— Reaffirms 2022 Outlook —
LONDON, May 9, 2022
/PRNewswire/ -- Clarivate Plc (NYSE: CLVT) (the "Company" or
"Clarivate"), a global leader in providing trusted information and
insights to accelerate the pace of innovation, today reported
results for the first quarter ended March
31, 2022.
First Quarter 2022 Financial Highlights
- Revenues of $662.2 million
increased 54.6%, and 57.6% at constant currency
- Organic revenues(1) increased 4.4% at constant
currency
- Net income(2) attributable to ordinary shares of
$50.8 million increased $106.8 million; Net loss per diluted share of
$0.06 improved by $0.11
- Adjusted Net Income(1) of $155.1 million increased 75.4%; Adjusted Income
per diluted share(1) of $0.21 increased 50.0% or $0.07
- Adjusted EBITDA(1) of $262.3
million increased 59.2% and Adjusted EBITDA
Margin(1) of 39.6% increased 140 basis points
"Clarivate had a good start to the year with organic revenue
growth of 4.4% and strong profit conversion," said Jerre Stead, Executive Chair and CEO. "The
recent implementation of our 'One Clarivate' operating model is
showing early signs of success as we delivered some cross-selling
wins in the quarter. We also benefited by closing on several
transactional deals, which had slipped from last year's fourth
quarter."
Selected Financial Information
The results for the three months ended March 31, 2022 include contributions from the
following 2021 acquisitions 1) Bioinfogate, which was completed in
August 2021; and 2) ProQuest, which
was completed in December 2021 for
which there were no comparable amounts in the three months ended
March 31, 2021.
|
Three Months Ended
March 31,
|
|
Change
|
(in millions, except
percentages and per share data), (unaudited)
|
2022
|
|
2021
|
|
$
|
|
%
|
Revenues,
net
|
$ 662.2
|
|
$ 428.4
|
|
$
233.8
|
|
54.6 %
|
Annualized Contract
Value (ACV)
|
$
1,606.5
|
|
$ 909.4
|
|
$
697.1
|
|
76.7 %
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to ordinary shareholders
|
$ 50.8
|
|
$ (56.0)
|
|
$
106.8
|
|
190.7 %
|
Net income (loss) per
share, basic
|
$ 0.07
|
|
$ (0.09)
|
|
$
0.16
|
|
177.8 %
|
Net income (loss) per
share, diluted
|
$ (0.06)
|
|
$ (0.17)
|
|
0.11
|
|
64.7 %
|
Weighted-average shares
outstanding (diluted)
|
688.0
|
|
612.6
|
|
—
|
|
12.3 %
|
Adjusted
EBITDA(1)
|
$ 262.3
|
|
$ 164.8
|
|
$
97.5
|
|
59.2 %
|
|
|
|
|
|
|
|
|
Adjusted net
income(1)
|
$ 155.1
|
|
$ 88.4
|
|
$
66.7
|
|
75.4 %
|
Adjusted diluted
EPS(1)
|
$ 0.21
|
|
$ 0.14
|
|
$
0.07
|
|
50.0 %
|
Weighted average
ordinary shares (diluted)(2)
|
746.3
|
|
623.3
|
|
—
|
|
19.7 %
|
Net cash provided by
operating activities
|
$ 67.4
|
|
$ 174.0
|
|
$ (106.6)
|
|
(61.3) %
|
Free cash
flow(1)
|
$ 26.0
|
|
$ 141.0
|
|
$ (115.0)
|
|
(81.6) %
|
Adjusted free cash
flow(1)
|
$ 191.3
|
|
$ 163.2
|
|
$
28.1
|
|
17.2 %
|
|
(Amounts in tables may
not sum due to rounding)
|
|
(1) Non-GAAP measure. Please see
"Reconciliation to Certain Non-GAAP measures" in this earnings
release for important disclosures and reconciliations of these
financial measures to the most directly comparable GAAP measure.
These terms are defined elsewhere in this earnings
release.
|
(2) Calculated assuming a net income
position compared to a net loss position on the statement of
operations for calculating Adjusted net income and Adjusted diluted
EPS.
|
First Quarter 2022 Operating Results
Revenues, net, for the first quarter increased $233.8 million, or 54.6%, to $662.2 million, and increased 57.6% on a
constant currency basis. Organic revenues(1) increased
$18.7 million or 4.4% on a constant
currency basis.
Subscription revenues for the first quarter increased
$164.8 million, or 69.0%, to
$403.8 million, and increased
71.5% on a constant currency basis, primarily driven by the
acquisition of ProQuest in December
2021. Organic subscription revenues(1) increased
2.8% on a constant currency basis, primarily due to price
increases, new business and the benefit of net installations in the
prior year.
Re-occurring revenues for the first quarter increased
$5.0 million, or 4.6% to $114.5 million, and increased 9.3% on a constant
currency basis. Organic re-occurring revenues(1)
increased 9.3% on a constant currency basis, primarily due to price
increases in patent renewal volumes and improvement in yield per
case.
Transactional revenues for the first quarter increased
$60.8 million, or 73.3%, to
$143.7 million, and increased
75.6% on a constant currency basis, primarily due to the
acquisition of ProQuest. Organic transactional
revenues(1) increased 2.3% on a constant currency basis,
primarily due to an increase in custom data sales.
Net income attributable to ordinary shares for the first quarter
improved to $50.8 million, compared
to Net loss of $56.0 million in the
prior-year period, primarily driven by the mark-to-market gain on
financial instruments, higher revenues and profits. Net loss per
diluted share for the first quarter of $(0.06) improved $0.11, compared to Net loss per diluted share of
$(0.17) in the prior-year period.
Adjusted EBITDA for the first quarter was $262.3 million, an increase of $97.5 million or 59.2%. Adjusted net income for
the first quarter was $155.1 million,
an increase of $66.7 million or
75.4%. The increase in Adjusted EBITDA and Adjusted net income was
driven by earnings contributions from acquisitions, organic growth
and cost savings from integration programs.
