4 TH QUARTER AND FULL YEAR 2012 RESULTS

Transcription

1 4 TH QUARTER AND FULL YEAR 2012 RESULTS CONFERENCE CALL & WEBCAST FEBRUARY 11, :00 PM 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 DAVID CALHOUN CHIEF EXECUTIVE OFFICER

5 OVERVIEW Solid full year 2012 results Revenue grew 1%...up 4% constant currency Strong growth in recurring revenue Continued pressure in Insights Adjusted EBITDA grew 4%...up 6% constant currency Adjusted net income grew 19%...up 23% constant currency Focus on shareholder value Adopted dividend policy initial yield of 2%, first payment in 1Q13 Target capital structure path to investment grade Arbitron acquisition adding more media measurement 2013 guidance In line with long-term framework accelerating earnings and cash flow growth 5

6 WELL-POSITIONED FOR GROWTH 2012 ACCOMPLISHMENTS OPPORTUNITY Increased US retail coverage Growth with clients through Insights Expanded coverage in Africa, India, China Extended long-term client relationships Launched solution to increase local TV coverage Measure high growth, global middle class consumers Further embedded with clients to help them grow Provide clients with stable local market measurement Expanded TV & Digital internationally Commercialized OCR and XCR Acquired Social Guide, signed with Twitter Expand global ratings footprint Positioned to increase value of digital content Create Social TV ratings paid + earned media Accelerated growth of Ad Solutions with Vizu Commercialized Nielsen Catalina Solutions Signed agreement to acquire Arbitron Provide unique advertising effectiveness solutions Combine reach & retail data to increase client ROI Opportunity to measure more media consumption 6

7 BRIAN WEST CHIEF FINANCIAL OFFICER

8 TOTAL NIELSEN RESULTS FY 2012 ($ in millions except per share amounts) FULL YEAR 2012 RESULTS 2012 V% (a) 2012 Guidance Revenue $5,612 4% 5-6% Adjusted EBITDA $1,602 6% Adjusted EBITDA margin % 28.5% 49 bps 30 to 50 bps Steady revenue growth Margin expansion Strong earnings growth delevering, refinancing Adjusted Net Income (ANI) $704 23% 15% - 20% Diluted ANI per share (b) $ % $ $1.84 Net Debt to Adjusted EBITDA (c) 3.75x 3.7x (a) (b) (c) Year-over-year growth in constant currency Calculated using weighted average shares outstanding of million for 2012 and million for See Appendix for detail Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis. Excludes $288M of mandatory convertible subordinated debt 8

9 TOTAL NIELSEN RESULTS 4Q 2012 ($ in millions except per share amounts) 4 TH QUARTER RESULTS V% (a) Revenue $1,464 $1,421 4% Adjusted EBITDA $457 $432 6% Adjusted EBITDA margin % 31.2% 30.4% 81 bps Adjusted Net Income (ANI) $234 $190 24% Strong growth in recurring revenue Strong margin expansion Strong earnings growth Accelerating free cash flow conversion Diluted ANI per share (b) $0.62 $ % Free Cash Flow $207 $148 37% (a) (b) Year-over-year growth in constant currency Calculated using weighted average shares outstanding of million for 4Q 2012 and million for 4Q See Appendix for detail 9

10 SEGMENT REVENUE ($ in millions) 4 TH QUARTER RESULTS V% (a) Information $686 $641 8% Insights $234 $255 (8%) Total Buy $920 $896 3% Watch $527 $504 5% Information strength Insights global decline Developing markets +6% constant currency Watch growth stable Expos show timing Expositions $17 $21 (19%) Total $1,464 $1,421 4% (a) Year-over-year growth in constant currency 10

11 SEGMENT PROFITABILITY ADJUSTED EBITDA ($ in millions) 4 TH QUARTER RESULTS V% (a) Buy $221 $222 1% Watch $234 $210 11% Expositions $3 $4 (25%) Corporate $(1) $(4) NM Buy: developing markets expansion Watch: measuring across screens Delivering on cost management and productivity efforts Total $457 $432 6% (a) Year-over-year growth in constant currency 11

12 SELECTED CASH FLOW & BALANCE SHEET ITEMS ($ in millions) CASH FLOW 4Q 12 CAPITAL TABLE Free Cash Flow $207 12/31/12 12/31/11 Change Capex $133 Cash Taxes $36 Restructuring $15 Loan Debt (secured) $4,090 $4,656 $(566) % Sr. Notes % Sr. Notes (307) BALANCE SHEET 12/31/12 Gross Debt (a) $6,296 Cash $288 Net Debt (a) $6,008 Net Debt Ratio (b) 3.75x 7.75% Sr. Notes 1,084 1, % Sr. Notes Capital lease/misc. debt (111) Total Debt (a) $6,296 $6,475 (179) Less Cash (31) Net Debt $6,008 $6,156 (148) Net Debt Ratio (b) 3.75x 3.98x (0.23) Weighted avg. interest rate (a) 4.86% 5.68% (82) bps (a) (b) Does not include $288 million of mandatory convertible subordinated bonds; weighted avg. interest rate calculated based on am ount outstanding at end of quarter Reflects Net Debt divided by Adjusted EBITDA calculated on last twelve months basis. See Appendix for detail. 12

13 CAPITAL ALLOCATION Focus on shareholder value Priorities for free cash flow Investing in growth organic and acquired Paying down debt Returning capital to shareholders Adopting dividend policy ~2% initial yield Quarterly dividend of $0.16 starting 1Q13 Commitment to annual growth Target capital structure Net debt ratio of x Optimize for future maturities and refinancing needs Debt maturity profile (a) (a) Reflects 12/31/12 debt balances. Figures exclude $288M of mandatory convertible subordinated debt due 2013, capital leases and bank overdrafts 13

