NIELSEN INVESTOR OVERVIEW MARCH 2015

Transcription

1 NIELSEN INVESTOR OVERVIEW MARCH 2015

2 FORWARD LOOKING STATEMENTS The following discussion contains 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 March 16, 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 NIELSEN AT A GLANCE 2014 Revenue $6.3B 2014 Free Cash Flow $681M 2014 Adjusted EBITDA Margin 29.2% Cash returned to shareholders over $1.1B Measurement and analytics for content, advertising and activity for television, digital, social and audio Measurement and analytics for sales, market share and consumer goods Watch 44% Buy 56% 2014 Revenue $2.8B Adjusted EBITDA Margin 44% 2014 Revenue $3.5B Adjusted EBITDA Margin 19% Dividend Yield 2.3% Market Cap $16.1B Private Equity Ownership 9.8% Our focus is to drive shareholder value through consistent growth, profitability and free cash flow generation Revenues recurring in nature ~70% Market Cap and Dividend Yield are reported as of 3/16/15 3

4 NIELSEN S BUSINESS STRATEGY & OBJECTIVES OUR VALUES Expand coverage of consumer purchase behavior globally OUR BRAND BUY OPEN Capture Total Audience across all screens and platforms QUALITY SIMPLE WATCH INTEGRITY INTEGRATED MARKETING EFFECTIVENESS Help clients understand how individuals viewing behavior impacts purchase behavior NEUTRALITY Execution of our strategy drives shareholder value through the cycles 4

5 THE NIELSEN VALUE PROPOSITION PERFORMANCE MANAGEMENT CONSUMER FOCUS WATCH BROADCAST TV CABLE SATELLITE TV TIME SHIFTING DIGITAL MOBILE TOTAL AUDIENCE BUY GROCERY MASS RETAIL DRUG STORE CLUB OUTLETS SPECIALTY STORE E-COMMERCE TOTAL CONSUMER GLOBAL PRESENCE Well positioned to meet client needs of today and tomorrow 5

6 COMPELLING FINANCIAL PERFORMANCE RESULTS CONSISTENT REVENUE GROWTH 5% revenue CAGR (a) from 09 to quarters of consecutive growth Investing in key growth opportunities MARGIN EXPANSION Powerful syndicated business model Disciplined pricing and cost-out initiatives ~3pts of margin expansion 09 to 14 POWERFUL FREE CASH FLOW 24% CAGR (b) from 09 to 14 Sustainable capital efficiency BALANCED CAPITAL ALLOCATION De-levered from 9.1x to ~3.6x between 06 to 14 Tremendous flexibility to invest in growth ~$1.1B back to shareholders through Strong track record of delivering consistent results Note: a) Revenue CAGR derived on a constant currency basis, excludes Audio and Harris acquisitions b) Free Cash Flow CAGR is as reported 6

7 WHY INVEST IN NIELSEN? Measuring the total consumer and Total Audience Unmatched global footprint of 106 countries Mission critical measurement and analytics embedded in client workflows Syndicated, scalable products and services Strategic investments to drive continued and future growth opportunities Proven track record of growth and economic resilience Underpins ability to return cash to shareholders Driving shareholder value is the cornerstone of our strategy 7

8 OUR GROWING GLOBAL FOOTPRINT Our focus is relentless on our pursuit to provide clients with the most complete understanding of what consumers buy and watch in 106 countries 2014 REVENUE DISTRIBUTION U.S. & Canada 58% Western Europe 16% Asia <15% LatAm, Africa, <15% Nielsen presence Middle East, Eastern Europe ~20% of revenues in emerging markets, growing at double digit pace underscored by a global employee base of 42,000 talented associates we work hard to attract, develop and retain 8

9 LONG-TERM, BEST-IN-CLASS CLIENT BASE BUY WATCH PARTNERSHIPS HIGHLIGHTS 20,000+ clients Relationships with top 10 clients for over 30 years Long-term contracts provide stable, recurring revenues average length of 3-10 years No client represents more than 3% of 2014 revenues For 90 years, we have been at the forefront of measuring consumers around the world, helping clients drive better business decisions and profitable growth over time 9