Adjusted diluted earnings per share was $0.21 for the first quarter, compared to
$0.14 in the prior-year period, as
strong growth in Adjusted net income was offset by a 19.7% increase
in weighted average ordinary shares outstanding primarily driven by
the acquisition of ProQuest.
Balance Sheet and Cash Flow
As of March 31, 2022, cash and
cash equivalents of $500.2 million
increased $69.3 million, driven by
the growth in revenues and profits. Restricted cash decreased
$141.2 million to $15.5 million, compared to December 31, 2021 primarily due to 2022 first
quarter employee payroll payments related to the CPA Global Equity
Plan. The payments were funded by the sale of shares held in the
Employee Benefit Trust established for the CPA Equity Plan in
December 2021.
The Company's total debt outstanding as of March 31, 2022 was $5,559.6 million, a decrease of $7.6 million compared to December 31, 2021.
Net cash provided by operating activities of $67.4 million for the three months ended
March 31, 2022, decreased
$106.6 million compared to net cash
provided by operating activities of $174.0
million for the prior year, primarily due to the payments in
the first quarter of 2022 related to the CPA Equity Plan. Adjusted
free cash flow for the three months ended March 31, 2022, was $191.3
million, an increase of $28.1
million, compared to the prior year, as a result of growth
in revenues and Adjusted EBITDA.
Reaffirmed Outlook for 2022 (forward-looking
statement)
Jonathan Collins, Executive Vice
President and Chief Financial Officer, said: "With our first
quarter results in-line with our expectations, we reaffirm our
outlook for 2022. We currently expect progressive improvement in
our quarterly organic growth rate as we move through the year.
Additionally, the benefit of cost synergies primarily from
acquisition integration savings will drive expansion of our
Adjusted EBITDA margin and profit growth."
The full year outlook presented below assumes no further
currency movements, acquisitions, divestitures, or unanticipated
events.
The below outlook includes Non-GAAP measures. Please see
"Reconciliation to Certain Non-GAAP measures" presented below for
important disclosure and reconciliations of these financial
measures to the most directly comparable GAAP measure. These terms
are defined elsewhere in this earnings press release.
|
2022 Outlook
|
Revenues
|
$2.80B to
$2.88B
|
Adjusted
EBITDA
|
$1.16B to
$1.22B
|
Adjusted EBITDA
margin
|
41% to 42%
|
Adjusted Diluted
EPS(1)
|
$0.85 to
$0.95
|
Adjusted Free Cash
Flow
|
$675M to
$725M
|
|
(1) Adjusted Diluted EPS for 2022 is
calculated based on approximately 741.7 million fully diluted
weighted average shares outstanding.
|
Conference Call and Webcast
Clarivate will host a conference call and webcast today to
review the results for the first quarter at 9:00 a.m. Eastern Time. The conference call will
be simultaneously webcast on the Investor Relations section of the
company's website.
Interested parties may access the live audio broadcast by
dialing 1-844-200-6205 in the United
States, 1-929-526-1599 for international, and 1-833-950-0062
in Canada. The conference ID
number is 430211. An audio replay will be available approximately
two hours after the completion of the call at 1-866-813-9403 in
the United States, 44-204-525-0658
for international, and 1-266-828-7578 in Canada. The Replay Conference ID number is
060097. The recording will be available for replay through
May 23, 2022. The webcast can be
accessed at
https://services.choruscall.com/mediaframe/webcast.html?webcastid=XSdgZ81U
and will be available for replay.
Use of Non-GAAP Financial Measures
Non-GAAP results are not presentations made in accordance with
U.S. generally accepted accounting principles ("GAAP") and are
presented only as a supplement to our financial statements based on
GAAP. Non-GAAP financial information is provided to enhance the
reader's understanding of our financial performance, but none of
these non-GAAP financial measures are recognized terms under GAAP.
They are not measures of financial condition or liquidity, and
should not be considered as an alternative to profit or loss for
the period determined in accordance with GAAP or operating cash
flows determined in accordance with GAAP. As a result, you should
not consider such measures in isolation from, or as a substitute
for, financial measures or results of operations calculated or
determined in accordance with GAAP.
We use non-GAAP measures in our operational and financial
decision-making. We believe that such measures allow us to focus on
what we deem to be a more reliable indicator of ongoing operating
performance and our ability to generate cash flow from operations
and we also believe that investors may find these non-GAAP
financial measures useful for the same reasons. Non-GAAP measures
are frequently used by securities analysts, investors, and other
interested parties in their evaluation of companies comparable to
us, many of which present non-GAAP measures when reporting their
results. These measures can be useful in evaluating our performance
against our peer companies because we believe the measures provide
users with valuable insight into key components of GAAP financial
disclosures. However, non-GAAP measures have limitations as
analytical tools and because not all companies use identical
calculations, our presentation of non-GAAP financial measures may
not be comparable to other similarly titled measures of other
companies.
Definitions and reconciliations of non-GAAP measures, such as
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow,
Standalone Adjusted EBITDA, and organic revenue to the most
directly comparable GAAP measures are provided within the schedules
attached to this release. Our presentation of non-GAAP measures
should not be construed as an inference that our future results
will be unaffected by any of the adjusted items, or that any
projections and estimates will be realized in their entirety or at
all.
We calculate constant currency by converting the non-U.S. dollar
income statement balances for the most current year to U.S. dollars
by applying the average exchange rates of the preceding year.
Forward-Looking Statements
This communication contains "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
These statements, which express management's current views
concerning future business, events, trends, contingencies,
financial performance, or financial condition, appear at various
places in this communication and may use words like "aim,"
"anticipate," "assume," "believe," "continue," "could," "estimate,"
"expect," "forecast," "future," "goal," "intend," "likely," "may,"
"might," "plan," "potential," "predict," "project," "see," "seek,"
"should," "strategy," "strive," "target," "will," and "would" and
similar expressions, and variations or negatives of these words.
