QuintilesIMS. Q Earnings Call. February 14, Copyright 2016 QuintilesIMS. All rights reserved.

Similar documents
Q Earnings Call

Q Earnings Call

Q Earnings Call

Q Earnings Call. May 3, 2016

IQVIA Reports Third-Quarter 2018 Results and Updates Full-Year 2018 Guidance

IQVIA Reports Second-Quarter 2018 Results and Raises Full-Year 2018 Revenue and Profit Guidance

IQVIA Reports First-Quarter 2018 Results and Raises Full-Year 2018 Revenue Guidance

IQVIA Reports Fourth-Quarter and Full-Year 2017 Results, Issues First-Quarter and Full-Year 2018 Guidance

Fourth Quarter 2015 Earnings Call February 11, 2016

IMS Health Reports Second-Quarter 2014 Results. DANBURY, CT, July 24, 2014 IMS Health Holdings, Inc. ( IMS Health ) (NYSE:IMS), a

Syneos Health. Q4 and Full Year 2017 Financial Results. February 28, 2018

Mylan: Q EARNINGS August 8, Q Earnings All Results are Unaudited

2016 Second Quarter Financial Results

2018 First Quarter Financial Results

Q Financial Results. February 26, 2018

2016 Third Quarter Financial Results

Mylan Q EARNINGS November 5, Q Earnings All Results are Unaudited

2016 Fourth Quarter Financial Results

Q4 FY2018 FINANCIAL HIGHLIGHTS & SUPPLEMENTAL METRICS. March 26, 2018

Syneos Health. Q Financial Results. August 2, 2018

Zebra Technologies Second-Quarter 2018 Results. August 7, 2018

Second Quarter 2018 Earnings Conference Call August 9, Copyright 2018 CPI Card Group

2018 Second Quarter Financial Results

INC Research Q4 & Full Year 2016 Financial Results. February 28, 2017

Copyright 2018 CPI Card Group. Fourth Quarter & FY 2017 Earnings Conference Call March 12, 2018

Safe Harbor Statement

EMC CORPORATION Consolidated Income Statements (in millions, except per share amounts) (unaudited)

3Q 2018 Highlights and Operating Results. Products. Technology. Services. Delivered Globally.

Zebra Technologies Third-Quarter 2018 Results. November 6, 2018

Aramark Fourth Quarter & Full Year 2018 Results November 13, 2018

ACI WORLDWIDE QUARTERLY AND FULL-YEAR EARNINGS PRESENTATION

First Quarter 2018 Financial Review and Analysis (preliminary, unaudited)

The NASDAQ OMX Group. Q309 Earnings Presentation. November 5, 2009

Key Performance Indicators & Non-GAAP Measures

4Q15 EARNINGS PRESENTATION. January 28, 2016

Q1 FY2019 FINANCIAL HIGHLIGHTS & SUPPLEMENTAL METRICS. June 21, 2018

Albemarle Corporation Second Quarter 2017 Earnings Appendix & Non-GAAP Reconciliations Conference Call/Webcast Tuesday, August 8 th, :00am ET

Electronic Arts Inc. Q2 FY 2018 Results. October 31, 2017

August 8, Conduent Q Earnings Results

Bruker Corporation (NASDAQ: BRKR)

Q3 FY16 FINANCIAL RESULTS CONFERENCE CALL May 10, 2016 at 5:00 pm ET

Veritiv Corporation Fourth Quarter and Fiscal Year 2017 Financial Results March 1, 2018

EFI Q Earnings Call. July 20, 2015

CSG SYSTEMS INTERNATIONAL, INC. DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES

Veritiv Corporation Third Quarter 2017 Financial Results November 7, 2017

Q2 Fiscal 2016 Earnings Presentation August 2, endurance.com /

Strategy and Perspectives on Debt

Q EARNINGS CALL

Supplementary Materials. For use in conjunction with the November 2, 2016 Earnings Call