10 WHAT CONSUMERS BUY Broad, unparalleled reach of consumers worldwide 2B electronic records collected weekly 3M store level data files annually 25M+ characteristics collected for 30M products 1.7M+ store visits monthly 16M consumer surveys per year 10

11 BUY: PROVIDING MEASUREMENT AND ANALYTICS Total 2014 Revenue: $3.5B Approximately 60% recurring in nature DEVELOPED MARKETS: $2.4B EMERGING MARKETS: $1.1B Retail sales measurement and market share information Presence in 106 countries Measure billions of monthly point-of-sale transactions Store level data from nearly 2 million stores, supplemented from proprietary household level data from 240K households Advanced analytical capabilities and solutions Demand strategy Help clients see around corners Product Innovation Our measurement and analytics are embedded in the operating disciplines of our clients, helping to drive their growth Marketing C-Suite Supply Chain Research Sales Investor and Media Relations 11

12 DIGITAL SHOPPING & E-COMMERCE SALES SHOPPER SHELF DELIVER SHARE MEASUREMENT FOR E- COMMERCE COMPARABLE TO BRICK & MORTAR Launched in 5 markets (UK, France, Spain, China, and Korea); 2015 plans across NA, Europe, and SE Asia Nielsen Omnichannel for an Alibaba key account in China to compliment the channel measurement INSIGHT TO UNDERSTAND THE 21 ST CENTURY SHOPPER BEHAVIOR AND SEGMENTATION Insights on how shoppers browse and buy across devices Shopper segmentations to guide communication and engagement plans Measure shoppers and content similar to media COMPETITIVE BENCHMARKS AND ANALYTICS TO DIGITAL SHELF Insights to understand and improve the digital shelf conditions Analytics to optimize assortment choice for multi-channel retail Powerful long-term opportunity for Nielsen 12

13 EMERGING MARKETS GROWTH OF MIDDLE CLASS EMERGING MARKETS REVENUE 7.0B 8.3B $1.1B 10% CAGR $0.4B LOCALS 10-30% Growth 3.7B $0.6B $0.7B GLOBAL MNCs Biggest increase ever Acceleration with locals Source: OECD; CAGR represented in constant currency 13

14 WHAT CONSUMERS WATCH Measuring Total Audience across screens 181M Watching Time-Shifted TV 164M Using App/Web on a Smartphone 146M Watching Video on Internet 258M Listening to AM/FM Radio 142M Using Social Media on an App on a Smarthphone * Number of users engaging with these forms of media 14

15 WATCH: MEASURING THE TOTAL AUDIENCE Total 2014 Revenue: $2.8B Approximately 85% recurring in nature TELEVISION DIGITAL Global television audience measurement A leader in US television advertising Television audience measurement in 35 countries Proprietary data methods Gold standard, MRC accredited panel Digital measurement, audience analytics and consumer research Digital Ad Ratings Digital Content Ratings Mobile measurement A leader in social media measurement Strategic relationships (Adobe, Experian, Facebook, Twitter) Our measurement and analytics are embedded in the operating disciplines of our clients, helping to drive their growth Media Programmers Executives Media Sales Agencies and Advertisers Marketing Investor and Media Relations 15

16 dynamic linear THE ONLY TOTAL AUDIENCE MEASUREMENT TV CONNECTED TV PC TABLET SMARTPHONE Programs & Ads C3/C7/Program Ratings Content Digital Content Ratings Ads Digital Ad Ratings 16

17 DIFFERENTIATED CROSS PLATFORM ARCHITECTURE TWO TYPES OF CONTENT Native Digital Content HARDWARE & HARDWARE SOFTWARE METER COMPARABLE OVERNIGHT RATING BIG DATA ENABLED MEASUREMENT Digital Ratings ONE CLIENT-SIDE IMPLEMENTATION Total Audience SDKs ONE ENCODING PROCESS UNIVERSAL GOLD STANDARD PROCESS MRC ACCREDITED Linear Ratings Traditional Linear Content 17

18 NIELSEN AUDIO Expanded measurement of US consumers by 2+ hours LONG TERM GROWTH OPPORTUNITIES Digital Audio (Streaming) Audience Measurement: 2+ hours of consumer s day Audio ROI linking listening behavior to consumer purchasing habits Global expansion Radio listening measured in 270+ markets Advertisers gain an average of $6 for each $1 spent on radio (a) (a) Source: Nielsen Catalina Solutions 18

