376
|
|
|
|
781
|
|
|
|
748
|
|
Equity in net loss of
affiliates
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
Other non-operating
expense, net
|
|
|
4
|
|
|
|
13
|
|
|
|
6
|
|
|
|
15
|
|
Restructuring
charges
|
|
|
12
|
|
|
|
65
|
|
|
|
47
|
|
|
|
89
|
|
Share-based
compensation expense
|
|
|
11
|
|
|
|
7
|
|
|
|
26
|
|
|
|
20
|
|
Other items
(a)
|
|
|
13
|
|
|
|
6
|
|
|
|
25
|
|
|
|
18
|
|
Adjusted
EBITDA
|
|
$
|
470
|
|
|
$
|
468
|
|
|
$
|
885
|
|
|
$
|
891
|
|
|
|
(a)
|
Other items primarily
consist of business optimization costs, including strategic review
costs, and transaction related costs for the three and six months
ended June 30, 2019. For the three months ended June 30, 2018,
other items primarily consist of transaction related costs. For the
six months ended June 30, 2018, other items primarily consist of
transaction related costs and business optimization
costs.
|
The below table presents reconciliations from diluted net income
per share to Adjusted earnings per share for the three and six
months ended June 30, 2019 and
2018:
|
|
Three Months
Ended June
30, (Unaudited)
|
|
|
Six Months
Ended June
30, (Unaudited)
|
|
(IN
MILLIONS)
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net income
attributable to Nielsen shareholders per share of
common stock, diluted
|
|
$
|
0.34
|
|
|
$
|
0.20
|
|
|
$
|
0.47
|
|
|
$
|
0.40
|
|
Depreciation and
amortization associated with acquisition-related
tangible and intangible
assets
|
|
|
0.15
|
|
|
|
0.16
|
|
|
|
0.30
|
|
|
|
0.31
|
|
Restructuring
|
|
|
0.03
|
|
|
|
0.18
|
|
|
|
0.13
|
|
|
|
0.25
|
|
Share-based
compensation
|
|
|
0.03
|
|
|
|
0.02
|
|
|
|
0.07
|
|
|
|
0.06
|
|
Other non-operating
(income)/expense, net
|
|
|
0.00
|
|
|
|
0.03
|
|
|
|
0.00
|
|
|
|
0.03
|
|
Other items
(a)
|
|
|
0.04
|
|
|
|
0.02
|
|
|
|
0.07
|
|
|
|
0.05
|
|
Tax effect of above
items
|
|
|
(0.08)
|
|
|
|
(0.14)
|
|
|
|
(0.17)
|
|
|
|
(0.23)
|
|
Discrete tax
benefit/(provision)
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
-
|
|
Adjusted earnings
per share
|
|
$
|
0.53
|
|
|
$
|
0.47
|
|
|
$
|
0.88
|
|
|
$
|
0.87
|
|
(a)
|
Other items primarily
consist of business optimization costs, including strategic review
costs, and transaction related costs for the three and six months
ended June 30, 2019. For the three months ended June 30, 2018,
other items primarily consist of transaction related costs. For the
six months ended June 30, 2018, other items primarily consist of
transaction related costs and business optimization
costs.
|
Free Cash Flow
We define free cash flow as net cash provided by operating
activities, plus contributions to the Nielsen Foundation, less
capital expenditures, net. We believe providing free cash flow
information provides valuable supplemental liquidity information
regarding the cash flow that may be available for discretionary use
by us in areas such as the distributions of dividends, repurchase
of common stock, voluntary repayment of debt obligations or to fund
our strategic initiatives, including acquisitions, if any. However,
free cash flow does not represent residual cash flows entirely
available for discretionary purposes; for example, the repayment of
principal amounts borrowed is not deducted from free cash flow. Key
limitations of the free cash flow measure include the assumptions
that we will be able to refinance our existing debt when it matures
and meet other cash flow obligations from financing activities,
such as principal payments on debt. Free cash flow is not a
presentation made in accordance with GAAP. The following table
presents reconciliation from net cash provided by operating
activities to free cash flow:
|
|
Three Months Ended
June 30,
(Unaudited)
|
|
|
Six Months Ended
June 30,
(Unaudited)
|
|
(IN
MILLIONS)
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net cash provided by
operating activities
|
|
$
|
226
|
|
|
$
|
242
|
|
|
$
|
183
|
|
|
$
|
125
|
|
Less: Capital
expenditures, net
|
|
|
(108)
|
|
|
|
(118)
|
|
|
|
(230)
|
|
|
|
(246)
|
|
Free cash
flow
|
|
$
|
118
|
|
|
$
|
124
|
|
|
$
|
(47)
|
|
|
$
|
(121)
|
|
Net Debt and Net Debt Leverage Ratio
The net debt leverage ratio is defined as net debt (gross debt
less cash and cash equivalents) as of the balance sheet date
divided by Adjusted EBITDA for the twelve months then ended. Net
debt and the net debt leverage ratio are commonly used metrics to
evaluate and compare leverage between companies and are not
presentations made in accordance with GAAP. The calculation of net
debt and the net debt leverage ratio as of June 30, 2019 is as follows:
(IN MILLIONS)
(Unaudited)
|
|
Gross debt as of June
30, 2019
|
|
$
|
8,645
|
|
Less: Cash and cash
equivalents as of June 30, 2019
|
|
|
(393)
|
|
Net debt as of June
30, 2019
|
|
$
|
8,252
|
|
|
|
|
|
|
Adjusted EBITDA for the
year ended December 31, 2018
|
|
$
|
1,850
|
|
Less: Adjusted EBITDA
for the six months ended June 30, 2018
|
|
|
891
|
|
Add: Adjusted EBITDA
for the six months ended June 30, 2019
|
|
|
885
|
|
Adjusted EBITDA for
the twelve months ended June 30, 2019
|
|
$
|
1,844
|
|
|
|
|
|
|
Net debt leverage
ratio as of June 30, 2019
|
|
|
4.48x
|
|
View original
content:http://www.prnewswire.com/news-releases/nielsen-reports-2nd-quarter-2019-results-300893701.html
SOURCE Nielsen Holdings plc