Citi Credit Conference. Bill Bradley, Treasurer November 15, 2012

Transcription

1 Citi Credit Conference Bill Bradley, Treasurer November 15, 2012

2 Forward Looking Statements The following discussion may contain forward-looking statements, including those about Nielsen s outlook and prospects, in the meaning of 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 October 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. Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

3 Nielsen: Who we are Our mission To provide clients with the most complete understanding of their consumers and markets worldwide Our brand Quality Integrity Neutrality Our journey VNU PE Ownership Nielsen IPO Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

4 Nielsen enables growth of consumer industries What Consumers Buy What Consumers Watch We provide We help Retail measurement of sales, market share and analytics for consumer goods Consumer packaged goods manufacturers, retailers Measurement and analytics for content, advertising, and activity across TV, digital and social Media companies, content distributors, online publishers, tech players Client example > 80 markets worldwide 50+ year relationship Multi-year contract 70+ year relationship Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

5 Compelling financial model Priorities Compounding growth Recurring revenue Margin expansion Deleveraging Results 5% revenue CAGR from 08 to 11 (1) 23 quarters of consecutive growth (1) Developing markets growth opportunity High renewal rates 70% recurring across Watch & Buy 30+ year relationship with top clients Sustainable operating efficiencies Adjusted EBITDA margin benefit Significant market/product investment Net leverage reduced from 9.1x at 12/31/06 to 3.8x at 9/30/12 (2) Derisk by lowering rate, extending maturities Sustainable, low cash tax rate (1) Based on constant currency growth (2) Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis. Excludes $288M of mandatory convertible subordinated debt due 2013, but includes all other debt, including capital leases Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

6 Resilient financial performance Revenue Adjusted EBITDA ($ millions) ($ millions) CAGR = 5.2% CAGR = 8.7% $4,806 $4,808 $5,126 $5,532 $1,312 $1,411 $1,546 $1, % 4.0% 6.1% 5.6% 25.1% 27.3% 27.5% 27.9% Constant currency growth Adjusted EBITDA Margin Note: Revenue and EBITDA growth rates derived on a constant currency basis; figures are as reported Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

7 Strong free cash flow profile Capex Free cash flow (1) ($ millions) ($ millions) CAGR ( 09-11) = 14.1% CAGR ( 09-11) = 8.0% $379 $367 $282 $334 $367 $235 $209 $ LTM9/ LTM9/30 5.9% 6.5% 6.6% 6.8% 17.9% 14.8% 17.7% 23.3% % of revenue % of Adjusted EBITDA (1) Defined as net cash provided by operating activities minus capital expenditures Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

8 Proactive balance sheet management Debt Maturity Profile (1) Recent Actions and Results ($ millions) Issued $800M unsecured issue at 4.5% with 8 yr term (Oct 2012) $2,725 Redeemed all of 11.5% senior notes due 2016 and prepaid 8.5% senior secured term loan due 2017 (Oct 2012) $342 $342 $149 $733 $1,084 $800 Reduced weighted average interest rate from ~5.7% to ~4.8% pro-forma (3) Deleveraging progress (2) Refinanced $1.2bn of existing 2013 term loan maturities with new 5 year facility (Feb 2012) 9.1x 7.9x 7.4x 6.2x 5.8x 4.0x 3.8x Repaid ~$380mm of debt in 2011 (incremental to IPO debt paydowns) LTM 9/30/12 Achieved S&P upgrade of senior secured debt to BBB- (Oct 2012) (1) Reflects 09/30/12 debt balances and pro forma for new senior notes. Figures exclude $288M of mandatory convertible subordinated debt due 2013, capital leases and bank overdrafts (2) Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis. Excludes $288M of mandatory convertible subordinated debt due 2013, but includes all other debt, including capital leases (3) Excludes $288M of mandatory convertible subordinated debt due 2013 Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

9 Selected cash flow & balance sheet items ($ in millions) Cash Flow 3Q 12 Free Cash Flow $258 Capex $73 Cash Taxes $26 Restructuring $16 Balance Sheet 9/30/12 Gross Debt (a) $6,392 Cash $325 Net Debt (a) $6,067 Net Debt Ratio (b) 3.8xx Capital Table 6/30/12 9/30/12 Change Loan Debt (secured) $ 4,835 $4,668 ($167) % Sr. Notes % Sr. Notes % Sr. Notes 1,084 1, Capital lease/misc. debt Total Debt (a) $ 6,555 $6,392 (163) Less Cash Net Debt $ 6,272 $6,067 (205) (b) Net Debt Ratio 4.0x 3.8x (0.2) (a) Weighted avg. interest rate 5.61% 5.66% 5 bps (a) (b) Does not include $288 million of mandatory convertible subordinated bonds; weighted avg. interest rate calculated based on amount outstanding at end of quarter Reflects Net Debt divided by Adjusted EBITDA calculated on last twelve months basis. See Appendix for detail Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

10 9/30/12 Capitalization Reported and Pro Forma At 9/30/2012 ($ millions) 9/30/2012 As Reported Pro Forma Carrying xltm Carrying xltm Facility (Maturity) Amount Adj. EBITDA Amount Adj. EBITDA Cash & cash equivalents $325 $205 $635 million R/C U.S. & Euro TL B - Tranche A (due August 2013) U.S. & Euro Ext. TL B - Tranche B & Tranche C (due May 2016) 2,660 2,660 U.S. TL A - Tranche D (due February 2017) 1,192 1,192 Sr. Sec Fixed Rate TL (due June 2017) Capital lease obligations Other secured debt Total Secured OpCo debt $4, x $4, x 11.50% Senior Notes due % Senior Notes due % Senior Notes due ,084 1, % Senior Notes due Other debt 2 2 Total OpCo debt $6, x $6, x Mandatory Conv. Sub. Bonds (due February 2013) Total (Nielsen Holding N.V.) debt $6, x $6, x Market value of equity (at 11/8/12) 10, x 10, x Total Capitalization $17, x $17, x LTM Adjusted 9/30/12 EBITDA $1,577 $1,577 Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