Examples of forward-looking statements include, among others,
statements we make regarding: guidance outlook and predictions
relating to expected operating results, such as revenue growth and
earnings; strategic actions such as acquisitions, joint ventures,
and dispositions, including the anticipated benefits therefrom, and
our success in integrating acquired businesses; anticipated levels
of capital expenditures in future periods; our ability to
successfully realize cost savings initiatives and transition
services expenses; our belief that we have sufficiently liquidity
to fund our ongoing business operations; expectations of the effect
on our financial condition of claims, litigation, environmental
costs, the COVID-19 pandemic and governmental responses thereto,
contingent liabilities, and governmental and regulatory
investigations and proceedings; and our strategy for customer
retention, growth, product development, market position, financial
results, and reserves. Forward-looking statements are neither
historical facts nor assurances of future performance. Instead,
they are based only on management's current beliefs, expectations,
and assumptions regarding the future of our business, future plans
and strategies, projections, anticipated events and trends, the
economy, and other future conditions. Because forward-looking
statements relate to the future, they are difficult to predict and
many of which are outside of our control. Important factors that
could cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include those factors discussed under the caption "Risk Factors" in
our annual report on Form 10-K, along with our other filings with
the U.S. Securities and Exchange Commission ("SEC"). However, those
factors should not be considered to be a complete statement of all
potential risks and uncertainties. Additional risks and
uncertainties not known to us or that we currently deem immaterial
may also impair our business operations. Forward-looking statements
are based only on information currently available to our management
and speak only as of the date of this communication. We do not
assume any obligation to publicly provide revisions or updates to
any forward-looking statements, whether as a result of new
information, future developments or otherwise, should circumstances
change, except as otherwise required by securities and other
applicable laws. Please consult our public filings with the SEC or
on our website at www.clarivate.com.
About Clarivate
Clarivate™ is a global leader in providing solutions to
accelerate the pace of innovation. Our bold mission is to help
customers solve some of the world's most complex problems by
providing actionable information and insights that reduce the time
from new ideas to life-changing inventions in the areas of Academia
& Government, Life Sciences & Healthcare, Professional
Services and Consumer Goods, Manufacturing & Technology. We
help customers discover, protect and commercialize their inventions
using our trusted subscription and technology-based solutions
coupled with deep domain expertise. For more information, please
visit clarivate.com.
Condensed
Consolidated Balance Sheets (In millions, except share
data) (unaudited)
|
|
|
March 31,
2022
|
|
December 31,
2021
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash equivalents
|
$
500.2
|
|
$
430.9
|
Restricted cash
|
15.5
|
|
156.7
|
Accounts receivable, net
|
859.8
|
|
906.4
|
Prepaid expenses
|
97.7
|
|
76.6
|
Other current assets
|
76.9
|
|
66.6
|
Total current assets
|
1,550.1
|
|
1,637.2
|
Property and equipment,
net
|
80.0
|
|
83.8
|
Other intangible
assets, net
|
10,137.9
|
|
10,392.4
|
Goodwill
|
7,803.4
|
|
7,904.9
|
Other non-current
assets
|
63.1
|
|
50.8
|
Deferred income
taxes
|
28.6
|
|
27.9
|
Operating lease
right-of-use assets
|
80.6
|
|
86.0
|
Total Assets
|
$
19,743.7
|
|
$
20,183.0
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable
|
$
117.3
|
|
$
129.2
|
Accrued expenses and other current liabilities
|
532.0
|
|
679.6
|
Current portion of deferred revenues
|
1,080.6
|
|
1,030.4
|
Current portion of operating lease liability
|
30.5
|
|
32.2
|
Current portion of long-term debt
|
30.6
|
|
30.6
|
Total current liabilities
|
1,791.0
|
|
1,902.0
|
Long-term
debt
|
5,452.0
|
|
5,456.3
|
Warrant
liabilities
|
127.4
|
|
227.8
|
Non-current portion of
deferred revenues
|
54.7
|
|
54.2
|
Other non-current
liabilities
|
143.2
|
|
142.7
|
Deferred income
taxes
|
376.7
|
|
380.1
|
Operating lease
liabilities
|
89.1
|
|
94.0
|
Total liabilities
|
8,034.1
|
|
8,257.1
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred Shares, no par value; 14,375,000 shares authorized;
5.25% Mandatory Convertible Preferred Shares, Series A, 14,375,000
shares issued and outstanding as of both March 31, 2022 and
December 31, 2021
|
1,392.6
|
|
1,392.6
|
Ordinary Shares, no par value; unlimited shares authorized at
March 31, 2022 and December 31, 2021; 681,463,527 and 683,139,210
shares issued, and 678,974,630 and 683,139,210 shares outstanding
at March 31, 2022 and December 31, 2021, respectively
|
11,815.0
|
|
11,827.9
|
Treasury shares, at cost; 2,488,897 and 547,136 shares as of
March 31, 2022 and December 31, 2021, respectively
|
(48.7)
|
|
(16.9)
|
Accumulated other comprehensive income
|
103.5
|
|
326.7
|
Accumulated deficit
|
(1,552.8)
|
|
(1,604.4)
|
Total shareholders'
equity
|
11,709.6
|
|
11,925.9
|
Total
Liabilities and Shareholders' Equity
|
$
19,743.7
|
|
$
20,183.0
|
Condensed
Consolidated Statement of Operations (In millions, except
share and per share data) (unaudited)
|
|