Electronic Arts Inc. Q4 FY 2017 Results. May 9, 2017

3 rd Quarter Fiscal 2019

Fourth Quarter and Full Year 2018 Financial Review and Analysis

Q2 FY2019 FINANCIAL HIGHLIGHTS & SUPPLEMENTAL METRICS. September 19, 2018

Veritiv Corporation Second Quarter 2016 Financial Results August 9, 2016

Q EARNINGS CALL FEBRUARY 20, 2018

NEW REVENUE ACCOUNTING STANDARD (ASC 606) February 7, 2018

Veritiv Corporation First Quarter 2018 Financial Results May 8, 2018

FINANCIAL REVIEW. R. Steve Kinsey. Chief Financial Officer and Chief Administrative Officer

Walgreens Boots Alliance Fiscal year end 2015 and 4Q earnings conference call. 28 October 2015

2Q15 Earnings August 2015

Safe Harbor and Non-GAAP Measures

March 31, 2009 Quarterly Results. May 6, 2009

2015 Fourth Quarter Financial Results

Bottomline Technologies Reconciliation to Non GAAP Measures Three Months Ended June 30, 2013

Fourth Quarter & Year-End 2018 Earnings Conference Call February 27, 2019

rd Quarter Results

Q Earnings All Results are Unaudited

Key Performance Indicators & Non-GAAP Measures

4Q 2018 Highlights and Operating Results. Products. Technology. Services. Delivered Globally.

William Blair 35 th Annual Growth Stock Conference. June 9, 2015 NYSE: Q. Copyright 2014 Quintiles

First Quarter Fiscal 2016 Earnings Conference Call

Contact: Ken Bond Deborah Hellinger Oracle Investor Relations Oracle Corporate Communications

XYLEM INC. Q EARNINGS RELEASE FEBRUARY 1, 2018

Electronic Arts Inc. Q3 FY 2017 Results. January 31, 2017

Second Quarter 2018 Financial Review and Analysis (preliminary, unaudited)

Disclaimers. Cautionary Note Regarding Forward-Looking Statements. Non-GAAP Information. Website Disclosure

During the year, the Company achieved a number of milestones in executing its growth strategy:

Albemarle Corporation Second Quarter 2018 Earnings and Non-GAAP Reconciliations Conference Call/Webcast Wednesday, August 8 th, :00am ET

EMC CORPORATION Consolidated Income Statements (in millions, except per share amounts) (unaudited)

FIRST QUARTER FISCAL YEAR 2019 Earnings Conference Call & Presentation. February 7, 2019 at 9:00 a.m. CT (10:00 a.m. ET)

February 21, Conduent Q4 & FY 2017 Earnings Results

Third Quarter 2018 Earnings Call

Walgreens Boots Alliance 3Q16 Consolidated Financial Results Earnings conference call. 6 July 2016

4Q18 EARNINGS. February NASDAQ: GRPN /

FINANCIAL RESULTS AND COMPANY OVERVIEW Second-Quarter Performance

Q EARNINGS PRESENTATION NOVEMBER 1, 2018

3Q18 Earnings Presentation. October 24, 2018

Fourth Quarter and Fiscal 2016 Results. 20 October 2016

Fiscal 2019 First Quarter Results. December 20, 2018

FOURTH QUARTER 2017 EARNINGS PRESENTATION FEBRUARY 8, 2018

2017 First Quarter May 3, 2017

Viasat, Inc. FY18 Q4 results. May 24, 2018

2018 Outlook. Webcast Presentation December 13, 2017

Quarterly Update FY16 Fourth Quarter. November 8, 2016

ZEBRA TECHNOLOGIES SECOND-QUARTER 2016 RESULTS. August 9, 2016

Q1 FY17 FINANCIAL RESULTS CONFERENCE CALL November 7, 2016 at 5:00 pm ET

ACI Worldwide (ACIW) Investor Conferences

Earnings Call Presentation

The NASDAQ OMX Group. Q110 Earnings Presentation. April 30, 2010

Q EARNINGS CALL May 1, :00 am ET

Transcription:

QuintilesIMS Q4 2016 Earnings Call February 14, 2017 Copyright 2016 QuintilesIMS. All rights reserved.

