4 TH QUARTER AND FULL YEAR 2015 RESULTS FEBRUARY 11, :00AM ET NYSE: NLSN

Transcription

1 4 TH QUARTER AND FULL YEAR 2015 RESULTS FEBRUARY 11, :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 February 11, 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 Fourth Quarter & Full Year Results Business Update Financials and Guidance Q&A Appendix and Reconciliations 3

4 MITCH BARNS CHIEF EXECUTIVE OFFICER

5 FULL YEAR 2015 OVERVIEW Financial highlights P Revenue of $6.2 billion up 5.0% constant currency P Adjusted EBITDA of $1.9 billion up 7.2% constant currency P Adjusted net income per share of $2.63 up 12.4% constant currency P Record free cash flow of $804 million up 18.1% year over year Continued execution on our balanced capital allocation framework P Returned ~$1.1B back to shareholders P Additional share buyback of $500M total authorization of ~$850M as of year-end Acquisitions are delivering P Leveraging exelate as the foundation for Nielsen s Enterprise Marketing Platform Reiterating 2016 guidance RESILIENCE THROUGH THE CYCLES 5

6 UPDATE ON KEY STRATEGIC INITIATIVES Watch: Total Audience Measurement P Nielsen Social Content Ratings: Now includes Facebook Instagram to come P Digital Ad Ratings Live with Google DoubleClick in 8 countries Significant new clients wins P VOD/SVOD measurement Expanded measurement and reporting out to 35 days 35 networks and studios covering over 6,000 episodes P Digital Content Ratings: Momentum continues Adding large digital video platform to client roster P Total Content Ratings: Over 70 networks signed up P Next steps: Multiple meetings with key industry players over the next few weeks Marketing Effectiveness: +31% in 4Q; Strong momentum across client base Buy: Total Consumer Measurement P New client wins P Strong growth with retailers P Broad-based Emerging market growth P Developed markets exited the year with good momentum 6

7 THREE STRATEGIC INVESTMENTS Nielsen Total Audience Measurement Enterprise Marketing Platform Connected Buy System FOCUS ON MEASURING THE TOTAL AUDIENCE & THE TOTAL CONSUMER 7

8 JAMERE JACKSON CHIEF FINANCIAL OFFICER

9 TOTAL NIELSEN RESULTS FY 2015 ($ in millions except per share amounts, growth in constant currency, excluding Free Cash Flow) V% Revenues $6,172 $6, % Adjusted EBITDA $1,858 $1, % Adjusted EBITDA margin % 30.1% 29.2% 61 bps Adjusted Net Income (ANI) $975 $ % Diluted ANI per share (a) $2.63 $ % Free Cash Flow $804 $ % Leverage 3.8x 3.6x 0.2 Highlights 38 quarters of constant currency growth Growth initiatives & investments delivering: Watch: Nielsen Total Audience execution & reshaping portfolio Buy: Emerging markets growth & new client wins Expanding margins in both segments Record free cash flow Returned ~$1.1B back to shareholders (a) Calculated using weighted average shares outstanding of million for 2015 and million for See appendix for detail 9

10 TOTAL NIELSEN RESULTS 4Q 2015 ($ in millions except per share amounts, growth in constant currency, excluding Free Cash Flow) 4Q Q 2014 V% Highlights Revenues $1,624 $1, % Adjusted EBITDA $531 $ % Adjusted EBITDA margin % 32.7% 32.1% 45 bps Adjusted Net Income (ANI) $300 $ % Diluted ANI per share (a) $0.82 $ % Solid revenue growth in Watch and Buy Strong operating leverage Portfolio pruning & reshaping in Watch Solid free cash flow performance Strong finish good momentum into 2016 Free Cash Flow $306 $ % (a) Calculated using weighted average shares outstanding of million for 4Q 2015 and million for 4Q See appendix for detail 10

11 WATCH SEGMENT RESULTS ($ in millions, growth in constant currency) REVENUE 4Q 15 4Q 14 V% 4Q DYNAMICS Total Watch PROFITABILITY Adjusted EBITDA Margin $745 $ % $725 $ % 5.2% 6.9% 70 bps Strong revenue growth; +5.2% 4Q +4.9% FY Audience Measurement (Video/Text): +7.6% Audio (6.9%) delivery timing Marketing Effectiveness +31.3% Portfolio pruning NRG exit Growth initiatives are delivering Continued Digital Ad Ratings momentum Nielsen Catalina majority ownership SVOD & Digital Content Ratings traction exelate driving new client wins 11

