Clarivate Reports Second Quarter 2020 Results
-- Reaffirms outlook for 2020 --
LONDON, July 30, 2020 /PRNewswire/ -- Clarivate Plc (NYSE: CCC) (the "Company" or "Clarivate"), a global leader in providing trusted information and insights to accelerate the pace of innovation, today reported results for the second quarter ended June 30, 2020.
Second Quarter 2020 Financial Highlights
- Revenues of $273.5 million increased 12.9% on a reported basis and up 14.2% at constant currency(1)
- Adjusted revenues(1) of $276.9 million increased 14.2% on a reported basis and excluding divested businesses increased 21.4% at constant currency(1)
- Net loss of $1.5 million or $0.00 per diluted share and adjusted net income(1) of $69.5 million or $0.18 per diluted share
- Adjusted EBITDA(1) of $100.1 million increased 36.7%
- Total cash and cash equivalents of $608.5 million increased $532.4 million
Selected Financial Information
The results for the three and six months ended June 30, 2020 includes contribution from the acquisition of Decision Resources Group ("DRG"), which was completed at the end of February 2020, and Darts-ip, which was completed in November 2019, for which there were no comparable amounts in the prior year period. The current year periods exclude the results of the MarkMonitor Brand Protection, Antipiracy, and Antifraud products, which were divested on January 1, 2020.
Three Months Ended |
Change |
Six Months Ended |
Change |
||||||||||||||||||||
(in millions, except percentages and per share data) |
2020 |
2019 |
$ |
% |
2020 |
2019 |
$ |
% |
|||||||||||||||
Revenues, net |
273.5 |
242.3 |
31.2 |
12.9 |
% |
514.1 |
476.3 |
37.8 |
7.9 |
% |
|||||||||||||
Adjusted revenues, net(1) |
276.9 |
242.4 |
34.5 |
14.2 |
% |
519.4 |
476.6 |
42.8 |
9.0 |
% |
|||||||||||||
Annual Contract Value (ACV) |
852.8 |
782.6 |
70.2 |
9.0 |
% |
852.8 |
782.6 |
70.2 |
9.0 |
% |
|||||||||||||
Net loss |
(1.5) |
(77.8) |
76.3 |
98.1 |
% |
(75.5) |
(137.0) |
61.5 |
44.9 |
% |
|||||||||||||
Net loss per share |
0.00 |
(0.29) |
0.29 |
100.0 |
% |
(0.21) |
(0.57) |
0.36 |
63.2 |
% |
|||||||||||||
Adjusted EBITDA(1) |
100.1 |
73.2 |
26.9 |
36.7 |
% |
178.3 |
132.4 |
45.9 |
34.7 |
% |
|||||||||||||
Adjusted net income(1) (2) |
69.5 |
N/A |
— |
— |
% |
94.9 |
N/A |
— |
— |
% |
|||||||||||||
Adjusted diluted EPS(1) (2) |
0.18 |
N/A |
— |
— |
% |
0.25 |
N/A |
— |
— |
% |
|||||||||||||
Net cash provided by operating activities |
N/A |
N/A |
— |
— |
% |
107.6 |
42.9 |
64.7 |
150.8 |
% |
|||||||||||||
Free cash flow(1) |
N/A |
N/A |
— |
— |
% |
54.9 |
18.0 |
36.9 |
(205.0) |
% |
|||||||||||||
Adjusted free cash flow(1) |
N/A |
N/A |
— |
— |
% |
119.6 |
72.6 |
47.0 |
(64.7) |
% |
|||||||||||||
(Amounts in tables may not sum due to rounding) |
|
(1) |
Non-GAAP measure. Please see "Reconciliation to Certain Non-GAAP measures" in this earnings release for important disclosures and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings release. |
(2) |
Amounts are not comparable as the company was privately held until May 14, 2019. |
"We continue to execute really well against our strategic initiatives, which drove revenue, profit and margin growth this quarter," said Jerre Stead, Executive Chairman and CEO of Clarivate. "Against the backdrop of the global pandemic, we have made significant progress on integrating the recent acquisition of DRG, building our Global Business Centers, and driving improvement in colleague engagement and delighting our customers through outstanding service."