Legal This presentation should be viewed in conjunction with QuintilesIMS s Q4 2016 earnings call Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as expect, anticipate, intend, plan, believe, seek, see, will, would, target, similar expressions, and variations or negatives of these words. Actual results may differ materially from our expectations due to a number of factors, including, but not limited to, that our ability to integrate the legacy IMS Health and Quintiles businesses successfully and to achieve anticipated cost savings and other synergies; the possibility that other anticipated benefits of the proposed transaction will not be realized, including without limitation, anticipated revenues, expenses, earnings and other financial results, and growth and expansion of the combined company s operations, and the anticipated tax treatment; possible disruptions from the combination of IMS Health and Quintiles through a merger of equals business combination that could harm our businesses, including current plans and operations; our ability to retain, attract and hire key personnel; potential adverse reactions or changes to relationships with clients, employees, suppliers or other parties resulting from the merger; that most of our contracts may be terminated on short notice, and we may be unable to maintain large client contracts or to enter into new contracts; our financial results may be adversely affected if we underprice our contracts, overrun our cost estimates or fail to receive approval for or experience delays in documenting change orders; imposition of restrictions on our use of data by data suppliers or their refusal to license data to us; failure to meet our productivity objectives; failure to successfully invest in growth opportunities; imposition of restrictions on our current and future activities under data protection and privacy laws; breaches or misuse of our or our outsourcing partners security or communication systems; hardware and software failures, delays in the operation of our computer and communications systems or the failure to implement system enhancements; consolidation in the industries in which our clients operate; our ability to protect our intellectual property rights and our susceptibility to claims by others that we are infringing on their intellectual property rights; the risks associated with operating on a global basis, including fluctuations in the value of foreign currencies relative to the U.S. dollar, and the ability to successfully hedge such risks; general economic conditions in the markets in which we operate, including financial market conditions; and our ability to successfully integrate, and achieve expected benefits from, our acquired businesses. For a further discussion of the risks relating to the combined company s business, see the Risk Factors in our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2016, filed with the SEC, as such factors may be amended or updated from time to time in our subsequent periodic and other filings with the SEC, which are accessible on the SEC s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We assume no obligation to update any such forward-looking statement after the date of this release, whether as a result of new information, future developments or otherwise. Non-GAAP Information This presentation includes information based on financial measures that are not recognized under generally accepted accounting principles in the United States ( GAAP ), such as Adjusted EBITDA, Adjusted Net Income, and Adjusted Basic and Diluted Earnings per Share. In addition, management believes that these measures are useful to assess the company s operating performance trends on a more consistent basis from period to period because they exclude certain non-cash items, certain variable costs and certain other adjustments. The non-gaap measures are not presented in accordance with GAAP. Note that historic Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS are presented using the same legacy calculation each company previously used to calculate such financial metrics. Please refer to the appendix of this presentation for reconciliations of non-gaap financial measures contained herein to the most comparable GAAP measures. Past Performance In all cases where historical results are presented or past performance is described, we note that past performance is not a reliable indicator of future results and performance. Trademarks All trademarks or service marks are the property of QuintilesIMS or their respective owners. Solely for convenience, the trademarks, service marks and trade names are referenced without the, (sm) and (TM) symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these marks. 1

Update Delivered on Financial Commitments Operational Discipline Integration Execution Reorganization CRO Commercial Strategy Refinement Data Enabled Site ID Optimization Increased Share Repurchase Authorization to $2.5B 2

4th Quarter Results: Assumes Merger Closed 1/1/2015 $M, except per share data Revenue Adjusted EBITDA (2,3) +4.2% (1) @ CFx +3.5% (1) @ AFx +14.5% @ CFx +16.7% @ AFx $2,008 $55 (1) $1,953 $1,939 $541 $463 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Deferred Revenue Add-back Dollars are at actual foreign exchange rates. AFx is actual currency, CFx is constant currency; revenue does not include reimbursed expense revenue (1) GAAP Revenue reduced by $55 million due to deferred revenue adjustment from merger (2) Prior-year Adjusted EBITDA recast to conform with current methodology (3) See reconciliations of non-gaap items in appendix 3