12 BUY SEGMENT RESULTS ($ in millions, growth in constant currency) REVENUE 4Q 15 4Q 14 V% 4Q DYNAMICS Developed $607 $ % Emerging $272 $ % Total Buy $879 $ % PROFITABILITY Solid revenue growth; +5.9% 4Q +5.0% FY Developed markets strengthening... US & EU Emerging markets resilient Discretionary spend remains steady overall Adjusted EBITDA $195 $ % 6 th straight quarter of margin expansion Margin 22.2% 22.3% 25 bps 12

13 FOREIGN CURRENCY IMPACT 2015 CURRENCY PROFILE - REVENUE PROJECTED FX IMPACT (a) : REPORTED VS CONSTANT CURRENCY 3% 4% 3% 9% 21% 60% (330) (200) (240) (300) (160) (90) (80) (60) (140) (210) (580) (620) (610) (680) USD EUR CAD GBP CNY Other 4Q15 FY15 1Q16E 2Q16E 3Q16E 4Q16E FY16E Rev (bps) EBITDA (bps) (a) Projected impact assumes rates in effect at 2/9/16 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 13

14 2016 GUIDANCE (Revenue and adj. EBITDA margin growth in constant currency) OTHER FINANCIAL METRICS Total Revenue 4.0% - 6.0% Net book interest $325M- $335M Adj. EBITDA margin growth bps Cash Taxes 14.0% % Adj. Net Income Per Share $ $2.93 Cash restructuring $50M - $75M Free Cash Flow ~$950M Est. wtd. avg. diluted shares outstanding for FY 2015 ~361M 14

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16 APPENDIX

17 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, 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. 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. 17

18 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, 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. 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, net. It 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. 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, repayment of debt obligations or to fund our strategic initiatives, including acquisitions, if any. Free cash flow is not a presentation made in accordance with GAAP. 18

19 HISTORICAL WATCH REVENUE ($ in millions) Watch Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY Audience Measurement (Video and Text) $445 $458 $458 $479 $1,840 $434 $443 $448 $459 $1,784 Audio Marketing Effectiveness Other Watch Total Watch $660 $707 $715 $745 $2,827 $652 $694 $694 $725 $2,765 Y/Y Growth (a) 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY Watch Audience Measurement (Video and Text) 5.5% 6.8% 5.8% 7.6% 6.4% 6.0% 6.5% 6.2% 6.5% 6.3% Audio 1.7% (0.8)% 11.0% (6.9)% 1.2% NM NM NM (3.7)% NM Marketing Effectiveness 22.7% 21.7% 7.9% 31.3% 21.0% 10.0% 10.7% 18.2% 19.3% 13.3% Other Watch (20.0)% (15.5%) (5.9)% (13.8)% (14.1)% 1.8% (4.3%) (8.5)% (6.6)% (2.4)% Total Watch 3.6% 4.7% 6.1% 5.2% 4.9% 29.4% 28.3% 29.2% 4.0% 21.3% (a) Year-over-year growth in constant currency 19

20 ADJUSTED NET INCOME RECONCILIATION ($ in millions except per share amounts) Quarter ended December 31, (Unaudited) Year ended December 31, (Unaudited) Net income $ 254 $ 158 $ 575 $ 381 Interest expense, net Provision for income taxes Depreciation and amortization EBITDA ,839 1,487 Equity in net loss of affiliates Other non-operating (income) / expense, net (202) 39 (175) 171 Restructuring charges Stock-based compensation expense Other items (a) Adjusted EBITDA ,858 1,837 Interest expense, net (79) (71) (307) (297) Depreciation and amortization (142) (148) (574) (573) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (54) (37) (159) (154) Stock-based compensation expense (9) (11) (48) (47) Adjusted net income $ 300 $ 309 $ 975 $ 970 Adjusted net income per share of common stock, diluted $0.82 $0.81 $2.63 $2.52 (a) See footnotes on next page 20

21 ADJUSTED NET INCOME RECONCILIATION (continued) (a) For the three and twelve months ended December 31, 2015, other items consists of a $36 million donation to the Nielsen Foundation, $14 million charge for the partial settlement of certain U.S. pension plans, and other non-recurring costs. For the three and twelve months ended December 31, 2014, other items consist of non-recurring costs. Quarter ended Year ended December 31, December 31, (Unaudited) (Unaudited) Weighted-average shares of common stock outstanding basic 363,059, ,676, ,996, ,333,037 Dilutive shares of common stock from stock compensation plans 3,436,080 4,164,203 3,961,016 5,038,415 Weighted-average shares of common stock outstanding, diluted 366,495, ,840, ,957, ,371,452 21