Second Quarter 2020 Operating Results
Revenues, net, for the second quarter of 2020 increased $31.2 million, or 12.9%, to $273.5 million, compared to the prior-year period. Adjusted revenues, net, which excludes the impact of deferred revenues resulting from purchase accounting adjustments primarily related to recent acquisitions, increased $34.5 million or 14.2%, to $276.9 million, compared to the second quarter of 2019.
Subscription revenues for the second quarter of 2020 increased $13.8 million, or 6.8%, to $216.5 million, compared to the prior-year period, primarily driven by recent acquisitions, new business, including several large contract renewals entered into during June 2020, and price increases within both the Science Product Group and IP Product Group, partially offset by the MarkMonitor divested products. Excluding the impact of acquisitions and divestitures, organic subscription revenues increased 3.6% on a constant currency basis, compared to the second quarter of 2019.
Transactional revenues for the second quarter of 2020 increased $20.7 million, or 52.1%, to $60.4 million, compared to the prior-year period, due primarily to recent acquisitions, partially offset by divested businesses, a decrease in backfile sales and lower CompuMarkTM search volumes. Excluding the impact of acquisitions and divestitures, organic transactional revenues decreased (12.6)% on a constant currency basis, compared to the second quarter of 2019 primarily due to an overall decrease in demand primarily driven by economic conditions resulting from the COVID-19 pandemic.
Net loss for the second quarter of 2020 was $1.5 million, or ($0.00) per share, compared to a net loss of $77.8 million, or ($0.29) per share, in the prior-year period. The year-over-year improvement is due primarily to an increase in revenues, and lower share-based compensation, transaction and interest expenses in this year's second quarter.
Adjusted EBITDA for the second quarter of 2020 increased by 36.7% to $100.1 million, compared to the prior-year period, driven by higher revenues, as noted above, and ongoing cost savings initiatives.
Adjusted net income for the second quarter of 2020 was $69.5 million and adjusted diluted earnings per share was $0.18. The results for the second quarter of 2019 are not comparable as the company was privately held until May 14, 2019.
Balance Sheet and Cash Flow
At June 30, 2020 cash and cash equivalents of $608.5 million increased $532.4 million, compared to December 31, 2019. The increase was due primarily to proceeds of $304.0 million from the sale of ordinary shares of Clarivate in June 2020 and $277.5 million received from the voluntary exercise of 24.1 million warrants in exchange for ordinary shares of Clarivate during the first quarter of 2020, as well as contributions from operational cash flows.
The Company's total debt outstanding at June 30, 2020 was $1,953.7 million, an increase of $288.7 million compared to December 31, 2019 due to a term loan of $360.0 million incurred during the first quarter of 2020 with net proceeds used to fund a portion of the DRG acquisition, offset by a $65.0 million repayment of the revolver in full. Net debt, or debt minus unrestricted cash and cash equivalents, at June 30, 2020 was $1,345.2 million, compared to $1,588.9 million as of December 31, 2019.
Net cash provided by operating activities was $107.6 million for the six months ended June 30, 2020, compared to net cash provided by operating activities of $42.9 million for the prior year period. Adjusted free cash flow for the six months ended June 30, 2020 was $119.6 million, an increase of $47.0 million, compared to the prior year period, due primarily to the growth in revenues and operational efficiencies.
Reaffirmed Outlook for 2020 (forward-looking statement)
Given the COVID-19 pandemic, we implemented a contingency plan and a tiered cost reduction approach. Our scenario assumptions include: 1) a gradual lifting of restrictions governing the free movement of labor in mid-to-late third quarter of 2020 and, 2) economic activity begins to recover early in the fourth quarter of 2020.