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
Revenues,
net
|
$
662.2
|
|
$
428.4
|
Operating
expenses:
|
|
|
|
Cost of revenues
|
249.2
|
|
147.9
|
Selling, general and administrative costs
|
193.7
|
|
134.3
|
Depreciation and amortization
|
176.4
|
|
131.6
|
Restructuring and impairment
|
11.7
|
|
67.9
|
Other operating (income) expense, net
|
(13.7)
|
|
16.2
|
Total operating expenses
|
617.3
|
|
497.9
|
Income (loss) from
operations
|
44.9
|
|
(69.5)
|
Mark to market gain on financial instruments
|
(100.4)
|
|
(51.2)
|
Income (loss) before
interest expense and income tax
|
145.3
|
|
(18.3)
|
Interest expense and amortization of debt discount,
net
|
59.5
|
|
37.4
|
Income (loss) before
income tax
|
85.8
|
|
(55.7)
|
Provision for income taxes
|
16.3
|
|
0.3
|
Net income
(loss)
|
69.5
|
|
(56.0)
|
Dividends on preferred shares
|
18.7
|
|
—
|
Net income (loss)
attributable to ordinary shares
|
$
50.8
|
|
$
(56.0)
|
|
|
|
|
Per share:
|
|
|
|
Basic
|
$
0.07
|
|
$
(0.09)
|
Diluted
|
$
(0.06)
|
|
$
(0.17)
|
|
|
|
|
Weighted average shares
used to compute earnings per share:
|
|
|
|
Basic
|
682,539,103
|
|
602,272,375
|
Diluted
|
687,994,133
|
|
612,598,664
|
Condensed
Consolidated Statements of Cash Flows (In
millions) (unaudited)
|
|
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
Cash Flows From
Operating Activities
|
|
|
|
Net income
(loss)
|
$
69.5
|
|
$
(56.0)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and amortization
|
176.4
|
|
131.6
|
Deferred
income taxes
|
(1.3)
|
|
0.2
|
Share-based compensation
|
24.6
|
|
1.2
|
Restructuring and impairment
|
(0.9)
|
|
38.9
|
Loss
(gain) on foreign currency forward contracts
|
6.7
|
|
(1.0)
|
Mark to
market adjustment on contingent shares
|
—
|
|
(25.1)
|
Mark to
market gain on financial instruments
|
(100.4)
|
|
(51.2)
|
Amortization of debt issuance costs
|
3.6
|
|
2.3
|
Other
operating activities
|
(19.5)
|
|
7.3
|
Changes in
operating assets and liabilities:
|
|
|
|
Accounts receivable
|
40.2
|
|
44.2
|
Prepaid expenses
|
(20.8)
|
|
(7.2)
|
Other assets
|
(18.5)
|
|
(0.9)
|
Accounts payable
|
(10.3)
|
|
13.7
|
Accrued expenses and other current liabilities
|
(143.9)
|
|
29.1
|
Deferred revenues
|
63.3
|
|
66.0
|
Operating lease right of use assets
|
4.6
|
|
7.5
|
Operating lease liabilities
|
(5.1)
|
|
(25.7)
|
Other liabilities
|
(0.8)
|
|
(0.9)
|
Net cash provided by operating activities
|
67.4
|
|
174.0
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
Capital
expenditures
|
(41.4)
|
|
(33.0)
|
Acquisitions, net of cash acquired
|
(1.3)
|
|
0.4
|
Net cash used in investing activities
|
(42.7)
|
|
(32.6)
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
Principal
payments on term loan
|
(7.2)
|
|
(7.2)
|
Payment of
debt issuance costs and discounts
|
(2.1)
|
|
—
|
Repurchases of ordinary shares
|
(55.1)
|
|
—
|
Cash
dividends on preferred shares
|
(18.9)
|
|
—
|
Proceeds
from stock options exercised
|
0.4
|
|
5.1
|
Payments
related to finance lease
|
(0.5)
|
|
—
|
Payments
related to tax withholding for stock-based compensation
|
(5.4)
|
|
(4.5)
|
Net cash used in financing activities
|
(88.8)
|
|
(6.6)
|
Effects of exchange
rates
|
(7.8)
|
|
8.7
|
|
|
|
|
Net increase in cash
and cash equivalents
|
69.3
|
|
141.3
|
Net (decrease) increase
in restricted cash
|
(141.2)
|
|
2.2
|
Net (decrease) increase
in cash and cash equivalents, and restricted cash
|
(71.9)
|
|
143.5
|
|
|
|
|
Beginning of
period:
|
|
|
|
Cash and
cash equivalents
|
430.9
|
|
257.7
|
Restricted
cash
|
156.7
|
|
14.7
|
Total cash and cash
equivalents, and restricted cash, beginning of period
|
587.6
|
|
272.4
|
|
|
|
|
End of
period:
|
|
|
|
Cash and
cash equivalents
|
500.2
|
|
399.0
|
Restricted
cash
|
15.5
|
|
16.9
|
Total cash and cash
equivalents, and restricted cash, end of period
|
$
515.7
|
|
$
415.9
|
|
|
|
|
Supplemental Cash Flow
Information:
|
|
|
|
Cash paid for
interest
|
27.8
|
|
27.3
|
Cash paid for income
tax
|
3.6
|
|
2.6
|
Capital expenditures
included in accounts payable
|
7.7
|
|
6.1
|
|
|
|
|
Non-Cash Financing
Activities:
|
|
|
|
Retirement of treasury
shares
|
(33.3)
|
|
—
|
Shares issued as
contingent stock consideration associated with the DRG
acquisition
|
—
|
|
61.6
|
Shares issued as
contingent stock consideration associated with the CPA Global
acquisition
|
—
|
|
43.9
|
Treasury share
purchases settled after period end
|
11.3
|
|
—
|
Dividends accrued on
our 5.25% Series A Mandatory Convertible Preferred
Shares
|
6.4
|
|
—
|
Total Non-Cash
Financing Activities
|
$
(15.6)
|
|
$
105.5
|
Reconciliation to Certain Non-GAAP Measures
(Amounts in tables may not sum due to rounding)
Adjusted EBITDA
Adjusted EBITDA represents net loss before the provision
for income taxes, depreciation and amortization, interest income
and expense adjusted to exclude the acquisition or disposal-related
transaction costs (such costs include net income from continuing
operations before provision for income taxes, depreciation and
amortization and interest income and expense from divestitures),
share-based compensation, mandatory convertible preferred share
dividend expense, unrealized foreign currency gains (losses),
transformational and restructuring expenses, acquisition-related
adjustments to deferred revenues, non-operating income or expense,
the impact of certain non-cash mark-to-market adjustments on
financial instruments, legal settlements and other items that are
included in net income for the period that the Company does not
consider indicative of its ongoing operating performance and
certain unusual items impacting results in a particular period.