11 Global footprint Nielsen presence Client Trends Past: West East Future: West East We continue to increase coverage to fulfill client needs and support their growth and expansion Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

12 Leadership position Retail sales measurement TV audience measurement Digital (online, mobile, social) Analytical insights Advertising effectiveness Nielsen enables trade between advertisers and media platforms, and provides insights to enhance the transaction value for both sides Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

13 Trends shaping What Consumers Buy Growth of middle class Demographic shifts Projected increase in global middle class population and spending (a) $35B $55B Spending by middle class $22B 1.9B 3.3B 5B Population of middle class E 2030E > Shift in focus to developing markets > Major changes in global population (a) The Emerging Middle Class in Developing Countries, Organization for Economic Cooperation and Development 2010 Clients need to understand new consumers in developing markets, who represent the greatest future growth opportunity Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

14 Trends shaping What Consumers Watch More choices and platforms Consumers more connected 1950s BLACK & WHITE TELEVISION Video penetration by platform, Q (a) (Percent of US population) 1960s FIRST SATELLITE BROADCAST 95% 1970s 1980s RISE OF CABLE TV MORE ADVERTISER- SUPPORTED NETWORKS 54% 1990s DIGITAL AND INTERNET REVOLUTION DVR PENETRATION OVER-THE-TOP DISTRIBUTION 12% 5:20 5:51 144:54 Monthly time spent among video users (hh:mm) (a) Nielsen Cross-Platform Report: Based on Total US Population, Persons 2+ for TV and Online, (Home and Work) 13+ for Mobile, 2 nd Qtr 2012 Cross-platform measurement facilitates broader reach of consumers and better marketing ROI Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

15 Strategic initiatives Invest in expansion of coverage to measure and understand emerging consumers across the developing world Deploy cross-platform solutions globally to reach and measure audiences across screens and platforms Enable more precise advertising placement and campaigns that effectively synchronize paid and earned media Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

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17 Appendix Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

18 Certain non-gaap measures Overview of Non-GAAP Presentations We consistently use the below non-gaap financial measures 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 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 or any other performance measures of operating performance or liquidity 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. 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. Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

19 Adjusted net income reconciliation: Q3 ($ in millions except per share amounts) Quarter ended September 30 (Unaudited) Net income $ 106 $ 103 Interest expense, net Provision for income taxes Depreciation and amortization EBITDA Equity in net loss of affiliates 1 2 Other non-operating expense, net -- 4 Restructuring charges 3 9 Stock-based compensation expense 10 8 Other items (a) -- 1 Adjusted EBITDA Interest expense, net (105) (112) Depreciation and amortization (130) (125) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (26) (29) Stock-based compensation expense (10) (8) Interest expense attributable to mandatory convertible bonds 6 6 Adjusted net income $ 200 $ 181 Adjusted net income per share of common stock, diluted (b) $0.53 $0.48 (a) (b) See footnotes on next page Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

20 Adjusted net income reconciliation: Q3 cont d (a) Other items primarily consist of costs related to our initial public offering in 2011 and other transaction-related fees. (b) 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 anti-dilutive in accordance with GAAP. The amount also includes the weightedaverage amount of shares of common stock convertible associated with the mandatory convertible bonds based upon the average price of our common stock during the period. Weighted-average shares of common stock outstanding as of quarter ended September 30, 2012, basic 362,016,373 Dilutive shares of common stock from stock compensation plans 4,205,147 Shares of common stock convertible associated with the mandatory convertible bonds 10,416,700 Weighted-average shares of common stock outstanding, diluted 376,638,220 Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

21 Adjusted net income reconciliation: YTD ($ in millions except per share amounts) Nine months ended September 30 (Unaudited) Net income/(loss) $ 234 $ (9) Loss from discontinued operations, net -- 1 Interest expense, net Provision / (Benefit) for income taxes 114 (51) Depreciation and amortization EBITDA 1, Equity in net (income)/loss of affiliates (1) 1 Other non-operating expense, net (a) Restructuring charges Stock-based compensation expense Other items (b) Adjusted EBITDA 1,145 1,114 Interest expense, net (316) (363) Depreciation and amortization (388) (396) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (88) (92) Stock-based compensation expense (24) (18) Interest expense attributable to mandatory convertible bonds Adjusted net income $ 470 $ 400 Adjusted net income per share of common stock, diluted (c) $1.25 $1.10 (a) (b) (c) See footnotes on next page Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

22 Adjusted net income reconciliation: YTD cont d (a) Non-operating expense for nine months ended September 30 reflects debt extinguishment/prepayment charges of $6 million in 2012 and $231 million in (b) Other items primarily consist of Sponsor Advisory Fees (including termination payments of $102 million for the nine months ended September 30, 2011), costs related to public offering and other transaction-related fees. (c) 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 anti-dilutive in accordance with GAAP. The amount also includes the weightedaverage amount of shares of common stock convertible associated with the mandatory convertible bonds based upon the average price of our common stock during the period. Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

23 Free cash flow reconciliation ($ in millions) Quarter Ended September 30 Nine Months Ended September Net cash provided by operating activities $331 $269 $444 $339 Capital expenditures (73) (71) (225) (213) Free Cash Flow $258 $198 $219 $126 Sponsor termination fees Normalized Free Cash Flow $258 $198 $219 $228 Copyright 2012 Nielsen Holdings N.V. Citi Credit Conference November

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