Outlook |
|
Adjusted Revenues |
$1.13B to $1.16B |
Adjusted EBITDA |
$395M to $420M |
Adjusted EBITDA margin |
35% to 36% |
Adjusted diluted EPS |
$0.53 to $0.59 |
Adjusted Free Cash Flow |
$220M to $240M |
Adjusted diluted EPS for 2020 is calculated based on approximately 394.1 million fully diluted weighted average shares outstanding, an increase of approximately 64.3 million shares or 20%, compared to 329.8 million shares outstanding at the end of December 31, 2019. The increase in shares is primarily driven by the February 2020 offering of 27.6 million shares, with proceeds used to fund a portion of the cash consideration for the acquisition of DRG, the issuance of approximately 29.0 million ordinary shares from the exercise of outstanding warrants, and the issuance of 14.0 million ordinary shares from the June 2020 public offering.
The above outlook does not reflect any impact from our planned combination with CPA Global, announced on July 29, 2020, and assumes no further currency movements, acquisitions, divestitures, or unanticipated events. The above outlook includes Non-GAAP measures. Please see "Reconciliation to Certain Non-GAAP measures" in this earnings release for important disclosure and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings release.
Conference Call and Webcast
Clarivate will host a conference call and webcast today to review the results for the second quarter at 8:00 a.m. Eastern Time. The conference call will be simultaneously webcast on the Investor Relations section of the company's website.
Interested parties may access the live audio broadcast by dialing 1-888-317-6003 in the United States, 1-412-317-6061 for international, and 1-866-284-3684 in Canada. The conference ID number is 2940334. An audio replay will be available approximately two hours after the completion of the call at 1-877-344-7529 in the United States, 1-412-317-0088 for international, and 1-855-669-9658 in Canada. The Replay Conference ID number is 10139888. The recording will be available for replay through August 13, 2020.
The webcast can be accessed at https://services.choruscall.com/links/ccc200806.html and will be available for replay.
Use of Non-GAAP Financial Measures
Non-GAAP results are not presentations made in accordance with U.S. generally accepted accounting principles ("GAAP") and are presented only as a supplement to our financial statements based on GAAP. Non-GAAP financial information is provided to enhance the reader's understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP. They are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such measures in isolation from, or as a substitute for, financial measures or results of operations calculated or determined in accordance with GAAP.
We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations and we also believe that investors may find these non-GAAP financial measures useful for the same reasons. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as analytical tools and because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
Definitions and reconciliations of non-GAAP measures, such as Adjusted Revenues, EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, and Standalone Adjusted EBITDA and net debt to the most directly comparable GAAP measures are provided within the schedules attached to this release. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that any projections and estimates will be realized in their entirety or at all.
Forward-Looking Statements
This communication contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and may use words like "aim," "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "forecast," "future," "goal," "intend," "likely," "may," "might," "plan," "potential," "predict," "project," "see," "seek," "should," "strategy," "strive," "target," "will," and "would" and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance outlook and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, including our planned combination with CPA Global, the anticipated benefits therefrom, and our success in integrating acquired businesses; anticipated levels of capital expenditures in future periods; our ability to successfully realize cost savings initiatives and transition services expenses; our belief that we have sufficiently liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, the COVID-19 pandemic and governmental responses thereto, contingent liabilities, and governmental and regulatory investigations and proceedings; and our strategy for customer retention, growth, product development, market position, financial results, and reserves. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management's current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are more fully discussed under the caption "Risk Factors" in our 2019 Annual Report on Form 10-K and in the current report on Form 8-K we filed on June 19, 2020, along with our other filings with the U.S. Securities and Exchange Commission ("SEC"). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements are based only on information currently available to our management and speaks only as of the date of this communication. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.
