1 ST QUARTER 2015 RESULTS

Transcription

1 1 ST QUARTER 2015 RESULTS WEDNESDAY APRIL 22, :00AM ET NYSE: NLSN

2 SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS The following discussion contains forward-looking statements, including those about Nielsen s outlook and prospects, that relate to the Private Securities Litigation Reform Act of Forward-looking statements are those which are not historical facts. These and other statements that relate to future results and events are based on Nielsen s current expectations as of April 22, Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties. The risks and uncertainties that we believe are material are outlined in our disclosure filings and materials, which you can find on Please consult these documents for a more complete understanding of these risks and uncertainties. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Our outlook is provided for the purpose of providing information about current expectations for This information may not be appropriate for other purposes. 2

3 AGENDA First Quarter Business Update Financials and Guidance Q&A Appendix and Reconciliations 3

4 MITCH BARNS CHIEF EXECUTIVE OFFICER

5 FIRST QUARTER 2015 OVERVIEW Solid 1Q performance; broad-based growth and execution on Total Audience - Revenue of $1.5 billion up 4.4% constant currency - Adjusted EBITDA of $380 million up 7.3% constant currency - Adjusted net income per share of $0.46 up 17.9% constant currency Continued execution on our balanced capital allocation framework - Raised quarterly dividend by 12% to $0.28; up 75% since inception - On track to repurchase $1 billion by mid-2016 Acquisition of exelate - Data and technology to drive better precision in advertising - Enhancing our capability in the programmatic ecosystem Updating 2015 guidance to reflect the impact of FX; operational guidance reaffirmed STRONG EXECUTION DELIVERING SHAREHOLDER VALUE 5

6 UPDATE ON KEY GROWTH CATALYSTS Watch: Total Audience Measurement progress Total Audience: framework for comprehensive measurement of the consumer Traction with signature-based VOD solution Gaining critical mass in mobile measurement with SDK adoption video and audio Digital Ad Ratings (fka OCR) momentum and market expansion Rollout of Digital Content Ratings (with Adobe) on track Buy: Unmatched global presence Marketing Effectiveness: Strong growth in demand for marketing ROI products New client wins Stronger discretionary spend on innovation and analytics Broad-based Emerging market growth Progress in ecommerce: new partnerships, New Offer Advisor launch EXECUTING AND DELIVERING 6

7 JAMERE JACKSON CHIEF FINANCIAL OFFICER

8 TOTAL NIELSEN RESULTS ($ in millions except per share amounts, growth in constant currency) 1Q Q 2014 V% Revenues $1,458 $1, % Adjusted EBITDA $380 $ % Adjusted EBITDA margin % 26.1% 25.3% 70 bps Adjusted Net Income (ANI) $173 $ % Diluted ANI per share (a) $0.46 $ % Free Cash Flow $(1) $13 NM Revenues +4.4%, solid growth in Watch and Buy Margin expansion +70bps while reinvesting for long-term growth Strong growth in earnings fueled by operating leverage and share repurchase (a) Calculated using weighted average shares outstanding of million for 1Q 2015 and million for 1Q See appendix for detail 8

9 WATCH SEGMENT RESULTS ($ in millions, growth in constant currency) REVENUE 1Q 15 1Q 14 V% 1Q DYNAMICS Total Watch PROFITABILITY Adjusted EBITDA Margin $660 $ % $652 $ % 3.6% 6.1% 99bps Non-core products ~220bps drag on revenue Solid revenue growth +5.8% ex-impact: - Audience Measurement (ex-audio) +5.5% - Audio +1.7% - Marketing Effectiveness +22.7% - Strong renewals Legacy rankings to be replaced by Digital Content Ratings in Fall of 2015 Shedding non-core assets and investing in faster growth products (exelate) Margin improvement driven by continued productivity & operating leverage 9

10 BUY SEGMENT RESULTS ($ in millions, growth in constant currency) REVENUE 1Q 15 1Q 14 V% 1Q DYNAMICS Developed $549 $ % Emerging $249 $ % Total Buy $798 $ % PROFITABILITY Adjusted EBITDA $110 $ % Margin 13.8% 14.1% 47bps Solid revenue growth +5.1% Developed: investments driving growth in analytics & subscription services Emerging: broad-based growth New client wins Margin improvement driven by cost out initiatives and scaling emerging markets 10

11 FOREIGN CURRENCY IMPACT 2014 CURRENCY PROFILE - REVENUE PROJECTED FX IMPACT (a) : REPORTED VS CONSTANT CURRENCY 23% 3% 3% 4% 11% 56% USD EUR CAD GBP CNY Other No single currency is >3%, excluding USD, CAD, EUR, CNY & GBP (370) (430) (540) (530) (600) (620) (630) (650) (680) (750) 1Q15 2Q15E 3Q15E 4Q15E FY15E Rev (bps) EBITDA (bps) (a) Projected impact assumes rates in effect at 4/21/15 remain in effect for the balance of Also based on company estimates for future quarters on distribution of revenue and EBITDA by currency. Note: we report on a constant currency basis to reflect operating performance 11