Adjusted EBITDA margin is calculated by dividing
Adjusted EBITDA by Revenues, net plus the impact of the
deferred revenue purchase accounting adjustments relating to
acquisitions prior to 2021.
The following table presents our calculation of Adjusted
EBITDA for the three months ended March
31, 2022 and 2021 and reconciles these measures to our Net
loss for the same periods:
|
Three Months Ended March 31,
|
(in millions);
(unaudited)
|
2022
|
|
2021
|
Net income (loss) attributable to ordinary
shares
|
$
50.8
|
|
$
(56.0)
|
Dividends on preferred shares
|
18.7
|
|
—
|
Net income
(loss)
|
69.5
|
|
(56.0)
|
Provision for income taxes
|
16.3
|
|
0.3
|
Depreciation and amortization
|
176.4
|
|
131.6
|
Interest expense and amortization of debt discount,
net
|
59.5
|
|
37.4
|
Deferred revenues adjustment(1)
|
(0.2)
|
|
3.0
|
Transaction related costs(2)
|
6.7
|
|
(22.9)
|
Share-based compensation expense
|
37.0
|
|
39.0
|
Restructuring and impairment(3)
|
11.7
|
|
67.9
|
Mark to market gain on financial
instruments(4)
|
(100.4)
|
|
(51.2)
|
Other(5)
|
(14.2)
|
|
15.7
|
Adjusted EBITDA
|
$
262.3
|
|
$
164.8
|
Adjusted EBITDA Margin
|
39.6 %
|
|
38.2 %
|
|
|
(1) Reflects the deferred revenues
adjustment made as a result of purchase accounting prior to the
adoption of ASU No. 2021-08, Accounting for Contract Assets and
Contract Liabilities from Contracts with Customers. In the
fourth quarter of 2021, Clarivate adopted ASU No. 2021-08 which
allows an acquirer to account for the related revenue contracts in
accordance with ASC 606, Revenue from Contracts with
Customers, as if it had originated the contracts. This guidance
was applied retrospectively to all business combinations for which
the acquisition date occurs during or subsequent to
2021.
|
(2) Includes costs incurred to complete
business combination transactions, which were comprised of
acquisitions, dispositions and capital market activities, as well
as advisory, legal, and other professional and consulting costs.
This also includes the mark-to-market adjustments on the contingent
stock consideration associated with the CPA Global and DRG
acquisitions.
|
(3) Primarily reflects costs related to
restructuring and impairment associated with One Clarivate,
ProQuest and CPA Global Programs. The costs associated with the CPA
Global program were substantially complete as of March 31, 2022.
There were no impairment charges incurred during the three months
ended March 31, 2022 on right-of-use assets compared to $41.0 for
the three months ended March 31, 2021 relating to the cease use and
exit of leased properties.
|
(4) Reflects mark-to-market adjustments
on financial instruments under ASC 815, Derivatives and
Hedging. Warrant instruments that do not meet the criteria to
be considered indexed to an entity's own stock shall be initially
classified as a liability at their estimated fair values,
regardless of the likelihood that such instruments will ever be
settled in cash. In periods subsequent to issuance, changes in the
estimated fair value of the liabilities are reported through
earnings.
|
(5) Includes primarily the net impact of
foreign exchange gains and losses related to the re-measurement of
balances and other items that do not reflect our ongoing operating
performance.
|
Adjusted Net Income and Adjusted Diluted EPS
Adjusted Net Income is calculated using net income (loss),
adjusted to exclude acquisition or disposal-related transaction
costs (such costs include net income from continuing operations
before the provision for income taxes, depreciation and
amortization and interest income and expense from the divested
business), amortization related to acquired intangible assets,
share-based compensation, mandatory convertible preferred share
dividend expense, unrealized foreign currency gains/(losses),
transformational and restructuring expenses, acquisition-related
adjustments to deferred revenues, the impact of certain non-cash
mark-to-market adjustments on financial instruments, interest on
debt held in escrow, and other items that are included in net
income for the period that the Company does not consider indicative
of its ongoing operating performance and certain unusual items
impacting results in a particular period, and the income tax impact
of any adjustments. We calculate Adjusted Diluted EPS by using
Adjusted Net Income divided by adjusted diluted weighted average
shares for the period. The adjusted diluted weighted average shares
assumed that all instruments in the calculation are dilutive.