About Clarivate
Clarivate™ is a global leader in providing trusted information and insights to accelerate the pace of innovation. We offer subscription and technology-based solutions coupled with deep domain expertise that cover the entire lifecycle of innovation – from foundational research and ideas to protection and commercialization. Today, we're setting a trail-blazing course to help customers turn bold ideas into life-changing inventions. Our portfolio consists of some of the world's most trusted information brands, including the Web of Science™, Cortellis™, Derwent™, CompuMark™, MarkMonitor™ and Techstreet™. For more information, please visit clarivate.com.
Condensed Consolidated Balance Sheets (unaudited) (in thousands) |
|||||||
June 30, |
December 31, |
||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
608,522 |
$ |
76,130 |
|||
Restricted cash |
2,010 |
9 |
|||||
Accounts receivable, net of allowance for doubtful accounts of $11,074 and $16,511 at June 30, 2020 and December 31, 2019, respectively |
279,160 |
333,858 |
|||||
Prepaid expenses |
51,440 |
40,710 |
|||||
Other current assets |
18,960 |
11,750 |
|||||
Assets held for sale |
— |
30,619 |
|||||
Total current assets |
960,092 |
493,076 |
|||||
Computer hardware and other property, net |
24,324 |
18,042 |
|||||
Other intangible assets, net |
2,261,549 |
1,828,640 |
|||||
Goodwill |
1,824,258 |
1,328,045 |
|||||
Other non-current assets |
22,178 |
18,632 |
|||||
Deferred income taxes |
17,161 |
19,488 |
|||||
Operating lease right-of-use assets |
100,622 |
85,448 |
|||||
Total Assets |
$ |
5,210,184 |
$ |
3,791,371 |
|||
Liabilities and Shareholders' Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
22,068 |
$ |
26,458 |
|||
Accrued expenses and other current liabilities |
228,474 |
159,217 |
|||||
Current portion of deferred revenues |
424,187 |
407,325 |
|||||
Current portion of operating lease liabilities |
24,067 |
22,130 |
|||||
Current portion of long-term debt |
12,600 |
9,000 |
|||||
Liabilities held for sale |
— |
26,868 |
|||||
Total current liabilities |
711,396 |
650,998 |
|||||
Long-term debt |
1,913,214 |
1,628,611 |
|||||
Non-current portion of deferred revenues |
19,116 |
19,723 |
|||||
Other non-current liabilities |
16,959 |
18,891 |
|||||
Deferred income taxes |
86,247 |
48,547 |
|||||
Operating lease liabilities |
80,663 |
64,189 |
|||||
Total liabilities |
2,827,595 |
2,430,959 |
|||||
Commitments and Contingencies |
|||||||
Shareholders' equity: |
|||||||
Ordinary Shares, no par value; unlimited shares authorized at June 30, 2020 and December 31, 2019; 387,335,119 and 306,874,115 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively; |
3,326,267 |
2,208,529 |
|||||
Accumulated other comprehensive loss |
(15,629) |
(4,879) |
|||||
Accumulated deficit |
(928,049) |
(843,238) |
|||||
Total shareholders' equity |
2,382,589 |
1,360,412 |
|||||
Total Liabilities and Shareholders' Equity |
$ |
5,210,184 |
$ |
3,791,371 |
|||
Condensed Consolidated Statement of Operations (unaudited) (in thousands, except share and per share data) |
|||||||
Three Months Ended June 30, |
|||||||
2020 |
2019 |
||||||
Revenues, net |
$ |
273,500 |
$ |
242,309 |
|||
Operating costs and expenses: |
