- 2Q’14 revenues increased 15.0% to $1,594 million, up 15.9% in
constant currency
- Adjusted EBITDA for the quarter grew 16.2% to $460 million, up
17.9% in constant currency
- Income from continuing operations per share on a diluted basis for
2Q’14 was $0.19 compared to $0.31 in 2Q’13, primarily due to recent
debt refinancing fees
- Adjusted Net Income per share on a diluted basis for 2Q’14 was
$0.62, up 26.5% compared to $0.49 in 2Q’13
NEW YORK -- (Business Wire)
Nielsen N.V. (NYSE:NLSN), a leading global provider of information and
insights into what consumers watch and buy, today announced financial
results for the second quarter ended June 30, 2014.
“Our second quarter results reflect the underlying strength of our Buy
and Watch businesses, the successful integration of Arbitron and our
steady and consistent business model. We continue to extend our
leadership positions in both retail and audience measurement with
meaningful innovation and great execution. Our focus on measuring and
improving performance for our clients continues to be a powerful
combination and positions us well to deliver long-term value to our
shareholders,” commented Mitch Barns, Chief Executive Officer of Nielsen.
Second Quarter 2014 Operating Results
Revenues for the second quarter increased 15.0% to $1,594 million, or
15.9% on a constant currency basis compared to the second quarter of
2013. Revenues, excluding the impact of the Arbitron and Harris
acquisitions, increased 4.4%, or 5.2% on a constant currency basis.
Revenues within the Buy segment grew 6.6%, or 7.9% on a constant
currency basis, to $900 million. Excluding Harris, Buy revenues grew
4.8% on a constant currency basis, driven largely by new client wins and
a 9.2% increase in developing market revenues. On a constant currency
basis, Information services revenue grew 5.0%, while Insights revenue
grew 17.9%, or 4.2% excluding Harris.
Revenues within the Watch segment increased 28.0%, or 28.3% on a
constant currency basis, to $694 million. Excluding the Arbitron
acquisition, Watch revenues increased 5.7%, or 5.9% on a constant
currency basis, driven by continued strength in Audience Measurement,
including accelerating demand in Digital, and Advertiser Solutions.
Adjusted EBITDA for the second quarter increased 16.2% to $460 million,
or 17.9% on a constant currency basis compared, to the second quarter of
2013. Adjusted EBITDA margins grew 50 basis points on a constant
currency basis due to the accretive impact of acquisitions and the
benefit of ongoing productivity initiatives.
Income from continuing operations for the second quarter decreased 36.1%
to $76 million, or 33.9% on a constant currency basis, compared to the
second quarter of 2013. The year-over-year decline largely reflects fees
related to recent refinancings of our long-term debt; year-to-date
refinancing activity further improved our weighted average interest rate
to approximately 3.86% as of June 30, 2014 on a pro forma basis. Income
from continuing operations per share, on a diluted basis, was $0.19
compared to $0.31 in the second quarter of 2013.
Adjusted Net Income for the second quarter increased 28.3% to $240
million, or 31.1% on a constant currency basis, compared to the second
quarter of 2013. Adjusted Net Income per share on a diluted basis was
$0.62 compared to $0.49 in the second quarter of 2013.
Financial Position
As of June 30, 2014, cash balances were $310 million and gross debt was
$6,692 million. Net debt (gross debt less cash and cash equivalents) was
$6,382 million and our net debt leverage ratio was 3.66x at the end of
the second quarter. Our proforma net debt leverage ratio, giving effect
to Arbitron’s results for the full twelve month period ended June 30,
2014, was 3.57x at the end of the second quarter. Capital expenditures
were $94 million for the second quarter of 2014 as compared to $100
million for the second quarter of 2013.
Free cash flow for the second quarter of 2014 increased to $116 million
from $107 million in the second quarter of 2013 and cash flow from
operations increased to $210 million in the second quarter of 2014 from
$206 million in second quarter of 2013.
On May 1, 2014, the company increased the quarterly dividend by 25% to
$0.25 per quarter.
In June 2014, a secondary public offering of 20.0 million shares of our
common stock was completed on behalf of certain selling stockholders,
primarily comprised of the Sponsor group. All proceeds went to the
selling stockholders and the offering did not have a significant impact
on our operating results or financial position. Subsequent to this
offering, the sponsors hold approximately 20% of our common stock.