19 THE DIGITAL OPPORTUNITY WHAT WE SAID LAST DECEMBER U.S. INDUSTRY OUTLOOK 2013 TV/Radio Spend CAGR: 4% WHERE WE ARE TODAY... ON-TRACK GROWING RAPIDLY $83B 20 OUT OF TOP 25 ADVERTISERS ENDORSE DIGITAL AD RATINGS $15B ~2% AD SPEND MEASUREMENT SPEND 2017 Digital Video (incl. Mobile) Spend 2017 Digital Display Spend CAGR: 25% ~$300M opportunity 2% CAGR: 11% $18B ~$200M opportunity <1% PUBLISHER CLIENTS SEEING INCREASED DEMAND FOR DIGITAL AD RATINGS IN RFPs DIGITAL CONTENT RATINGS A GAME CHANGER FOR DIGITAL PLANNING AD SPEND MEASUREMENT SPEND AD SPEND MEASUREMENT SPEND Source: PwC Media & Entertainment Outlook 2013, e-marketer, Nielsen financials; Excludes Display Mobile 19

20 MARKETING EFFECTIVENESS: WHERE WATCH MEETS BUY REACH WHAT TOTAL AUDIENCE DID I REACH? RESONANCE HOW DID IT CHANGE ATTITUDES? REACTION HOW DID IT CHANGE BEHAVIORS? Helping clients understand how individuals viewing behavior is impacting their purchasing behavior to increase ROI marketing efforts 20

21 NIELSEN MARKETING EFFECTIVENESS SOLUTION Nielsen integrates with 1 st party datasets to provide total view OUR CAPABILITIES IMPACT PLANNING Match 1 ST party data to Nielsen total audience measurement SHIFT MEDIA PLANNING FROM DEMOGRAPHICS TO DEMOS+ OPTIMIZATION Integrate daily total audience reach within overall marketing data sets ENABLE MARKETERS TO MAKE ADJUSTMENTS TO PLANS INFLIGHT ROI Assemble longitudinal view of all marketing elements and actual sales DRIVE HIGHER ROI / BUILD STRONGER BRANDS 21

22 NIELSEN IS UNIQUELY POSITIONED DATA OWNERS TRUST NIELSEN 90+ years with retailers, media and manufacturers Independent 3 rd party Sterling reputation with regard to consumer privacy UNIQUE ABILITY TO ENRICH DATA Most experienced measurement scientists anywhere Proprietary panels the source of truth Reference data and hierarchies across Watch & Buy CONNECT AND ACTIVATE Combine with Nielsen s industry standard datasets Embed in systems across the ecosystem 22

23 MARKETING EFFECTIVENESS: GROWTH OPPORTUNITIES MARKETING WILL CONTINUE TO GROW MORE COMPLEX THE VOLUME AND GRANULARITY OF WATCH AND BUY DATA WILL CONTINUE TO EXPAND NO DATA SET ON ITS OWN WILL TELL THE COMPLETE STORY OUR PANEL IS CRUCIAL NIELSEN IS THE ONLY COMPANY POSITIONED TO ASSEMBLE THE TOTAL VIEW WE ARE UNIQUELY TRUSTED TO PROTECT CONSUMER PRIVACY AND THE DATA OWNER S SECURITY WE CAN EXTEND BEYOND CPG TO VIRTUALLY ANY CONSUMER CATEGORY 23

24 FINANCIALS

25 CONSISTENT PERFORMANCE THROUGH THE CYCLES REVENUE ($B) ADJUSTED EBITDA ($B) ADJUSTED NET INCOME ($B) 5% 9% CAGR (a) CAGR $1.8 42% CAGR $970 NET DEBT LEVERAGE RATIO (b) FREE CASH FLOW ($M) (c) 3.6x 24% CAGR $681 Note: Revenue and Adjusted EBITDA growth rates derived on a constant currency basis. Adjusted Net Income and Free Cash Flow growth rates are as reported. (a) Revenue CAGR excludes Audio and Harris acquisitions; figures are as reported (b) Reflects Net Debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months is ProForma and includes nine months of Arbitron Adjusted EBITDA of $117 million and 2012 exclude $288M of mandatory convertible subordinated debt (c) Excludes impact of 2011 Sponsor Termination Fees ($102M) and 2013 one-time Arbitron deal-related costs ($46M) 25