|||||||
Cost of revenues, excluding depreciation and amortization |
(90,859) |
(87,629) |
|||||
Selling, general and administrative costs, excluding depreciation and amortization |
(88,482) |
(92,453) |
|||||
Share-based compensation expense |
(6,856) |
(33,932) |
|||||
Depreciation |
(2,904) |
(2,131) |
|||||
Amortization |
(53,241) |
(40,932) |
|||||
Transaction expenses |
(8,527) |
(23,158) |
|||||
Transition, integration and other related expenses |
(1,320) |
(5,262) |
|||||
Restructuring and impairment |
(15,846) |
— |
|||||
Other operating income, net |
8,781 |
6,607 |
|||||
Total operating expenses |
(259,254) |
(278,890) |
|||||
Income (loss) from operations |
14,246 |
(36,581) |
|||||
Interest expense |
(21,122) |
(37,468) |
|||||
Loss before income tax |
(6,876) |
(74,049) |
|||||
Benefit (Provision) for income taxes |
5,385 |
(3,712) |
|||||
Net loss |
$ |
(1,491) |
$ |
(77,761) |
|||
Per Share |
|||||||
Basic and diluted |
$ |
0.00 |
$ |
(0.29) |
|||
Weighted-average shares outstanding |
|||||||
Basic and diluted |
375,877,260 |
264,762,720 |
|||||
Condensed Consolidated Statement of Operations (unaudited) (in thousands, except share and per share data) |
|||||||
Six Months Ended June 30, |
|||||||
2020 |
2019 |
||||||
Revenues, net |
$ |
514,092 |
$ |
476,334 |
|||
Operating costs and expenses: |
|||||||
Cost of revenues, excluding depreciation and amortization |
(173,258) |
(176,896) |
|||||
Selling, general and administrative costs, excluding depreciation and amortization |
(175,430) |
(184,749) |
|||||
Share-based compensation expense |
(24,325) |
(37,108) |
|||||
Depreciation |
(5,233) |
(4,182) |
|||||
Amortization |
(102,353) |
(97,038) |
|||||
Transaction expenses |
(35,216) |
(33,428) |
|||||
Transition, integration and other related expenses |
(3,552) |
(6,423) |
|||||
Restructuring and impairment |
(23,600) |
— |
|||||
Other operating income, net |
14,813 |
990 |
|||||
Total operating expenses |
(528,154) |
(538,834) |
|||||
Loss from operations |
(14,062) |
(62,500) |
|||||
Interest expense |
(52,062) |
(70,569) |
|||||
Loss before income tax |
(66,124) |
(133,069) |
|||||
Provision for income taxes |
(9,368) |
(3,952) |
|||||
Net loss |
$ |
(75,492) |
$ |
(137,021) |
|||
Per Share: |
|||||||
Basic and diluted |
$ |
(0.21) |
$ |
(0.57) |
|||
Weighted-average shares outstanding |
|||||||
Basic and diluted |
359,503,556 |
241,275,061 |
|||||
Consolidated Statements of Cash Flows (unaudited) (in thousands) |
|||||||
Six Months Ended June 30, |
|||||||
2020 |
2019 |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|||||||
Net loss |
$ |
(75,492) |
$ |
(137,021) |
|||
Adjustments to reconcile net loss to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
107,586 |
101,220 |
|||||
Allowance for doubtful accounts and credit losses expense |
787 |
2,478 |
|||||
Gain on sale of line of business |
(395) |
— |
|||||
Deferred income tax benefit |
(6,641) |
(4,603) |
|||||
Share-based compensation |
20,824 |
37,108 |
|||||
Restructuring and impairment |
4,771 |
— |
|||||
Deferred finance charges |
2,072 |
13,144 |
|||||
Other operating activities |
(8,568) |
(1,492) |
|||||
Changes in operating assets and liabilities: |
|||||||
Accounts receivable |