Nielsen remains focused on strengthening its balance sheet by
opportunistically taking advantage of the credit and capital markets. In
July 2014, the company refinanced the remaining $800 million of its
7.75% Senior Notes due 2018 through the issuance of an additional $800
million in aggregate principal amount of 5.00% Senior Notes due 2022.
Conference Call and Webcast
Nielsen will hold a conference call to discuss the second quarter 2014
results at 8:30 a.m. U.S. Eastern Time (ET) on July 29, 2014. The audio
and slides for the call can be accessed live by webcast at http://nielsen.com/investors
or by dialing +1-877-201-0168. Callers outside the U.S. can dial
+1-647-788-4901. The conference ID for the call is “72200738.” 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
may be identified by words such as ‘will’, ‘expect’, ‘should’, ‘could’,
‘shall’ 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 limitations general economic conditions, conditions in the
markets Nielsen is engaged in, behavior of customers, suppliers and
competitors, technological developments, the integration of Arbitron, as
well as legal and regulatory rules affecting Nielsen’s business and
specific risk factors discussed in other releases and public filings
made by the Company (including the Company’s filings with the Securities
and Exchange Commission). 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.
About Nielsen
Nielsen N.V. (NYSE:NLSN) is a global information and measurement company
with leading market positions in marketing and consumer information,
television and other media measurement, online intelligence and mobile
measurement. Nielsen has a presence in approximately 100 countries, with
headquarters in New York, USA and Diemen, the Netherlands. 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,
our Twitter account at http://twitter.com/Nielsen
and our iPad App, NielsenIR, available on the App Store.
Results of Operations—(Three and Six Months Ended June 30, 2014 and
2013)
The following table sets forth, for the periods indicated, the amounts
included in our Condensed Consolidated Statements of Operations:
| |
|
| | | |
| Three Months Ended | | | Six Months Ended | | |
| June 30, | | | June 30, | | |
| (Unaudited) | | | (Unaudited) | | |
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) |
| 2014 |
|
|
| 2013 | | | 2014 |
| 2013 | |
Revenues
|
$
|
1,594
|
|
|
$
|
1,386
| | |
$
|
3,083
|
| |
$
|
2,705
|
| |
| |
|
| | | | | | | | | |
Cost of revenues
| |
677
| | | |
580
| | | |
1,319
| | | |
1,159
| | |
Selling, general and administrative expenses
| |
482
| | | |
434
| | | |
971
| | | |
876
| | |
Depreciation and amortization
| |
145
| | | |
126
| | | |
286
| | | |
247
| | |
Restructuring charges
|
|
13
|
|
|
|
8
| | |
|
37
|
| |
|
43
|
| |
| | | | | | | | | | | |
|
Operating income
|
|
277
|
|
|
|
238
| | |
|
470
|
| |
|
380
|
| |
| | | | | | | | | | | |
|
Interest income
| |
1
| | | |
—
| | | |
2
| | | |
1
| | |
Interest expense
| |
(78)
| | | |
(73)
| | | |
(155)
| | | |
(151)
| | |
Foreign currency exchange transaction (losses)/gains, net
| |
(6)
| | | |
(4)
| | | |
(33)
| | | |
(16)
| | |
Other income/(expense), net
|
|
(45)
|
|
|
|
—
| | |
|
(48)
|
| |
|
(12)
|
| |
| | | | | | | | | | | |
|
Income from continuing operations before income taxes and equity in
net income of affiliates
| |
149
| | | |
161
| | | |
236
| | | |
202
| | |
Provision for income taxes
| |
(74)
| | | |
(46)
| | | |
(107)
| | | |
(64)
| | |
Equity in net income of affiliates
|
|
1
|
|
|
|
4
| | |
|
2
|
| |
|
3
|
| |
| | | | | | | | | | | |
|
Income from continuing operations
| |
76
| | | |
119
| | | |
131
| | | |
141
| | |