4th Quarter Revenue $M Segment Assumes Merger Closed 1/1/2015 2016 2015 (2) VPY% AFx VPY% CFx Quintiles Standalone 2015 (3) VPY% AFx Legacy IMS Comm. $860 $811 6.1% 6.9% - - - VPY% CFx Legacy Q Comm. $74 $86 (14.2)% (14.0)% $86 (14.2)% (14.0)% Commercial Solutions $934 $897 4.2% 4.9% $86 984.6% 992.2% R&D Solutions $882 $837 5.4% 6.6% $837 5.4% 6.6% Integrated Engagement Services $192 $205 (6.7)% (8.4)% $205 (6.7)% (8.4)% Revenue $2,008 $1,939 3.5% 4.2% $1,129 77.9% 79.0% Deferred Revenue Adjustment (DRA) (1) $(55) - - - - - - Revenue with DRA $1,953 $1,939 0.7% 1.4% $1,129 73.1% 74.2% Dollars are at actual foreign exchange rates. AFx is actual currency, CFx is constant currency; revenue does not include reimbursed expense revenue Numbers may not add up to total due to rounding (1) Deferred revenue adjustment only impacts the Commercial Solutions segment (2) Legacy IMS commercial revenue excludes $1 million of intercompany revenue (3) Reflects the recasting of legacy Quintiles segments 4

4th Quarter Adjusted EBITDA $M Assumes Merger Closed 1/1/2015 Quintiles Standalone 2016 2015 (2) VPY% AFx VPY% CFx 2015 (2) VPY% AFx VPY% CFx Adj. EBITDA (1) $541 $463 16.7% 14.5% $231 133.7% 129.2% Adj. EBITDA Margin Adj. EBITDA Margin without DRA 27.7% 23.9% 380 bps 310 bps 20.5% 720 bps 650 bps 26.9% 23.9% 300 bps 230 bps 20.5% 640 bps 570 bps Dollars are at actual foreign exchange rates. AFx is actual currency, CFx is constant currency, DRA is deferred revenue adjustment (1) See reconciliations of non-gaap items in appendix (2) Prior-year Adjusted EBITDA recast to conform with current methodology 5

4th Quarter 2016 P&L $M, except per share data, at reported FX rates Net Loss / Income $(178) Diluted Loss / Earnings per Share $(0.74) Adjusted Net Income (1) $266 Adjusted Diluted Earnings per Share (1) $1.09 (1) See reconciliations of non-gaap items in appendix 6

Full-Year Revenue $M Segment Assumes Merger Closed 1/1/2015 2016 2015 (2) VPY% AFx VPY% CFx Quintiles Standalone 2016 2015 (3) VPY% AFx VPY% CFx Legacy IMS Comm. $3,224 $2,917 10.5% 11.3% $860 - - - Legacy Q Comm. $291 $323 (9.8)% (9.6)% $291 $323 (9.8)% (9.6)% Commercial $3,515 $3,241 8.5% 9.1% $1,152 $323 256.8% 258.9% R&D Solutions $3,472 $3,159 9.9% 10.6% $3,472 $3,159 9.9% 10.6% Integrated Engagement Services $796 $844 (5.8)% (7.9%) $796 $844 (5.8)% (7.9)% Revenue $7,783 $7,244 7.4% 7.8% $5,419 $4,326 25.3% 25.5% Deferred Revenue Adjustment (DRA) (1) $(55) - - - $(55) - - - Revenue with DRA $7,728 $7,244 6.7% 7.0% $5,364 $4,326 24.0% 24.2% Dollars are at actual foreign exchange rates. AFx is actual currency, CFx is constant currency; revenue does not include reimbursed expense revenue Numbers may not add up to total due to rounding (1) The deferred revenue adjustment only impacts the Commercial Solutions segment (2) Legacy IMS commercial revenue excludes $4 million of intercompany revenue (3) Reflects the recasting of legacy Quintiles segments 7

Net New Business and Backlog on a Contracted Basis $B, except BTB & Backlog Coverage Last Twelve Months As of 12/31/16 Next Twelve Months Net New Business Book-to-Bill Backlog Coverage (1) Backlog Backlog Estimated to Convert to Revenue ~$4.3 1.25x 2.73x ~$9.5 ~$2.9 Dollars are at actual foreign exchange rates (1) Backlog converge is defined as R&D Solutions backlog at the end of the current quarter divided by R&D Solutions trailing twelve months revenue 8