93,036 |
57,607 |
|||||
Prepaid expenses |
(6,693) |
(7,125) |
|||||
Other assets |
58,218 |
3,919 |
|||||
Accounts payable |
(5,851) |
(8,018) |
|||||
Accrued expenses and other current liabilities |
(15,379) |
(28,827) |
|||||
Deferred revenue |
(6,073) |
19,404 |
|||||
Operating lease right of use assets |
4,698 |
6,297 |
|||||
Operating lease liabilities |
(5,439) |
(6,434) |
|||||
Other liabilities |
(53,899) |
(4,770) |
|||||
Net cash provided by operating activities |
107,562 |
42,887 |
|||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|||||||
Capital expenditures |
(52,651) |
(24,871) |
|||||
Acquisitions, net of cash acquired |
(885,323) |
— |
|||||
Proceeds from sale of product line, net of restricted cash |
3,751 |
— |
|||||
Acquisition of intangible assets |
(5,982) |
— |
|||||
Net cash used in by investing activities |
(940,205) |
(24,871) |
|||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||||
Repayment of principal on long-term debt |
(6,300) |
(637,672) |
|||||
Repayments of revolving credit facility |
(65,000) |
(50,000) |
|||||
Proceeds from revolving credit facility |
— |
5,000 |
|||||
Proceeds from reverse recapitalization |
— |
682,087 |
|||||
Contingent purchase price payment |
(4,115) |
— |
|||||
Payment of debt issuance costs |
(5,267) |
— |
|||||
Proceeds from issuance of debt |
360,000 |
— |
|||||
Proceeds from issuance of ordinary shares |
843,766 |
— |
|||||
Proceeds from warrant exercises |
277,526 |
— |
|||||
Proceeds from stock options exercised |
1,182 |
137 |
|||||
Payments related to tax withholding for stock-based compensation |
(25,538) |
— |
|||||
Net cash provided by (used in) financing activities |
1,376,254 |
(448) |
|||||
Effect of exchange rate changes on cash and cash equivalents, and restricted cash |
(9,218) |
(80) |
|||||
Net increase in cash and cash equivalents, and restricted cash |
534,393 |
17,488 |
|||||
Consolidated Statements of Cash Flows (unaudited) (in thousands) |
|||||||
Beginning of period: |
|||||||
Cash and cash equivalents |
76,130 |
25,575 |
|||||
Restricted cash |
9 |
9 |
|||||
Total cash and cash equivalents, and restricted cash, beginning of period |
76,139 |
25,584 |
|||||
Cash and cash equivalents, and restricted cash, end of period |
610,532 |
43,072 |
|||||
Cash and cash equivalents |
608,522 |
43,063 |
|||||
Restricted cash |
2,010 |
9 |
|||||
Total cash and cash equivalents, and restricted cash, end of period |
$ |
610,532 |
$ |
43,072 |
|||
SUPPLEMENTAL CASH FLOW INFORMATION |
|||||||
Cash paid for interest |
$ |
42,187 |
$ |
57,551 |
|||
Cash paid for income tax |
$ |
8,028 |
$ |
14,573 |
|||
Capital expenditures included in accounts payable |
$ |
1,819 |
$ |
7,697 |
|||
Tax receivable agreement included in liabilities |
$ |
— |
$ |
264,600 |
|||
Assets received as reverse recapitalization capital |
$ |
— |
$ |
1,877 |
|||
Liabilities assumed as reduction of reverse recapitalization capital |
$ |
— |
$ |
5,910 |
|||
Reconciliation to Certain Non-GAAP Measures
(Amounts in tables may not sum due to rounding)
Adjusted Revenues
Adjusted Revenues excludes the impact of the deferred revenues purchase accounting adjustment (primarily recorded in connection with recent acquisitions).