Income from discontinued operations, net of tax
|
|
—
|
|
|
|
307
| | |
|
—
|
| |
|
319
|
| |
| | | | | | | | | | | |
|
Net income
| |
76
| | | |
426
| | | |
131
| | | |
460
| | |
Net income/(loss) attributable to noncontrolling interests
|
|
2
|
|
|
|
—
| | |
|
(1)
|
| |
|
(1)
|
| |
| | | | | | | | | | | |
|
Net income attributable to Nielsen stockholders
|
$
|
74
|
|
|
$
|
426
| | |
$
|
132
|
| |
$
|
461
|
| |
| | | | | | | | | | | |
|
Net income per share of common stock, basic
| | | | | | | | | | | | |
Income from continuing operations
|
$
|
0.19
| | |
$
|
0.32
| | |
$
|
0.35
| | |
$
|
0.38
| | |
Income from discontinued operations
|
$
|
—
| | |
$
|
0.82
| | |
$
|
—
| | |
$
|
0.85
| | |
Net income attributable to Nielsen stockholders
|
$
|
0.19
| | |
$
|
1.14
| | |
$
|
0.35
| | |
$
|
1.23
| | |
Net income per share of common stock, diluted
| | | | | | | | | | | | |
Income from continuing operations
|
$
|
0.19
| | |
$
|
0.31
| | |
$
|
0.34
| | |
$
|
0.38
| | |
Income from discontinued operations
|
$
|
—
| | |
$
|
0.80
| | |
$
|
—
| | |
$
|
0.84
| | |
Net income attributable to Nielsen stockholders
|
$
|
0.19
| | |
$
|
1.12
| | |
$
|
0.34
| | |
$
|
1.22
| | |
| | | | | | | | | | | |
|
Weighted-average shares of common stock outstanding, basic
| |
379,755,766
| | | |
376,580,064
| | | |
379,386,349
| | | |
373,598,206
| | |
Dilutive shares of common stock
|
|
5,601,047
|
|
|
|
4,979,326
|
|
|
|
5,624,779
|
|
|
|
4,844,227
|
| |
Weighted-average shares of common stock outstanding, diluted
|
|
385,356,813
|
|
|
|
381,559,390
| | |
|
385,011,128
|
| |
|
378,442,433
|
| |
| | | | | | | | | | | |
|
Certain Non-GAAP Measures
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.
Adjusted EBITDA and Adjusted Net Income
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, equity in net income of
affiliates, 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.
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. Also excluded from Adjusted Net Income is
interest expense attributable to the mandatorily convertible
subordinated bonds converted on February 1, 2013. Adjusted Net Income
per share of common stock presented on a diluted basis includes the
weighted-average amount of shares of common stock convertible associated
with the mandatorily convertible bonds based upon the average price of
our common stock during the periods beginning on or before February 1,
2013. Such shares are considered anti-dilutive in accordance with GAAP
for the periods presented.
Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share
of common stock are not presentations made in accordance with GAAP.
The below table presents a reconciliation from net income to Adjusted
EBITDA and Adjusted Net Income and a reconciliation from
weighted-average shares outstanding on a GAAP basis to diluted shares
outstanding for the three and six months ended June 30, 2014 and 2013:
| | |
|
| | |
| | |
| Three Months Ended | | | Six Months Ended | |
| June 30, | | | June 30, | |
| (Unaudited) | | | (Unaudited) | |
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) |
| 2014 |
| 2013 | | | 2014 | |
| 2013 | |
Net income |
$
|
76
|
$
|
426
| | |
$
|
131
| | |
$
|
460
| |
Income from discontinued operations, net of tax
| |
—
| |
(307)
| | | |
—
| | | |
(319)
| |
Interest expense, net
| |
77
| |
73
| | | |
153
| | | |
150
| |
Provision for income taxes
| |
74
| |
46
| | | |
107
| | | |
64
| |
Depreciation and amortization
|
|
145
|
|
126
| | |
|
286
|
| |
|
247
| |
| | | | | | | | |
|
EBITDA
| |
372
| |
364
| | | |
677
| | | |
602
| |
Equity in net income of affiliates
| |
(1)
| |
(4)
| | | |
(2)
| | | |
(3)
| |
Other non-operating expense/(income), net
| |
51
| |
4
| | | |
81
| | | |
28
