NEW YORK -- (Business Wire)
Nielsen Holdings plc (NYSE:NLSN) today announced first quarter 2016
results and that its Board of Directors approved an increase in the
company’s quarterly cash dividend of 11% to $0.31 per share.
Revenues were $1,487 million for the first quarter of 2016, up 2.0%, or
5.2% on a constant currency basis, compared to the first quarter of
2015, due to the solid performance of both its Buy and Watch businesses.
Adjusted Net Income for the first quarter of 2016 of $187 million was up
8.1%, or 9.4% on a constant currency basis, as compared to the first
quarter of 2015. Adjusted Net Income per share on a diluted basis grew
10.9% to $0.51 for the first quarter of 2016 compared to $0.46 in the
first quarter of 2015.
“Nielsen’s strong first quarter results were underpinned by our steady
and resilient business model, which drove 5.2% constant currency revenue
growth, continued margin expansion and strong earnings growth. Fueled by
10.0% growth in emerging markets and growing momentum with retailers
globally, our Buy segment grew 4.3% on a constant currency basis. Our
Watch segment grew 6.3% on a constant currency basis due to meaningful
progress with our Total Audience Measurement framework and notable
growth with our precision targeting and analytical solutions within
Marketing Effectiveness. In addition, we are pleased to announce an 11%
increase to our quarterly dividend as we continue to deliver on our
ongoing commitment to create shareholder value through our balanced
capital allocation approach,” said Mitch Barns, Chief Executive Officer
at Nielsen.
Barns continued, “As we look to the year ahead, our business will be
driven by three key factors. One, we are leading industry discussions on
the adoption of a new currency metric fueled by our Total Audience
Measurement framework. Two, the value of audience segmentation and
precision marketing is increasing and our unique set of analytic
capabilities, bolstered by our recent launch of the Nielsen Marketing
Cloud, position us well to provide clients with metrics to help improve
performance. And three, we continue to make progress on our plans for a
platform-based system that aligns and connects our wide array of
measurement and analytics data for our fast-moving consumer goods
clients.”
Net income for the first quarter of 2016 increased 60.3% to $101
million, or 62.9% on a constant currency basis, compared to the first
quarter of 2015 due to strong revenue growth, ongoing productivity
initiatives and the operating leverage of the business. Net income for
the first quarter of 2015 was negatively impacted by $26 million in net
foreign currency exchange transaction losses, compared with similar
losses of $1 million in the first quarter of 2016. Net income per share,
on a diluted basis, was $0.27 for the first quarter of 2016 compared to
$0.17 in the first quarter of 2015.
Adjusted EBITDA for the first quarter of 2016 increased 5.8% to $402
million, or 7.2% on a constant currency basis compared to the first
quarter of 2015. As a percentage of revenues, Adjusted EBITDA grew 97
basis points to 27.0%, and grew 49 basis points on a constant currency
basis, due to the benefit of our ongoing productivity initiatives and
the operating leverage of the business. Buy Adjusted EBITDA margins
increased 60 basis points or 43 basis points on a constant currency
basis, to 14.4%. Watch Adjusted EBITDA margins grew 68 basis points or
38 basis points on a constant currency basis, to 42.8%.
Revenues within the Buy segment decreased 0.6% to $793 million due to
the impact of foreign exchange, but increased 4.3% on a constant
currency basis. Buy revenues in developed markets grew 2.0% on a
constant currency basis due to modest strength in Europe and continued
traction with retailer clients. Buy emerging markets revenues grew 10.0%
on a constant currency basis as Nielsen’s unparalleled global footprint
remains a core competitive advantage for both local and multinational
clients.
Revenues within the Watch segment increased 5.2%, or 6.3% on a constant
currency basis, to $694 million. Audience Measurement of Video and Text
revenues increased 7.5% on a constant currency basis due to the
continued client adoption of the company’s Total Audience Measurement
framework, and continued investments. Audio revenues grew 0.8% on a
constant currency basis, on par with expectations. Marketing
Effectiveness had another strong quarter, growing revenues by 28.8% on a
constant currency basis due to clients’ growing demand for our marketing
ROI and precision targeting tools and investments. Other Watch revenues
decreased 18.6% on a constant currency basis due to the sale of the
National Research Group, Inc. which was completed in the fourth quarter
of 2015. Excluding Other Watch, our Watch segment grew 8.0% on a
constant currency basis.
Financial Position
As of March 31, 2016, Nielsen’s cash balances were $432 million and
gross debt was $7,660 million. Net debt (gross debt less cash and cash
equivalents) was $7,228 million and our net debt leverage ratio was
3.84x at the end of the quarter. Net capital expenditures were $109
million for the first quarter of 2016 as compared to $102 million in the
first quarter of 2015.
Cash flow from operations decreased to $87 million for the first quarter
of 2016 from $101 million in the first quarter of 2015 due to a $36
million contribution to the Nielsen Foundation. Free cash flow for the
first quarter 2016 increased to $14 million from a use of $1 million in
the first quarter of 2015.
In March 2016, Nielsen entered into an amendment to its credit agreement
which provides for additional Class A Term Loans in an aggregate
principal amount of $500 million, maturing in full in April 2019.