26 STEADY SEGMENT REVENUE GROWTH BUY SEGMENT ($ BILLIONS) CAGR 5% CAGR 5% WATCH SEGMENT ($ BILLIONS) $3.5 $2.8 CONSTANT CURRENCY GROWTH 2.3% 7.4% 5.8% 3.6% 3.1% 3.6% CONSTANT CURRENCY GROWTH 11.4% 4.6% 5.2% 4.8% 5.2% 5.8% Note: Figures are as reported, CAGR and CC% represented in constant currency (excluding Audio and Harris acquisitions). 26

27 SELECTED FINANCIAL METRICS & BALANCE SHEET ITEMS (in millions) FINANCIAL METRICS FY 14 Free Cash Flow $681 Capital Expenditures $412 D&A $573 Net Book Interest $297 Cash Taxes $154 Cash Restructuring $113 Wtd. avg. diluted shares CURRENT DEBT MATURITY PROFILE 12/31/14 (b) BALANCE SHEET 12/31/14 Gross Debt $6,862 Cash $273 Net Debt $6,589 Net Debt Ratio (a) 3.59x (a) Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis. (b) Includes annual amortization of Term Loans and excludes capital leases of $118M and miscellaneous debt of $9M 27

28 STRONG FREE CASH FLOW FREE CASH FLOW (1) ($MILLIONS) CAGR 24% $209 Strong free cash flow supports growth investments and increased shareholder returns 1) Defined as cash flow from operations, normalized for non-recurring Arbitron transaction costs, less CapEx. Excludes $102M sponsor termination fee paid in 2011 and $46M in certain Audio deal-related costs paid in

29 DRIVING SHAREHOLDER VALUE THROUGH CAPITAL ALLOCATION BALANCED CAPITAL ALLOCATION Free Cash Flow + Balance Sheet RECENT ACTIVITY Successful integration of Arbitron and Harris acquisitions Dividend ~45% Mandatory Debt ~15% Buyback / Tuck-in BD ~40% STRONG BALANCE SHEET Updated long-term leverage target to 3.0x area Refinanced ~$5B of debt stack at attractive rates Increased dividend 25%...+56% since inception ~$1.5B buyback authorization - ~$0.5B complete by year-end ~$1B executed by mid-2016 Committed to grow and return capital to investors 29

30 NIELSEN ACQUISITIONS & JOINT VENTURES Company Capabilities Marketing Analytics SaaS tool replacing PowerPoint analysis with real time, predictive analytics for marketing mix models Neurofocus Neurological testing for consumer research Retail Plus (JV) Measuring / monitoring sales and marketing of products in fast moving consumer goods sector MEMRB Expansion of retail services within Middle East/Eastern Europe; synergies across several countries Carrier IQ On-device meters for service quality measurement Social Guide Twitter TV ratings Vizu Marketing effectiveness Ibope (JV) Television audience measurement for Mexico, Dominican Republic and Venezuela Ipsa Retail Measurement Services (RMS) /Consumer Panel Services (CPS) in Ecuador Perishables Group Product expansion for retail services Arbitron Radio audience measurement Bowker E-books MediaXIM Belgium and Netherlands advertising info services G4 Trade promotion optimization; Leader in SaaS analytics solutions for CPG companies Nielsen Innovate Israel based incubator investing in startups that help Nielsen clients (10 countries) Harris U.S. custom surveys Nexium Retail shelf image identification technologies that replace manual inventory management systems MMRD (JV) RMS in Myanmar Czech TAM (JV) Television audience measurement Affinova Intuitive user interface platform and automated analytics capabilities; Nielsen s Innovation Practice exelate Digital audience intelligence in the Programmatic Media ecosystem Approximately $2B in acquisitions and JVs since 2011, driving growth, value & returns 30

31 FOREIGN CURRENCY IMPACT 2014 CURRENCY PROFILE - REVENUE PROJECTED FX IMPACT (a) : REPORTED VS CONSTANT CURRENCY No single currency is >3%, excluding USD, CAD, EUR, CNY & GBP (a) Projected impact assumes rates in effect at 2/12/15 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 31

