Nielsen Grows Revenue In 2019

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Today, Nielsen Holdings plc announced its fourth quarter and full-year 2019 results. For the full year, revenues decreased 0.3% on a reported basis and increased 1.7% on a constant currency basis, which was above guidance, with Adjusted EBITDA, Adjusted EPS and Free Cash Flow all in line with guidance. Nielsen also issued 2020 guidance, which is consistent with the medium-term growth framework communicated in November 2019.

David Kenny, Chief Executive Officer, commented, “2019 was a year of tremendous change and progress at Nielsen and I’m extremely proud of the way our teams executed. We delivered solid results and achieved or beat the goals we set out for 2019. Our results reflect increased financial discipline and operational progress as we focused on building a strong foundation for the future.”

“In 2020, our top priority is to execute on our strategic growth plans for Nielsen Global Media and Nielsen Global Connect. In Media, we are investing in our digital transformation and global adoption of One Media Truth, which we expect will result in faster growth over time. In Connect, the investments we’ve made in the Nielsen Connect platform and in automating operations have led to improved performance, and we continue to drive this turnaround. At the same time, we are making good progress on the planned separation of Global Media and Global Connect, which is targeted for completion within 12 months from the initial announcement in November 2019. We believe that each business is well-positioned for success as a standalone company and remain confident that this separation is the best path forward to enhance strategic focus, growth and long-term shareholder value.”

Fourth Quarter 2019 Results

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 Fourth-quarter revenues were $1,691 million, up 2.0% on a reported basis, or 2.7% on a constant currency basis, compared to the prior
year.

 Nielsen Global Media revenues increased 2.3% to $889 million on a reported basis, or 2.4% on a constant currency basis, compared to the prior year.

 Audience Measurement revenues increased 0.8% on a reported basis, or 1.0% on a constant currency basis, primarily due to continued client adoption of our Total Audience Measurement system, partly offset by pressure in local television measurement.

 Plan/Optimize revenues increased 6.0% on a reported and constant currency basis, driven in part by growth at Gracenote and outcome-based solutions and less pressure in Telecom than in prior quarters in 2019.

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 Nielsen Global Connect revenues increased 1.6% to $802 million on a reported basis, or 3.1% on a constant currency basis, compared to the prior year.

 Measure revenues increased 0.6% on a reported basis, or 2.6% on a constant currency basis, reflecting stronger performance in retail measurement services and improved trends in Developed Markets.

 Predict/Activate revenues increased 4.1% on a reported and constant currency basis, reflecting strength in analytics and innovation, partly offset by pressure in custom insights.

 Net loss for the fourth quarter was $109 million, compared to a net loss of $952 million in the fourth quarter of 2018. Net loss per share on a diluted basis for the fourth quarter was $0.31, compared to a net loss per share on a diluted basis of $2.68 for the fourth quarter of 2018.

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During the fourth quarter of 2019, Nielsen settled certain pension plans obligations and recorded a non-cash charge of $170 million, or $0.48 per share. Net loss was also impacted by higher depreciation and amortization expense, partially offset by lower restructuring charges. Net loss and net loss per share on a diluted basis for the fourth quarter of 2018 were each impacted by a charge relating to impairment of goodwill and other long-lived assets of $1,413 million and $3.98, respectively.

Adjusted earnings per share were $0.41 for the fourth quarter, compared to adjusted earnings per share of $0.51 in the prior-year period, with higher depreciation and amortization and taxes year over year, partially offset by higher adjusted EBITDA.

 Adjusted EBITDA for the fourth quarter was $492 million or up 0.8% compared to the prior year or up 1.4% on a constant currency
basis.

 The adjusted EBITDA margin decreased 33 basis points to 29.1% on a reported basis, or a decrease of 37 basis points on a constant currency
basis, compared to the prior year, as productivity initiatives were more than offset by investments in growth initiatives.

The full Year 2019 Results

 2019 revenues were $6,498 million, down 0.3% on a reported basis, or up 1.7% on a constant currency basis, compared to the prior year.