Full-Year Adjusted EBITDA $M Assumes Merger Closed 1/1/2015 Quintiles Standalone 2016 2015 (2) VPY% AFx VPY% CFx 2016 2015 (2) VPY% AFx VPY% CFx Adj. EBITDA (1) $1,956 $1,736 12.6% 9.1% $1,244 $850 46.3% 40.5% Adj. EBITDA Margin 25.3% 24.0% 130 bps 50 bps 23.2% 19.7% 350 bps 260 bps Adj. EBITDA Margin without DRA 25.1% 24.0% 110 bps 30 bps 23.0% 19.7% 330 bps 240 bps Dollars are at actual foreign exchange rates. AFx is actual currency, CFx is constant currency, DRA is deferred revenue adjustment (1) See reconciliations of non-gaap items in appendix (2) Prior-year Adjusted EBITDA recast to conform with current methodology 9

4th Quarter 2016 Balance Sheet Items & Metrics $M, at reported FX rates Cash & Cash Equivalents $1,198 Principal Balance of Debt (1) $7,219 Gross Leverage Ratio (2) 3.7x Net Leverage Ratio (2) 3.1x Net Cash Provided by Operating Activities $447 Capital Expenditures $86 Free Cash Flow $361 (1) Excludes $19 million of unamortized OID and debt issuance costs as of December 31, 2016 (2) Calculated using last twelve months EBITDA for the combined company conformed to current methodology 10

Foreign Currency Movement Since Sept 2016 EUR, JPY and GBP vs. USD 0% ~5.5% Decline (10%) ~6.5% Decline ~13.5% Decline (20%) Sept 16 Dec 16 Euro Yen Pound Foreign Currency movements are measured against the U.S. Dollar Exchange rates are as of month-end Source: Central Bank of Italy 11

Full-Year 2017 $M, except per share data Revenue at Constant Currency 8,125 8,225 FX Impact (125) Revenue at Actual Currency 8,000 8,100 Commercial Solutions 3,600 3,650 Research & Development Solutions 3,655 3,690 Integrated Engagement Services 745 760 Adjusted EBITDA 2,000 2,100 Adjusted Diluted EPS 4.40 4.55 Adjusted Book Tax Rate (1) ~30% Adjusted Cash Tax Rate (1) ~16% GAAP Book Tax Rate ~25% Dollars are at actual foreign exchange rates unless otherwise noted, revenue does not include reimbursed expense revenue Guidance assumes current exchange rates remain unchanged to the end of the year (1) Adjusted Book Tax Rate is defined as adjusted book tax divided by adjusted pre-tax income; Adjusted Cash Tax Rate is defined as cash taxes divided by adjusted pre-tax income 12

Q1 2017 Guidance $M, except per share data Revenue 1,890 1,925 Commercial Solutions 850 865 Research & Development Solutions 855 870 Integrated Engagement Services 185 190 Adjusted EBITDA 450 465 Adjusted Diluted EPS 0.93 0.97 Dollars are at actual foreign exchange rates, revenue does not include reimbursed expense revenue Guidance assumes current exchange rates remain unchanged to the end of the year 13

Q&A 14

Appendix: Historical Segment Revenue & Non- GAAP Financial Measures 15

Segment Revenue and Adjusted EBITDA $M, Combined Company as if Merger Closed 1/1/2015 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 Commercial Solutions (1) $897 $849 $872 $861 $934 R&D Solutions $837 $835 $887 $869 $882 Integrated Engagement Services $205 $198 $210 $196 $192 Revenue $1,939 $1,881 $1,969 $1,926 $2,008 Adjusted EBITDA (2) $463 $460 $466 $489 $541 Dollars are at actual foreign exchange rates, revenue does not include reimbursed expense revenue Numbers may not add up to total due to rounding (1) Excludes intercompany revenues within the Commercial Solutions segment of: Q4 2015 - $1 M, Q1 2016 - $ 1M, Q2 2016 - $1 M, Q3 2016 - $1 M (2) Prior-year Adjusted EBITDA recast to conform with current methodology 16