Capital Allocation
The Board of Directors approved an increase in the company’s quarterly
cash dividend of 11% to $0.31 per common share, commencing with the
payment on June 16, 2016 to shareholders of record on June 2, 2016.
The company repurchased $83 million of shares of its common stock during
the first quarter of 2016. The company has a total of $772 million
remaining for repurchase under the existing share repurchase program,
which it anticipates largely utilizing by the end of 2017.
Conference Call and Webcast
Nielsen will hold a conference call to discuss its first quarter 2016
results at 8:00 a.m. U.S. Eastern Time (ET) on April 20, 2016. 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 passcode for the call is “86712436.” 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’, ‘anticipates’,
‘should’, ‘goal’, ‘look’, ‘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, 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 Holdings plc (NYSE:NLSN) is a global performance management
company that provides a comprehensive understanding of what consumers
watch and buy. Nielsen’s Watch segment provides media and advertising
clients with Total Audience measurement services across all devices
where content — video, audio and text — is consumed. The Buy segment
offers consumer packaged goods manufacturers and retailers the
industry’s only global view of retail performance measurement. By
integrating information from its Watch and Buy segments and other data
sources, Nielsen provides its clients with both world-class measurement
as well as analytics that help improve performance. Nielsen, an S&P 500
company, has operations in over 100 countries that cover more than 90
percent 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 Months Ended March 31, 2016 and 2015)
The following table sets forth, for the periods indicated, the amounts
included in our condensed consolidated statements of operations:
|
| | |
| | Three Months Ended March 31, (Unaudited) | |
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) | | 2016 | |
| 2015 | |
Revenues
| |
$
|
1,487
| | |
$
|
1,458
| |
Cost of revenues
| | |
641
| | | |
622
| |
Selling, general and administrative expenses
| | |
465
| | | |
481
| |
Depreciation and amortization
| | |
147
| | | |
142
| |
Restructuring charges
| |
|
10
| | |
|
14
| |
Operating income
| |
|
224
| | |
|
199
| |
Interest income
| | |
1
| | | |
1
| |
Interest expense
| | |
(79
|
)
| | |
(73
|
)
|
Foreign currency exchange transaction losses, net
| |
|
(1)
| | |
|
(26
|
)
|
Income from continuing operations before income taxes
| | |
145
| | | |
101
| |
Provision for income taxes
| |
|
(44
|
)
| |
|
(38
|
)
|
Net income
| | |
101
| | | |
63
| |
Net income attributable to noncontrolling interests
| |
|
1
| | |
|
—
| |
Net income attributable to Nielsen stockholders
| |
$
|
100
| | |
$
|
63
| |
Net income per share of common stock, basic
| | | | | | | | |
Income from continuing operations
| |
$
|
0.28
| | |
$
|
0.17
| |
Net income attributable to Nielsen stockholders
| |
$
|
0.28
| | |
$
|
0.17
| |
Net income per share of common stock, diluted
| | | | | | | | |
Income from continuing operations
| |
$
|
0.27
| | |
$
|
0.17
| |
Net income attributable to Nielsen stockholders
| |
$
|
0.27
| | |
$
|
0.17
| |
Weighted-average shares of common stock outstanding, basic
| | |
361,580,670
| | | |
371,169,651
| |
Dilutive shares of common stock
| |
|
3,620,469
| | |
|
4,192,306
| |
Weighted-average shares of common stock outstanding, diluted
| |
|
365,201,139
| | |
|
375,361,957
| |
| | | | | | | |
|
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, 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.
The below table presents a reconciliation from revenue on a reported
basis to revenue on a constant currency basis for the three months ended
March 31, 2016.
|
| |
|
| |
|
| | |
| |
|
| | |
(IN MILLIONS) | | Three Months Ended March 31, 2016 Reported | | | Three Months Ended March 31, 2015 Reported | | | % Variance 2016 vs. 2015 Reported | | | Three Months Ended March 31, 2015 Constant Currency | | | % Variance 2016 vs. 2015 Constant Currency | |
| | | | | | | | | |
|
(Unaudited)
| | | | | | |
| | |
Revenues by segment | | | | | | | | | | | | | | | | | | | | |
Developed Markets
| |
$
|
550
| | |
$
|
549
| | | |
0.2
|
%
| |
$
|
539
| | | |
2.0
|
%
|
Emerging Markets
| |
|
243
| | |
|
249
| | |
|
(2.4
|
)%
| |
|
221
| | |
|
10.0
|
%
|
Buy
| |
$
|
793
| | |
$
|
798
| | |
|
(0.6
|
)%
| |
$
|
760
| | |
|
4.3
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
Audience Measurement (Video and Text)
| |
$
|
472
| | |
$
|
445
| | | |
6.1
|
%
| |
$
|
439
| | | |
7.5
|
%
|
Audio
| | |
120
| | | |
120
| | | |
—
|
%
| | |
119
| | | |
0.8
|
%
|
Marketing Effectiveness
| | |
67
| | | |
52
| | | |
28.8
|
%
| | |
52
| | | |
28.8
|
%
|
Other Watch
| |
|
35
| | |
|
43
| | |
|
(18.6
|
)%
| |
|
43
| | |
|
(18.6
|
)%
|
Watch
| |
$
|
694
| | |
$
|
660
| | |
|
5.2
|
%
| |
$
|
653
| | |
|
6.3
|
%
|
Total
| |
$
|
1,487
| | |
$
|
1,458
| | |
|
2.0
|
%
| |
$
|
1,413
| | |
|
5.2
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
The below table presents a reconciliation from Adjusted EBITDA and
Adjusted Net Income on a reported basis to a constant currency basis for
the three months ended March 31, 2016.