 Nielsen Global Media revenues increased 1.9% to $3,441 million on a reported basis, or 2.6% on a constant currency basis, compared to the prior year.

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 Audience Measurement revenues increased 2.5% on a reported basis, or 3.0% on a constant currency basis, primarily due to continued client adoption of our Total Audience Measurement system, partly offset by pressure in local television measurement.

 Plan/Optimize revenues increased 0.4% on a reported basis, or 1.6% on a constant currency basis, driven in part by growth at Gracenote and outcome-based solutions, partly offset by pressure in Telecom.

 Nielsen Global Connect revenues decreased 2.6% to $3,057 million on a reported basis, or an increase of 0.7% on a constant currency basis, compared to the prior year.

 Measure revenues decreased 2.3% on a reported basis, or an increase of 1.4% on a constant currency basis, reflecting stronger performance in retail measurement services.

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 Predict/Activate revenues decreased 3.3% on a reported basis, or 0.9% on a constant currency basis, reflecting pressure in innovation and custom insights, partially offset by strength in analytics.

 Net loss for the year was $415 million, compared to net loss of $712 million in 2018. Net loss per share on a diluted basis was $1.17, compared to net loss per share on a diluted basis of $2.00 in 2018. During 2019, Nielsen recorded an impairment charge of $1,004 million, or $2.82 per share, related to the writedown of goodwill in the Connect segment as a result of the interim impairment assessment.

Net loss was also impacted by the settlement of certain pension plans obligations and Nielsen recorded a non-cash charge of $170 million, or $0.48 per share. Net loss was impacted by higher depreciation and amortization expense and lower restructuring charges. Net loss and net loss per share on a diluted basis for 2018 were each impacted by a charge relating to impairment of goodwill and other long-lived assets of $1,413 million and $3.98, respectively.

 Adjusted net earnings per share were $1.80, compared to $1.83 in the prior year and were in-line with our guidance of $1.77-$1.83 per share for the year. This reflected higher depreciation and amortization versus 2018, partially offset by higher adjusted EBITDA and tax favorability.

 Adjusted EBITDA for the full year was $1,853 million or up 0.2% compared to the prior year or up 1.4% on a constant currency basis.

 The adjusted EBITDA margin increased 12 basis points to 28.5% on a reported basis, or a decrease of 8 basis points on a constant currency basis, compared to the prior year, as productivity initiatives were more than offset by investments in growth initiatives.

Financial Position

 As of December 31, 2019, Nielsen’s cash and cash equivalents were $454 million and gross debt was $8,309 million.

 Net debt (gross debt less cash and cash equivalents) was $7,855 million and Nielsen’s net debt leverage ratio was 4.24x at the end of the year.

 Cash flow from operations increased to $1,066 million for the full year of 2019, from $1,058 million in the prior year. Cash flow performance was primarily driven by lower employee annual incentive payments, lower retailer investments and lower restructuring
payments, partially offset by working capital timing and higher interest and tax payments during the year ended December 31, 2019.

 Cash taxes were $224 million for the full year of 2019, compared to $206 million in the prior year.

 Net capital expenditures were $519 million for the full year of 2019, compared to $516 million in the prior year.

 Free cash flow for the full year of 2019 increased to $547 million, compared to $542 million in the prior year.

Dividend

On February 20, 2020, our Board of Directors declared a quarterly dividend of $0.06 per share of Nielsen’s common stock. The dividend is
payable on March 19, 2020 to shareholders of record at the close of business on March 5, 2020.

2020 Full Year Guidance

The Company is providing full year 2020 guidance, as highlighted below:

 Total revenue growth on a constant currency basis: +1.5% to 3.0%
 Adjusted EBITDA margin: 27.7% – 28.5%
 Adjusted EBITDA: $1,830 – $1,910 million
 Adjusted earnings per share: $1.67 – $1.80

Free cash flow: $530 – $580 million

These estimates exclude $350 – $400million of separation-related costs.

2020 Guidance Non-GAAP Reconciliations

These reconciliations include preliminary forecasts based on current expectations and include certain assumptions on the classification and timing of certain separation-related costs and the tax-deductibility of such costs.

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