The following table presents our calculation of Adjusted Net
Income and Adjusted Diluted EPS for the three months ended
March 31, 2022 and 2021 and
reconciles these measures to our Net income (loss) and EPS for the
same periods:
|
Three Months Ended
March 31,
|
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
|
(in millions, except
per share amounts); (unaudited)
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
Net loss
attributable to ordinary shares, diluted
|
$
(44.1)
|
|
$
(0.06)
|
|
$
(107.2)
|
|
$
(0.17)
|
Change in fair value of private placement warrants
|
94.9
|
|
0.14
|
|
51.2
|
|
0.08
|
Net income (loss)
attributable to ordinary shares
|
50.8
|
|
0.07
|
|
(56.0)
|
|
(0.09)
|
Dividends on preferred shares
|
18.7
|
|
0.03
|
|
—
|
|
—
|
Net income
(loss)
|
69.5
|
|
0.10
|
|
(56.0)
|
|
(0.09)
|
Deferred revenues adjustment(1)
|
(0.2)
|
|
—
|
|
3.0
|
|
—
|
Transaction related costs(2)
|
6.7
|
|
0.01
|
|
(22.9)
|
|
(0.04)
|
Share-based compensation expense
|
37.0
|
|
0.05
|
|
39.0
|
|
0.06
|
Amortization related to acquired intangible assets
|
149.7
|
|
0.20
|
|
110.9
|
|
0.18
|
Restructuring and impairment(3)
|
11.7
|
|
0.02
|
|
67.9
|
|
0.11
|
Mark-to-market gain on financial
instruments(4)
|
(100.4)
|
|
(0.13)
|
|
(51.2)
|
|
(0.08)
|
Other(5)
|
(14.2)
|
|
(0.02)
|
|
15.7
|
|
0.03
|
Income tax impact of related adjustments
|
(4.7)
|
|
(0.01)
|
|
(18.0)
|
|
(0.03)
|
Adjusted net income
and Adjusted diluted EPS
|
$
155.1
|
|
$
0.21
|
|
$
88.4
|
|
$
0.14
|
Adjusted weighted
average ordinary shares (Diluted)
|
746,298,853
|
|
623,254,313
|
|
|
|
|
|
|
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606, Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
(2) Includes
costs incurred to complete business combination transactions, which
was comprised of acquisitions, dispositions and capital market
activities, as well as advisory, legal, and other professional and
consulting costs. This also consists of the mark-to-market
adjustments for the contingent stock consideration associated with
the CPA Global and DRG acquisitions.
|
(3)
Primarily reflects costs related to restructuring and impairment
associated with One Clarivate, ProQuest and CPA Global Programs.
The costs associated with the CPA Global program were substantially
complete as of March 31, 2022. There were no impairment charges
incurred during the three months ended March 31, 2022 on the
right-of-use assets, compared to $41.0 for the three months ended
March 31, 2021, which was related to the cease use and exit of
leased properties.
|
(4) Reflects
mark-to-market adjustments on financial instruments under ASC 815,
Derivatives and Hedging. Warrant instruments that do not
meet the criteria to be considered indexed to an entity's own stock
shall be initially classified as a liability at their estimated
fair values, regardless of the likelihood that such instruments
will ever be settled in cash. In periods subsequent to issuance,
changes in the estimated fair value of the liabilities are reported
through earnings.
|
(5) Includes
primarily the net impact of foreign exchange gains and losses
related to the re-measurement of balances and other items that do
not reflect our ongoing operating performance.
|
Free Cash Flow and Adjusted Free Cash Flow
Free cash flow is calculated using net cash provided by
operating activities less capital expenditures. Adjusted free cash
flow is calculated as free cash flow, less cash paid for
restructuring and lease-exit activities, payments related to the
CPA Global Equity Plan, transaction related costs, interest on debt
held in escrow, debt issuance costs, and other one-time payments
that the Company does not consider indicative of its ongoing
operating performance.
The following table reconciles our non-GAAP Free cash flow and
Adjusted free cash flow measure to Net cash provided by operating
activities:
|
Three Months Ended
March 31,
|
(in millions);
(unaudited)
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$
67.4
|
|
$
174.0
|
Capital expenditures
|
(41.4)
|
|
(33.0)
|
Free cash
flow
|
26.0
|
|
141.0
|
Cash paid for CPA Global Equity Plan(1)
|
149.8
|
|
—
|
Cash paid for restructuring costs(2)
|
10.1
|
|
16.0
|
Cash paid for transaction related
costs(3)
|
4.5
|
|
5.2
|
Cash paid for other costs(4)
|
0.9
|
|
1.0
|
Adjusted free cash
flow
|
$
191.3
|
|
$
163.2
|
|
(1) Includes
cash funded by a trust related to CPA Global Equity Plan payout
upon vesting.
|
(2) Reflects
cash payments for costs primarily related to restructuring and
lease-exit activities associated with the One Clarivate, ProQuest
and CPA Global Programs. The costs associated with the CPA Global
program were substantially complete as of March 31,
2022.
|
(3) Includes
cash paid for costs incurred to complete business combination
transactions, which are comprised of acquisitions, dispositions and
capital market activities, as well as advisory, legal, and other
professional and consulting costs.
|
(4) Includes
cash paid for other costs that do not reflect our ongoing operating
performance.
|
Required Reported Data
Standalone Adjusted EBITDA
We are required to report Standalone Adjusted EBITDA, which is
identical to Consolidated EBITDA and EBITDA as such terms are
defined under our credit facilities, dated as of October 31, 2019, and the indentures governing
our secured notes due 2026 issued by Camelot Finance S.A. and
guaranteed by certain of our subsidiaries, and the indentures
governing the secured and unsecured notes issued by Clarivate
Science Holdings Corporation in August
2021, respectively. In addition, the credit facilities and
the indentures contain certain restrictive covenants that govern
debt incurrence and the making of restricted payments, among other
matters. These restrictive covenants utilize Standalone Adjusted
EBITDA as a primary component of the compliance metric governing
our ability to undertake certain actions otherwise proscribed by
such covenants. Standalone Adjusted EBITDA reflects further
adjustments to Adjusted EBITDA for cost savings already
implemented.
Because Standalone Adjusted EBITDA is required pursuant to the
terms of the reporting covenants under the credit facilities and
the indentures and because this metric is relevant to lenders and
noteholders, management considers Standalone Adjusted EBITDA to be
relevant to the operation of its business. It is also utilized by
Management and the Compensation Committee of the Board of Directors
as an input for determining incentive payments to employees.