|
| |
|
| |
|
| | |
| |
|
| | |
(IN MILLIONS) | | Three Months Ended March 31, 2016 Reported | | | Three Months Ended March 31, 2015 Reported | | | % Variance 2016 vs. 2015 Reported | | | Three Months Ended March 31, 2015 Constant Currency | | | % Variance 2016 vs. 2015 Constant Currency | |
| | | | | | | | | |
|
(Unaudited)
| | | | | | |
| | |
| | | | | | | | | | | | | | | | | | | |
|
Net Income
| |
$
|
101
| | |
$
|
63
| | | |
60.3
|
%
| |
$
|
62
| | | |
62.9
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
Adjusted EBITDA
| |
$
|
402
| | |
$
|
380
| | | |
5.8
|
%
| |
$
|
375
| | | |
7.2
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
Adjusted Net Income
| |
$
|
187
| | |
$
|
173
| | | |
8.1
|
%
| |
$
|
171
| | | |
9.4
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
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.
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, Adjusted Net Income and Adjusted Net Income per share of common
stock for the three months ended March 31, 2016 and 2015:
|
| | |
| | Three Months Ended March 31, (Unaudited) | |
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA) | | 2016 | |
| 2015 | |
Net income | |
$
|
101
| | |
$
|
63
| |
Interest expense, net
| | |
78
| | | |
72
| |
Provision for income taxes
| | |
44
| | | |
38
| |
Depreciation and amortization
| |
|
147
| | |
|
142
| |
EBITDA
| | |
370
| | | |
315
| |
Other non-operating expense, net
| | |
1
| | | |
26
| |
Restructuring charges
| | |
10
| | | |
14
| |
Stock-based compensation expense
| | |
13
| | | |
14
| |
Other items(a) | |
|
8
| | |
|
11
| |
Adjusted EBITDA | | |
402
| | | |
380
| |
Interest expense, net
| | |
(78
|
)
| | |
(72
|
)
|
Depreciation and amortization
| | |
(147
|
)
| | |
(142
|
)
|
Depreciation and amortization associated with acquisition-related
| | | | | | | | |
tangible and intangible assets
| | |
52
| | | |
50
| |
Cash paid for income taxes
| | |
(29
|
)
| | |
(29
|
)
|
Stock-based compensation expense
| |
|
(13
|
)
| |
|
(14
|
)
|
Adjusted net income | |
$
|
187
| | |
$
|
173
| |
Adjusted net income per share of common stock, diluted | |
$
|
0.51
| | |
$
|
0.46
| |
Weighted-average shares of common stock outstanding, basic
| | |
361,580,670
| | | |
371,169,651
| |
Dilutive shares of common stock from stock compensation plans
| |
|
3,620,469
| | |
|
4,192,306
| |
Weighted-average shares of common stock outstanding, diluted
| |
|
365,201,139
| | |
|
375,361,957
| |
| | | | | | | |
|
(a) For the three months ended March 31, 2016 and 2015, other items
primarily consist of non-recurring 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 March 31, (Unaudited) | |
(IN MILLIONS) | | 2016 | |
| 2015 | |
Net cash provided by operating activities
| |
$
|
87
| | |
$
|
101
| |
Plus: Contribution to the Nielsen Foundation
| | |
36
| | | |
—
| |
Less: Capital expenditures, net
| |
|
(109
|
)
| |
|
(102
|
)
|
Free cash flow
| |
$
|
14
| | |
$
|
(1)
|
|
| | | | | | | |
|
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 March 31, 2016 is as follows:
|
(IN MILLIONS) (Unaudited) |
Gross debt as of March 31, 2016
|
|
$
|
7,660
|
Less: cash and cash equivalents as of March 31, 2016
| |
|
432
|
Net debt as of March 31, 2016 | | $ | 7,228 |
Adjusted EBITDA for the year ended December 31, 2015
| |
$
|
1,858
|
Less: Adjusted EBITDA for the three months ended March 31, 2015
| |
$
|
380
|
Add: Adjusted EBITDA for the three months ended March 31, 2016
| |
$
|
402
|
Adjusted EBITDA for the twelve months ended March 31, 2016
| |
$
|
1,880
|
Net debt leverage ratio as of March 31, 2016 | | | 3.84x |
| | |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160420005526/en/
Contacts:
For Nielsen Holdings plc:
Investor Relations:
Kate
Vanek, +1 646 654 4593
or
Media Relations:
Laura
Nelson, +1 203 563 2929
Source: Nielsen Holdings plc
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