32 2015 GUIDANCE MARCH 16, 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 $ $2.74 Cash taxes $160M - $170M Leverage ~3.6x Cash restructuring $50M - $75M Free Cash Flow $850-$900M Est. wtd. avg. diluted shares outstanding for FY 2015 ~371M Continued execution in line with long term financial framework 32

33 2015 REVENUE RANGE (Percentages reflected as constant currency) RANGE RANGE DRIVERS Watch $6.3B $2.8B Audience Measurement % Ad Solutions (Marketing Effectiveness) % Other (5) 0% Watch % Ongoing success with total audience measurement Continued traction with digital ratings Momentum in Ad Solutions (Marketing Effectiveness) Buy $3.5B Developed % Emerging % Buy % New client wins Moderate recovery in global discretionary spend Emerging markets fueled by local clients Total Nielsen revenue expected to grow 4-6% Note: Figures are as reported 33

34 LONG TERM FINANCIAL TARGETS REVENUE GROWTH MID-SINGLE DIGIT ADJUSTED EBITDA GROWTH 1X - 2X REVENUE EMERGING MARKET GROWTH DOUBLE DIGIT ADJUSTED NET INCOME PER SHARE GROWTH DOUBLE DIGIT TO MID-TEENS CASH TAX RATE MID-TEENS TO LOW 20 S TARGET LEVERAGE 3.0X AREA DIVIDEND GROWTH IN-LINE WITH EARNINGS GROWTH Note: All measures represented on constant currency basis; excludes Adjusted Net Income per share growth. 34

35 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. 35

36 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, 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, 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, Such shares are considered anti-dilutive in accordance with GAAP for the periods presented. Free Cash Flow We define free cash flow as net cash provided by operating activities, normalized for 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. 36

37 ADJUSTED NET INCOME RECONCILIATION ($ in millions except per share amounts) Net income $381 $736 $272 $87 $133 $(489) $(589) (Income)/ loss from discontinued operations, net of tax -- (305) (30) (26) Interest expense, net Provision / (benefit) for income taxes (54) (152) 26 Depreciation and amortization EBITDA 1,487 1,339 1,243 1,012 1, Impairment of goodwill and intangible Equity in net (income)/ loss of affiliates 4 (2) (5) (3) (5) 22 7 Other non-operating loss/(income), net (28) 84 6 Restructuring charges Stock-based compensation expense Other items (a) Adjusted EBITDA 1,837 1,617 1,504 1,450 1,324 1,226 1,087 Interest expense, net (297) (307) (386) (443) (614) (598) (633) Depreciation and amortization (573) (510) (493) (502) (530) (519) (462) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (154) (147) (124) (132) (129) (139) (91) Stock-based compensation expense (47) (47) (34) (27) (18) (14) (18) Interest expense attributable to mandatory convertible bonds Adjusted net income Adjusted net income per share of common stock, diluted $2.52 $2.02 $1.69 $1.44 $0.82 $0.61 $0.40 (a) Other items primarily consist of non-recurring items, sponsor termination fees (2011), and acquisition adjustments 37

38 WEIGHTED AVERAGE SHARES OUTSTANDING ($ in millions except per share amounts. Year ended December 31 for all years.) (continued) Weighted-average shares of common stock outstanding as of December 31, basic Dilutive shares of common stock from stock compensation plans Shares of common stock convertible associated with the mandatory convertible bonds Weighted-average shares of common stock outstanding as of December 31, diluted 379,333, ,797, ,787, ,469, ,499, ,905,810 5,038,415 5,130,337 4,523,116 5,032,773 3,153, ,994 10,416,700 9,531, ,371, ,824, ,727, ,033, ,652, ,905,810 38

39 FREE CASH FLOW RECONCILIATION ($ in millions. Year ended December 31 for all years.) Net cash provided by operating activities $1,903 $901 $784 $641 $543 $517 Sponsor termination fee Capital expenditures (412) (374) (358) (367) (334) (282) One-time Arbitron costs -- $46 Free Cash Flow $681 $573 $426 $376 $209 $235 39

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