Net Income to Adjusted EBITDA $M, Combined Company as if Merger Closed 1/1/2015 2015 Q4 2016 Q1 2016 Q2 2016 Q3 Net Income (1) $ 134 $ 150 $ 111 $ 153 Provision for (benefit from) income taxes 70 63 44 52 Depreciation and amortization 113 119 120 124 Interest expense, net 69 71 68 72 (Income) loss in unconsolidated affiliates - (2) 4 - (Income) loss in non-controlling interests 3 2 4 5 Deferred revenue purchasing accounting adjustments 4 1 2 2 Stock-based compensation 16 16 18 24 Other income (expense), net (11) 8 (1) 3 Impairment charges 3 - - 28 Restructuring and related charges 45 19 76 10 Acquisition related charges 17 13 10 5 Merger related charges - - 10 11 Adjusted EBITDA $ 463 $ 460 $ 466 $ 489 Numbers may not add up to total due to rounding (1) See QuintilesIMS Q3 Earnings Release Presentation for reconciliation of individual company Net Income to combine Adjusted EBITDA 17

Net Income to Adjusted EBITDA $M, Historical Data for Quintiles Standalone Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 Net Income $ (178) $ 105 $ 115 $ 387 Provision for (benefit from) income taxes 227 51 345 159 Depreciation and Amortization 190 35 288 127 Interest Expense, net 70 25 141 97 (Income) loss in unconsolidated affiliates 3 3 4 (8) (Income) loss in non-controlling interests 3-15 1 Deferred revenue purch. acctg. Adjustment 55-55 - Stock-based compensation 24 9 59 38 Other income (expense), net 20 (4) 26 10 Impairment charges - - 28 3 Restructuring and Related Charges 43 7 70 31 Acquisition Related Charges 9-11 5 Merger Related Charges 75-87 - Adjusted EBITDA $ 541 $ 231 $ 1,244 $ 850 Numbers may not add up to total due to rounding 18

Net Income to Adjusted EBITDA $M, Combined Company as if Merger Closed 1/1/2015 Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 Net Income $ (178) $ 134 $ 236 $ 804 Provision for (benefit from) income taxes 227 70 385 (41) Depreciation and Amortization 190 113 551 469 Interest Expense, net 70 69 281 263 (Income) loss in unconsolidated affiliates 3-4 (8) (Income) loss in non-controlling interests 3 3 15 1 Deferred revenue purch. acctg. Adjustment 55 4 60 10 Stock-based compensation 24 16 82 67 Other income (expense), net 20 (11) 33 (10) One time IPO expense - - - 2 Impairment charges - 3 28 2 Restructuring and Related Charges 43 45 147 121 Acquisition Related Charges 9 17 38 56 Merger Related Charges 75-96 - Adjusted EBITDA $ 541 $ 463 $ 1,956 $ 1,736 Numbers may not add up to total due to rounding 19

Net Income to Adjusted Net Income & Per Share Data $M, except per share data Three Months Ended December 31, 2016 Net Income $ (178) Provision for income taxes 227 Purchase Accounting Amortization 131 (Income) Loss from Unconsolidated Affiliates 3 (Income) Loss from Minority Interest 3 Deferred revenue purch. acctg. Adjustment 55 Stock-based compensation 24 Other Income (Loss), net 20 Royalty Hedge Gain/(Loss) (3) Restructuring and Related Charges 43 Acquisition Related Charges 9 Merger Related Charges 75 Adjusted Pre Tax Income $ 409 Provision for income taxes (227) (Income) Loss from Minority Interest (3) Other Income Tax Adjustments 209 Minority Interest effect in Non GAAP adjustments (1) Tax effect of Non GAAP adjustments (121) Adjusted Net Income $ 266 Adjusted Earnings per Share Attributable to Common Shareholders: Basic $ 1.11 Diluted $ 1.09 Weighted-Average Common Shares Outstanding: Basic 238.8 Diluted 243.9 Numbers may not add up to total due to rounding 20

Leverage Ratios $M Gross Debt as of December 31, 2016 $ 7,219 Net Debt as of December 31, 2016 $ 6,021 Adjusted EBITDA (1) for the twelve months ended December 31, 2016 $ 1,956 Gross Leverage Ratio (Gross Debt/LTM Adjusted EBITDA) 3.7x Net Leverage Ratio (Net Debt/LTM Adjusted EBITDA) 3.1x (1) LTM Adjusted EBITDA is for the combined company (assumes merger closed 1/1/2015) and recast to conform with current methodology 21