| |
Restructuring charges
| |
13
| |
8
| | | |
37
| | | |
43
| |
Stock-based compensation expense
| |
12
| |
11
| | | |
24
| | | |
21
| |
Other items(a) |
|
13
|
|
13
| | |
|
19
| | |
|
20
| |
| | | | | | | | |
|
Adjusted EBITDA | |
460
| |
396
| | | |
836
| | | |
711
| |
Interest expense, net
| |
(77)
| |
(73)
| | | |
(153)
| | | |
(150)
| |
Depreciation and amortization
| |
(145)
| |
(126)
| | | |
(286)
| | | |
(247)
| |
Depreciation and amortization associated with acquisition-related
tangible and intangible assets
| |
51
| |
38
| | | |
101
| | | |
74
| |
Cash paid for income taxes
| |
(37)
| |
(37)
| | | |
(69)
| | | |
(66)
| |
Stock-based compensation expense
| |
(12)
| |
(11)
| | | |
(24)
| | | |
(21)
| |
Interest expense attributable to mandatory convertible bonds
| |
—
| |
—
| | | |
—
| | | |
2
| |
|
|
| | |
|
| |
| |
Adjusted net income |
$
|
240
|
$
|
187
| | |
$
|
405
|
| |
$
|
303
| |
| | | | | | | | |
|
Adjusted net income per share of common stock, diluted |
$
|
0.62
|
$
|
0.49
| | |
$
|
1.05
|
| |
$
|
0.80
| |
| | | | | | | | |
|
Weighted-average shares of common stock outstanding, basic
| |
379,755,766
| |
376,580,064
| | | |
379,386,349
| | | |
373,598,206
| |
Dilutive shares of common stock from stock compensation plans
| |
5,601,047
| |
4,979,326
| | | |
5,624,779
| | | |
4,844,227
| |
Shares of common stock convertible associated with the mandatory
convertible bonds
|
|
—
|
|
—
| | |
|
—
|
| |
|
1,784,076
| |
| | | | | | | | |
|
Weighted-average shares of common stock outstanding, diluted
|
|
385,356,813
|
|
381,559,390
| | |
|
385,011,128
|
| |
|
380,226,509
| |
| | | | | | | | |
|
(a) For the three and six months ended June 30, 2014 and 2013, other
items primarily consist of transaction related costs.
Free Cash Flow
We define free cash flow as net cash provided by operating activities,
adjusted to exclude non-recurring Arbitron transaction costs, 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. The following table presents
a reconciliation from net cash provided by operating activities to free
cash flow:
| |
|
| | |
| Three Months Ended | | | Six Months Ended | |
| June 30, | | | June 30, | |
| (Unaudited) | | | (Unaudited) | |
(IN MILLIONS) |
| 2014 |
| 2013 | | | 2014 |
|
| 2013 | |
Net cash provided by operating activities
|
$
|
210
|
$
|
206
| | |
$
|
300
| | |
$
|
260
| |
Plus: One-time Arbitron costs
| |
-
| |
1
| | | |
-
| | | |
2
| |
Less: Capital expenditures
|
|
(94)
|
|
(100)
|
|
|
|
(171)
|
|
|
|
(170)
| |
Free cash flow
|
$
|
116
|
$
|
107
|
|
|
$
|
129
|
|
|
$
|
92
| |
| | | | | | | | |
|
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, 2014 is as follows:
|
|
(IN MILLIONS) | |
Gross debt as of June 30, 2014
|
|
|
$ 6,692
| |
Less: cash and cash equivalents as of June 30, 2014
| | |
310
|
|
Net debt as of June 30, 2014 | | | $ 6,382 | |
| | | |
|
Adjusted EBITDA for the year ended December 31, 2013
| | |
$1,617
| |
Less: Adjusted EBITDA for the six months ended June 30, 2013
| | |
711
| |
Add: Adjusted EBITDA for the six months ended June 30, 2014
| | |
836
|
|
Adjusted EBITDA for the twelve months ended June 30, 2014
| | |
$ 1,742
| |
Net debt leverage ratio as of June 30, 2014 | | | 3.66x | |
| | | |
|
Proforma net debt leverage ratio as of June 30, 2014 (1). | | | 3.57x | |
| | | |
|
(1) Proforma net debt leverage ratio includes Arbitron Adjusted EBITDA
of $47 million for the three month period of July 1, 2013 to September
30, 2013, the date on which the Arbitron acquisition was completed.
Contacts:
Nielsen N.V.
Investor Relations
Kate Vanek, 646-654-4593
or
Media
Relations
Laura Nelson, 203-563-2929
Source: Nielsen N.V.
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