The following table presents our calculation of Adjusted Revenues for the three and six months ended June 30, 2020 and 2019 and a reconciliation of this measure to our Revenues, net for the same periods:
Three Months Ended June 30, |
Variance |
|||||||||||||
(in millions, except percentages) |
2020 |
2019 |
$ |
% |
||||||||||
Revenues, net |
$ |
273.5 |
$ |
242.3 |
$ |
31.2 |
12.9 |
% |
||||||
Deferred revenues adjustment(1) |
3.4 |
0.1 |
3.3 |
NM |
||||||||||
Adjusted revenues, net |
$ |
276.9 |
$ |
242.4 |
$ |
34.5 |
14.2 |
% |
||||||
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting. |
||||||||||||||
Six Months Ended June 30, |
Variance |
|||||||||||||
(in millions, except percentages) |
2020 |
2019 |
$ |
% |
||||||||||
Revenues, net |
$ |
514.1 |
$ |
476.3 |
$ |
37.8 |
7.9 |
% |
||||||
Deferred revenues adjustment(1) |
5.3 |
0.3 |
5.0 |
NM |
||||||||||
Adjusted revenues, net |
$ |
519.4 |
$ |
476.6 |
$ |
42.8 |
9.0 |
% |
||||||
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting. |
||||||||||||||
Adjusted EBITDA
Adjusted EBITDA is calculated using net (loss) income before provision for income taxes, depreciation and amortization and interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income), share-based compensation, unrealized foreign currency gains/(losses), transition services agreement costs entered into with Thomson Reuters in 2016 ("Transition Services Agreement"), separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, non-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, and certain unusual items impacting results in a particular period.
The following table presents our calculation of Adjusted EBITDA for the three and six months ended June 30, 2020 and 2019 and reconciles these measures to our Net loss for the same periods:
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
(in millions) |
2020 |
2019 |
2020 |
2019 |
|||||||||||
Net loss |
$ |
(1.5) |
$ |
(77.8) |
$ |
(75.5) |
$ |
(137.0) |
|||||||
Provision for income taxes |
(5.4) |
3.7 |
9.4 |
4.0 |
|||||||||||
Depreciation and amortization |
56.1 |
43.1 |
107.6 |
101.2 |
|||||||||||
Interest, net |
21.1 |
37.5 |
52.1 |
70.6 |
|||||||||||
Transition services agreement costs(1) |
(0.8) |
2.5 |
0.8 |
7.7 |
|||||||||||
Transition, transformation and integration expense(2) |
1.3 |
11.3 |
3.6 |
13.8 |
|||||||||||
Deferred revenues adjustment(3) |
3.4 |
0.1 |
5.3 |
0.3 |
|||||||||||
Transaction related costs(4) |
8.5 |
23.2 |
35.2 |
33.4 |
|||||||||||
Share-based compensation expense |
6.9 |
33.9 |
24.3 |
37.1 |
|||||||||||
Restructuring(5) |
15.8 |
— |
23.6 |
— |
|||||||||||
Other (6) |
(5.3) |
(4.3) |
(8.1) |
1.3 |
|||||||||||
Adjusted EBITDA |
$ |
100.1 |
$ |
73.2 |
$ |
178.3 |
$ |
132.4 |
|||||||
Adjusted EBITDA Margin |
36.2 |
% |
30.2 |
% |
34.3 |
% |
27.8 |
% |
|||||||
(1) |
In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement. |
(2) |
Includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016, mainly related to the integration of separate business units into one functional organization and enhancements in our technology. |
(3) |
Reflects the deferred revenues adjustment as a result of purchase accounting. |
(4) |
Includes costs incurred to complete business combination transactions, including acquisitions and dispositions, and typically include advisory, legal and other professional and consulting costs. |
(5) |
Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG in 2020. |
(6) |
Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. |
Adjusted Net Income and Adjusted Diluted EPS
Adjusted Net Income is calculated using net income (loss), adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from the divested business), amortization related to acquired intangible assets, share-based compensation, unrealized foreign currency gains/(losses), Transition Services Agreement costs, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, debt extinguishment costs and refinancing related costs, non-cash income (loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, certain unusual items impacting results in a particular period, and the income tax impact of any adjustments. We calculate Adjusted Diluted EPS by using Adjusted Net Income divided by diluted weighted average shares for the period.