Standalone Adjusted EBITDA is calculated under the credit
facilities and the indentures by using our Consolidated Net Loss
for the trailing 12-month period (defined in the credit facilities
and the indentures as our U.S. GAAP net income adjusted for certain
items specified in the credit facilities and the indentures)
adjusted for items including: taxes, interest expense, depreciation
and amortization, non-cash charges, expenses related to capital
markets transactions, acquisitions and dispositions, restructuring
and business optimization charges and expenses, consulting and
advisory fees, run-rate cost savings to be realized as a result of
actions taken or to be taken in connection with an acquisition,
disposition, restructuring or cost savings or similar initiatives,
"run rate" expected cost savings, operating expense reductions,
restructuring charges and expenses and synergies related to the
transition projected by us, costs related to any management or
equity stock plan, other adjustments that were presented in the
offering memorandum used in connection with the issuance of the
secured notes due in 2026 and earnout obligations incurred in
connection with an acquisition or investment.
The following table bridges Net loss to Adjusted EBITDA to
Standalone Adjusted EBITDA, as Adjusted EBITDA reflects a
substantial portion of the adjustments that comprise Standalone
Adjusted EBITDA for the periods presented:
|
Twelve Months
Ended March 31,
|
(in millions);
(unaudited)
|
2022
|
Net loss
attributable to ordinary shares
|
$
(205.2)
|
Dividends on preferred shares
|
60.2
|
Net loss
|
(145.0)
|
Provision for income taxes
|
28.3
|
Depreciation and amortization
|
582.6
|
Interest expense and amortization of debt discount,
net
|
274.6
|
Deferred revenues adjustment(1)
|
0.7
|
Transaction related costs(2)
|
75.8
|
Share-based compensation expense
|
137.6
|
Restructuring and impairment(3)
|
73.3
|
Mark to market gain on financial
instruments(4)
|
(130.5)
|
Other(5)
|
0.5
|
Adjusted
EBITDA
|
$
897.9
|
Realized foreign exchange gain
|
7.4
|
ProQuest Adjusted EBITDA impact(6)
|
190.8
|
Bioinfogate Adjusted EBITDA impact(6)
|
0.2
|
Patient Connect Adjusted EBITDA
impact(6)
|
(0.8)
|
Cost savings(7)
|
106.5
|
Standalone Adjusted
EBITDA
|
$
1,202.0
|
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606, Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
(2) Includes
costs incurred to complete business combination transactions, which
were comprised of acquisitions, dispositions and capital market
activities, as well as advisory, legal, and other professional and
consulting costs.
|
(3)
Primarily reflects costs related to restructuring and impairment
associated with One Clarivate, ProQuest and CPA Global Programs.
The costs associated with the CPA Global program were substantially
complete as of March 31, 2022.
|
(4) Reflects
mark-to-market adjustments on financial instruments under ASC 815,
Derivatives and Hedging. Warrant instruments that do not
meet the criteria to be considered indexed to an entity's own stock
shall be initially classified as a liability at their estimated
fair values, regardless of the likelihood that such instruments
will ever be settled in cash. In periods subsequent to issuance,
changes in the estimated fair value of the liabilities are reported
through earnings.
|
(5) Includes
primarily the net impact of foreign exchange gains and losses
related to the re-measurement of balances and other items that do
not reflect our ongoing operating performance.
|
(6) Represents the acquisition
Adjusted EBITDA for the period beginning April 1 of the year of the
acquisition through the respective acquisition date of each
acquired business to reflect the company's Standalone EBITDA as
though material acquisitions occurred at the beginning of the
presented period.
|
(7) Reflects
the estimated annualized run-rate cost savings, net of actual cost
savings realized, related to restructuring and other cost savings
initiatives undertaken during the period (exclusive of any cost
reductions in our estimated standalone operating costs), including
synergies related to acquisitions.
|
The foregoing adjustments (6) and (7) are estimates and
are not intended to represent pro forma adjustments presented
within the guidance of Article 11 of Regulation S-X. Although we
believe these estimates are reasonable, actual results may differ
from these estimates, and any difference may be material. See
Cautionary Statement Regarding Forward-Looking Statements.
The following tables present the amounts of our subscription,
re-occurring and transactional revenues, including as a percentage
of our total revenues, for the periods indicated, as well the
drivers of the variances between periods.
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of
Factors
Increase/(Decrease)
|
|
Three Months
Ended
March 31,
|
|
Total
Variance
(Dollars)
|
Total
Variance
(Percentage)
|
Acquisitive
|
FX
Impact
|
Organic
|
(in millions, except
percentages); (unaudited)
|
2022
|
|
2021
|
|
|
|
|
|
|
Subscription
revenues
|
$ 403.8
|
|
$ 239.0
|
|
$
164.8
|
69.0 %
|
68.7 %
|
(2.5) %
|
2.8 %
|
Re-occurring
revenues
|
114.5
|
|
109.5
|
|
5.0
|
4.6 %
|
— %
|
(4.7) %
|
9.3 %
|
Transactional
revenues
|
143.7
|
|
82.9
|
|
60.8
|
73.3 %
|
73.3 %
|
(2.3) %
|
2.3 %
|
Deferred revenues
adjustment(1)
|
0.2
|
|
(3.0)
|
|
3.2
|
106.7 %
|
106.7 %
|
— %
|
— %
|
Revenues,
net
|
$ 662.2
|
|
$ 428.4
|
|
$
233.8
|
54.6 %
|
53.3 %
|
(3.1) %
|
4.4 %
|
|
|
|
|
|
|
|
|
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606, Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
The following tables and the discussion that follows presents
our revenues by Product Segment for the periods indicated, as well
as the drivers of the variances between periods, including as a
percentage of such revenues.