12 2015 GUIDANCE - APRIL 22, 2015 (Revenue and adj. EBITDA margin growth in constant currency) Total Revenue 4.0% - 6.0% OTHER FINANCIAL METRICS Adj. EBITDA margin growth 50-70bps Net book interest $310M - $320M Adj. Net Income Per Share (a) $ $2.66 Leverage ~3.6x Free Cash Flow $850 - $900M Cash taxes $160M - $170M Cash restructuring $50M - $75M Est. wtd. avg. diluted shares outstanding for FY 2015 ~371M ANI PER SHARE LOWER DUE TO FX; OPERATING GUIDANCE REAFFIRMED (a) Prior ANI per share guidance range: $2.68 $

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14 APPENDIX

15 CERTAIN NON-GAAP MEASURES Overview of Non-GAAP Presentations We use the non-gaap financial measures discussed below to evaluate the results of our operations. 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 a more meaningful understanding of our ongoing operating performance. 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, consistent with how we evaluate our 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. 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. 15

16 CERTAIN NON-GAAP MEASURES (continued) 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, goodwill and intangible asset impairment charges, stock-based compensation expense and other non-operating items from our consolidated statements of operations as well as certain other items considered unusual or non-recurring in nature. 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. Adjusted Net Income We define Adjusted Net Income as net income or loss from our consolidated statements of operations before income taxes, depreciation and amortization associated with acquired tangible and intangible assets, equity in net income of affiliates, restructuring charges, goodwill and intangible asset impairment charges, other non-operating items from our consolidated statements of operations and certain other items considered unusual or non-recurring in nature, reduced by cash paid for income taxes. Free Cash Flow We define free cash flow as net cash provided by operating activities, plus the excess tax benefit on stock-based compensation, less capital expenditures. We believe providing free cash flow information provides valuable supplemental information regarding the cash flow that may be available for discretionary use by us. Free cash flow is not a presentation made in accordance with GAAP. 16

17 ADJUSTED NET INCOME RECONCILIATION: Q1 ($ in millions except per share amounts) Quarter ended March 31 (Unaudited) Net income $ 63 $ 55 Interest expense, net Provision for income taxes Depreciation and amortization EBITDA Equity in net income of affiliates -- (1) Other non-operating expense, net Restructuring charges Stock-based compensation expense Other items (a) 11 6 Adjusted EBITDA Interest expense, net (72) (76) Depreciation and amortization (142) (141) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (29) (32) Stock-based compensation expense (14) (12) Adjusted net income $ 173 $ 165 Adjusted net income per share of common stock, diluted (b) $0.46 $0.43 (a), (b) See footnotes on next page 17

18 ADJUSTED NET INCOME RECONCILIATION: Q1 (continued) (a) For the three months ended March 31, 2015 and 2014, other items primarily consist of non-recurring costs. (a) Adjusted Net Income per share of common stock presented on a diluted basis includes potential common shares associated with stock-based compensation plans that may have been considered antidilutive in accordance with GAAP. Weighted-average shares of common stock outstanding as of quarter ended March 31, 5015, basic 371,169,651 Dilutive shares of common stock from stock compensation plans 4,192,306 Weighted-average shares of common stock outstanding, diluted 375,361,957 18

19 FREE CASH FLOW RECONCILIATION ($ in millions) QUARTER ENDED MARCH Net cash provided by operating activities Plus: Excess tax benefit on stock based compensation $75 $90 $26 -- Less: Capital expenditures (102) (77) Free cash flow $(1) $13 19

20 REVENUE RECONCILIATION ($ in millions) 1Q 15 Reported 1Q 14 Reported % V Reported 1Q 14 Constant Currency % V Constant Currency BUY $798 $837 (4.7)% $ % WATCH $660 $ % $ % TOTAL $1,458 $1,489 (2.1)% $1, % ADJUSTED EBITDA RECONCILIATION ($ in millions) 1Q 15 Reported 1Q 14 Reported % V Reported 1Q 14 Constant Currency % V Constant Currency BUY $110 $118 (6.8)% $ % WATCH $278 $ % $ % CORPORATE $(8) $(9) NM $(9) NM TOTAL $380 $ % $ % 20

21 DEBT CAPITAL TABLE ($ in millions) DEBT CAPITAL TABLE 3/31/15 12/31/14 Change Loan Debt (secured) $3,489 $3,758 $(269) 4.50% Sr. Notes (10/1/20) % Sr. Notes (10/1/21) % Sr. Notes (4/15/22) 2,308 1,553 $755 Capital lease/misc. debt ($1) Total Debt $7,347 $6,862 $485 Less Cash Net Debt $7,004 $6,589 $415 Net Debt Ratio (a) 3.8x 3.6x 0.2x Weighted avg. interest rate (b) 4.00% 3.79% 21 bps (a) Reflects Net Debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis (b) Excludes capital leases 21

22 SELECTED FINANCIAL METRICS & BALANCE SHEET ITEMS ($ in millions) FINANCIAL METRICS CURRENT DEBT MATURITY PROFILE 3/31/15 (b) 1Q 15 Free Cash Flow $(1) Capital Expenditures $102 D&A $142 Net Book Interest $72 Cash Taxes $29 Cash Restructuring $22 Wtd. avg. diluted shares BALANCE SHEET 3/31/15 $639 $1,041 $814 $1,942 $2,308 Gross Debt $7,347 Cash $343 Net Debt $7,004 $73 $118 $212 Net Debt Ratio (a) 3.80x (a) Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis (b) Excludes Revolver ($75M), Capital Leases ($116M) and Miscellaneous Debt ($9M) 22

23 NIELSEN INVESTOR RELATIONS Follow Nielsen