22 ADJUSTED EBITDA RECONCILIATION ($ in millions) 2015 QUARTER ENDED DECEMBER 31, 2014 % V 2014 Constant Currency % V Constant Currency Buy $195 $202 (3.5)% $ % Watch $343 $ % $ % Corporate $(7) $(7) NM $(7) NM Total $531 $ % $ % YEAR ENDED DECEMBER 31, % V 2014 Constant Currency % V Constant Currency Buy $624 $658 (5.2)% $ % Watch $1,269 $1, % $1, % Corporate $(35) $(35) NM $(35) NM Total $1,858 $1, % $1, % 22

23 ADJUSTED NET INCOME RECONCILIATION (continued, $ in millions) QUARTER ENDED DECEMBER 31, % V 2014 Constant Currency % V Constant Currency Adjusted Net Income $300 $309 (2.9)% $ % YEAR ENDED DECEMBER 31, % V 2014 Constant Currency % V Constant Currency Adjusted Net Income $975 $ % $ % 23

24 REVENUE RECONCILIATION ($ in millions) QUARTER ENDED DECEMBER 31, % V 2014 Constant Currency % V Constant Currency Developed Markets $607 $611 (0.7)% $ % Emerging Markets (8.4)% % Buy $879 $908 (3.2)% $ % Video and Text $ % $ % Audio (6.9)% 131 (6.9)% Marketing Effectiveness % % Other Watch (16.4)% 65 (13.8)% Watch $745 $ % $ % Total $1,624 $1,633 (0.6)% $1, % 24

25 REVENUE RECONCILIATION (continued, $ in millions) YEAR ENDED DECEMBER 31, % V 2014 Constant Currency % V Constant Currency Developed Markets $2,301 $2,390 (3.7)% $2, % Emerging Markets 1,044 1,133 (7.9)% % Buy $3,345 $3,523 (5.1)% $3, % Video and Text $1,840 $1, % $1, % Audio % % Marketing Effectiveness % % Other Watch (17.6)% 234 (14.1)% Watch $2,827 $2, % $2, % Total $6,172 $6,288 (1.8)% $5, % 25

26 FREE CASH FLOW RECONCILIATION ($ in millions) QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER Net cash provided by operating activities $401 $401 $1,179 $1,093 Plus: Excess tax benefit on stock-based compensation Less: Capital expenditures, net (95) (138) (401) (412) Free cash flow $306 $263 $804 $681 26

27 DEBT CAPITAL TABLE ($ in millions) DEBT CAPITAL TABLE 12/31/15 (d) 9/30/15 (d) Change Loan Debt (secured) $3,496 $3,573 $(77) 4.50% Sr. Notes (10/1/20) % Sr. Notes (10/1/21) % Sr. Notes (4/15/22) 2,284 2,283 1 Capital lease/misc. debt Total Debt $7,338 $7,398 $(60) Less Cash (1) Net Debt $6,981 $7,040 $(59) Adjusted EBITDA (a) $1,858 $1,851 7 Net Debt Ratio (b) 3.8x 3.8x -- Weighted avg. interest rate (c) 4.04% 3.98% 6 bps (a) Adjusted EBITDA calculated based on last twelve months basis (b) Reflects Net Debt (gross debt minus deferred financing fees and cash), divided by Adjusted EBITDA calculated on last twelve months basis (c) Excludes capital leases (d) Due to the adoption of a new accounting standard in the fourth quarter, debt issuances costs have been reclassified from assets to the related debt instrument in order to conform to year end presentation 27

28 SELECTED FINANCIAL METRICS & BALANCE SHEET ITEMS ($ in millions) FINANCIAL METRICS 4Q 15 Free Cash Flow $306 Capital Expenditures, net $95 D&A $142 Net Book Interest $79 Cash Taxes $54 Cash Restructuring $14 Wtd. avg. diluted shares BALANCE SHEET 12/31/15 Gross Debt $7,338 Cash $357 Net Debt $6,981 Net Debt Ratio (a) 3.8x CURRENT DEBT MATURITY PROFILE 12/31/15 (b) $2,300 $1,946 $1,033 $806 $632 $202 $ (a) Reflects net debt (gross debt minus deferred financing fees and cash), divided by Adjusted EBITDA calculated on last twelve months basis (b) Excludes Revolver ($164M) and Capital Leases ($142M) 28

29 NIELSEN INVESTOR RELATIONS Follow Nielsen