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of
Factors
Increase/(Decrease)
|
Revenues by Product
Segment
|
Three Months
Ended
March 31,
|
|
Total
Variance
(Dollars)
|
Total
Variance
(Percentage)
|
Acquisitive
|
FX
Impact
|
Organic
|
(in
millions, except percentages); (unaudited)
|
2022
|
|
2021
|
|
|
|
|
|
|
Science Product Segment
|
$ 420.4
|
|
$ 191.3
|
|
$ 229.1
|
119.8 %
|
117.6 %
|
(2.3) %
|
4.4 %
|
IP
Product Segment
|
241.6
|
|
240.1
|
|
1.5
|
0.6 %
|
— %
|
(3.6) %
|
4.2 %
|
Deferred revenues
adjustment(1)
|
0.2
|
|
(3.0)
|
|
3.2
|
106.7 %
|
106.7 %
|
— %
|
— %
|
Revenues,
net
|
$ 662.2
|
|
$ 428.4
|
|
$ 233.8
|
54.6 %
|
53.3 %
|
(3.1) %
|
4.4 %
|
|
|
|
|
|
|
|
|
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606 Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
The following table presents our calculation of Revenues, net
for the 2022 outlook:
|
|
|
|
|
Variance Increase
/
(Decrease)
|
|
Percentage of
Factors Increase /
(Decrease)
|
|
Year Ending
December
31,
|
|
Total
Variance
(Dollars)
|
Total
Variance
(Percentage)
|
|
Acquisitions
|
FX
Impact
|
Organic
|
(in
millions)
|
2022
Outlook
mid-point
|
|
2021
|
|
|
|
|
|
|
|
Revenues,
net
|
$ 2,840.0
|
|
$ 1,876.9
|
|
963.1
|
51.3 %
|
|
46.2 %
|
(1.4) %
|
6.5 %
|
The following table presents our calculation of Adjusted EBITDA
for the 2022 outlook and reconciles this measure to our Net loss
for the same period:
|
Year Ending December
31, 2022
(Forecasted)
|
(in
millions)
|
Low
|
|
High
|
Net loss
attributable to ordinary shares
|
$
(166.2)
|
|
$
(106.2)
|
Dividends on preferred shares(1)
|
75.5
|
|
75.5
|
Net loss
|
$
(90.7)
|
|
$
(30.7)
|
Provision for income taxes
|
60.1
|
|
60.1
|
Depreciation and amortization
|
560.1
|
|
560.1
|
Amortization of ProQuest acquired intangibles
|
180.6
|
|
180.6
|
Interest expense and amortization of debt discount,
net
|
242.5
|
|
242.5
|
Deferred revenue adjustment(2)
|
0.7
|
|
0.7
|
Restructuring and impairment(3)
|
88.4
|
|
88.4
|
Share-based compensation expense(4)
|
118.3
|
|
118.3
|
Adjusted
EBITDA
|
$
1,160.0
|
|
$
1,220.0
|
Adjusted EBITDA
margin
|
41 %
|
|
42 %
|
|
|
|
|
|
(1) Dividends on our mandatory
convertible preferred shares ("MCPS") are payable quarterly at an
annual rate of 5.25% of the liquidation preference of $100 per
share. For the purposes of calculating net loss attributable to
Clarivate, we have excluded the accrued and anticipated MCPS stock
dividends.
|
(2) Reflects
the deferred revenues adjustment made as a result of acquisition
accounting associated with businesses that were acquired prior to
January 1, 2021.
|
(3) Reflects
restructuring costs primarily associated with the ProQuest
acquisition which will be incurred in 2022.
|
(4) Includes
CPA Global Equity Plan compensation expense.
|
The following table presents our calculation of Adjusted Diluted
EPS for the 2022 outlook and reconciles these measures to our Net
loss per share for the same period:
|
Year Ending December
31, 2022
(Forecasted)
|
|
Low
|
|
High
|
|
Per
Share
|
|
Per
Share
|
Net loss attributable
to ordinary shares
|
$
(0.23)
|
|
$
(0.13)
|
Dividends on preferred
shares(1)
|
0.10
|
|
0.10
|
Net loss
|
$
(0.13)
|
|
$
(0.03)
|
Restructuring and
impairment(2)
|
0.12
|
|
0.12
|
Share-based
compensation expense(3)
|
0.16
|
|
0.16
|
Amortization related to
acquired intangible assets
|
0.80
|
|
0.80
|
Income tax impact of
related adjustments
|
(0.10)
|
|
(0.10)
|
Adjusted Diluted
EPS
|
$
0.85
|
|
$
0.95
|
Weighted average
ordinary shares (Diluted)(4)
|
741,709,816
|
|
|
|
|
|
(1)
Dividends on our mandatory convertible preferred shares ("MCPS")
are payable quarterly at an annual rate of 5.25% of the liquidation
preference of $100 per share. For the purposes of calculating net
loss attributable to Clarivate, we have excluded the accrued and
anticipated MCPS stock dividends.
|
(2) Reflects
restructuring costs primarily associated with the ProQuest
acquisition which will be incurred in 2022.
|
(3) Includes
CPA Global Equity Plan compensation expense.
|
(4) For the
purposes of calculating adjusted earnings per share, the Company
has excluded the accrued and anticipated MCPS stock dividends and
assumed the "if-converted" method of share dilution.
|
The following table presents our calculation of Free Cash Flow
and Adjusted Free Cash Flow for the 2022 outlook and reconciles
these measures to our Net cash provided by operating activities for
the same period:
|
Year Ending December 31, 2022
(Forecasted)
|
(in
millions)
|
Low
|
|
High
|
Net cash provided by
operating activities
|
$
606.5
|
|
$
656.5
|
Capital
expenditures
|
(185.0)
|
|
(185.0)
|
Free cash
flow
|
421.5
|
|
471.5
|
Cash paid for
restructuring costs(1)
|
87.5
|
|
87.5
|
Cash paid for CPA
Global Equity Plan(2)
|
166.0
|
|
166.0
|
Adjusted Free Cash Flow
|
$
675.0
|
|
$
725.0
|
|
|
|
|
|
(1) Reflects cash payments for costs
primarily related to restructuring associated with the ProQuest
acquisition in 2022.
|
(2) Includes cash funded by a trust
related to the CPA Global Equity Plan payout upon
vesting.
|
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SOURCE Clarivate Plc