14 2013 GUIDANCE FEBRUARY 11, 2013 (amounts in constant currency except earnings per share) Revenue growth 4.0% -5.0% Adjusted EBITDA margin growth 40 to 60 bps Adjusted net income growth 13-17% Reported Adj. net income per share at current rates (as of 2/8/13) $ $2.19 Dividend ~2% yield Deleveraging (a) ~ 0.3x Capital expenditures $350M - $360M Cash taxes $145M - $155M Depreciation and amortization $525M - $535M Cash restructuring $60M - $80M Net book interest (b) $335M - $340M Estimated wtd. avg. diluted shares outstanding for FY 2013 (c) 379M (a) Includes impact of foreign currency (b) Includes interest for mandatory convertible bond until 2/1/13 conversion. Also includes capital leases, amortization of financing fees, and interest rate swaps (c) Includes 10,416,700 shares associated with mandatory convertible bonds that converted to equity on 2/1/13 14

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16 APPENDIX

17 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. Net Debt and Net Debt Leverage Ratio The net debt leverage ratio is defined as net debt 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 not presentations made in accordance with GAAP, and 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. 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, 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. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA 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. We use Adjusted EBITDA to consistently 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 mandatory convertible subordinated bonds due

19 ADJUSTED NET INCOME RECONCILIATION: Q4 ($ in millions except per share amounts) Quarter ended December 31, (Unaudited) Net income $ 39 $ 95 Income from discontinued operations, net of tax -- (2) Interest expense, net Provision for income taxes Depreciation and amortization EBITDA Equity in net income of affiliates (4) (4) Other non-operating expense / (income), net 126 (10) Restructuring charges Stock-based compensation expense 10 9 Other items (a) 7 1 Adjusted EBITDA Interest expense, net (93) (108) Depreciation and amortization (132) (133) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (36) (40) Stock-based compensation expense (10) (9) Interest expense attributable to mandatory convertible bonds 5 6 Adjusted net income $ 234 $ 190 Adjusted net income per share of common stock, diluted (b) $0.62 $0.51 (a), (b) See footnotes on next page 19

20 ADJUSTED NET INCOME RECONCILIATION: Q4 (continued) (a) (b) Other items primarily consist of transaction-related fees. 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 antidilutive in accordance with GAAP. The amount also includes the weighted-average 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 December 31, 2012, basic 362,712,063 Dilutive shares of common stock from stock compensation plans 4,261,882 Shares of common stock convertible associated with the mandatory convertible bonds 10,416,700 Weighted-average shares of common stock outstanding, diluted 377,390,645 20

21 ADJUSTED NET INCOME RECONCILIATION: 2012 ($ in millions except per share amounts) Twelve months ended December 31 (Unaudited) Net income $ 273 $ 86 Income from discontinued operations, net -- (1) Interest expense, net Provision for income taxes Depreciation and amortization EBITDA 1,342 1,107 Equity in net income of affiliates (5) (3) Other non-operating expense, net (a) Restructuring charges Stock-based compensation expense Other items (b) Adjusted EBITDA 1,602 1,546 Interest expense, net (409) (471) Depreciation and amortization (520) (529) Depreciation and amortization of acquisition-related tangible and intangible assets Cash paid for income taxes (124) (132) Stock-based compensation expense (34) (27) Interest expense attributable to mandatory convertible bonds Adjusted net income $ 704 $ 590 Adjusted net income per share of common stock, diluted (c) $1.87 $1.61 (a), (b), (c) See footnotes on next page 21

22 ADJUSTED NET INCOME RECONCILIATION: 2012 (continued) (a) (b) (c) Non-operating expense for twelve months ended December 31 reflects debt extinguishment/pre-payment charges of $231 million in 2011 and $121 million in Other items primarily consist of Sponsor Advisory Fees (including termination payments of $102 million for the full year ended December 31, 2011), and costs related to public offering and other transaction-related fees. 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 weighted-average 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 year ended December 31, 2012, basic 361,787,868 Dilutive shares of common stock from stock compensation plans 4,523,116 Shares of common stock convertible associated with the mandatory convertible bonds 10,416,700 Weighted-average shares of common stock outstanding, diluted 376,727,684 22

23 FOREIGN CURRENCY IMPACT 2012 REVENUE DISTRIBUTION FX IMPACT: REPORTED VS. CONSTANT CURRENCY REVENUE By Currency As Reported Projected Impact (a) 100 FX impact (bps) U.S. $ 52% (50) (10) Euro 12% -100 (130) (250) Other 36% -300 (430) (390) Q12 2Q12 3Q12 4Q12 FY12 1Q13E 2Q13E 3Q13E 4Q13E FY13E (a) Projected impact assumes rates in effect at 2/8/13 remain in effect for the balance of Also based on company estimates for future quarters on distribution of revenue by currency. We report on a constant currency basis to reflect operating performance 23

24 FREE CASH FLOW RECONCILIATION ($ in millions) QUARTER ENDED DECEMBER 31 TWELVE MONTHS ENDED DECEMBER Net cash provided by operating activities $340 $302 $784 $641 Capital expenditures (133) (154) (358) (367) Free Cash Flow $207 $148 $426 $274 Sponsor termination fees Normalized Free Cash Flow $207 $148 $426 $376 24

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