The following table presents our calculation of Adjusted Net Income and Adjusted Diluted EPS for the three and six months ended June 30, 2020 and reconciles these measures to our Net loss and EPS for the same periods:
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||
2020 |
2020 |
|||||||||||||
(in millions, except per share amounts) |
Amount |
Per Share |
Amount |
Per Share |
||||||||||
Net loss |
$ |
(1.5) |
— |
$ |
(75.5) |
(0.21) |
||||||||
Dilutive impact of potential common shares |
— |
— |
— |
0.01 |
||||||||||
Net loss |
(1.5) |
— |
(75.5) |
(0.20) |
||||||||||
Transition services agreement costs(1) |
(0.8) |
— |
0.8 |
— |
||||||||||
Transition, transformation and integration expense(2) |
1.3 |
— |
3.6 |
0.01 |
||||||||||
Deferred revenues adjustment(3) |
3.4 |
0.01 |
5.3 |
0.01 |
||||||||||
Transaction related costs(4) |
8.5 |
0.02 |
35.2 |
0.09 |
||||||||||
Share-based compensation expense |
6.9 |
0.02 |
24.3 |
0.06 |
||||||||||
Amortization related to acquired intangible assets |
47.6 |
0.12 |
87.7 |
0.23 |
||||||||||
Restructuring(5) |
15.8 |
0.04 |
23.6 |
0.06 |
||||||||||
Debt extinguishment costs and refinancing related costs |
— |
— |
8.6 |
0.02 |
||||||||||
Other(6) |
(5.5) |
(0.01) |
(8.0) |
(0.01) |
||||||||||
Income tax impact of related adjustments |
(6.2) |
(0.02) |
(10.7) |
(0.03) |
||||||||||
Adjusted Net income and Adjusted Diluted EPS |
$ |
69.5 |
$ |
0.18 |
$ |
94.9 |
$ |
0.25 |
||||||
Weighted average ordinary shares (Diluted) |
394,596,443 |
380,955,231 |
||||||||||||
(1) |
In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement. |
(2) |
Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. |
(3) |
Reflects the deferred revenues adjustment as a result of purchase accounting. |
(4) |
Includes costs incurred to complete business combination transactions, including acquisitions and dispositions, and typically includes advisory, legal and other professional and consulting costs. |
(5) |
Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG in 2020. |
(6) |
Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. |
Free Cash Flow and Adjusted Free Cash Flow
Free cash flow is calculated using net cash provided by operating activities less capital expenditures. Adjusted free cash flow is calculated as free cash flow, less cash paid for transition services agreement, transition, transformation and integration expenses, transaction related costs and debt issuance costs offset by cash received for hedge accounting transactions. The following table reconciles our non-GAAP free cash flow measure to net cash provided by operating activities:
Six Months Ended June 30, |
|||||||
(in millions) |
2020 |
2019 |
|||||
Net cash provided by operating activities |
$ |
107.6 |
$ |
42.9 |
|||
Capital expenditures |
(52.7) |
(24.9) |
|||||
Free cash flow |
54.9 |
18.0 |
|||||
Cash paid for transition services agreement(1) |
(2.2) |
5.1 |
|||||
Cash paid for transition, transformation and integration expense(2) |
26.6 |
16.5 |
|||||
Cash paid for transaction related costs(3) |
34.3 |
33.0 |
|||||
Cash paid for debt issuance costs |
7.7 |
— |
|||||
Cash received for hedge accounting transactions |
(1.7) |
— |
|||||
Adjusted free cash flow |
$ |
119.6 |
$ |
72.6 |
|||
(1) |
Includes cash payments to Thomson Reuters under the Transition Services Agreement. These costs decreased substantially in 2019, as we were in the final stages of implementing our standalone company infrastructure. In 2019, the Transition Services Agreement cash paid is offset by cash receipts from the IPM Product Line divestiture. |
(2) |
Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. |
(3) |
Includes consulting and accounting costs associated with acquisitions and the sale of MarkMonitor Brand Protection, Antipiracy and Antifraud products. |
Required Reported Data
Standalone Adjusted EBITDA
We are required to report Standalone Adjusted EBITDA, which is identical to Consolidated EBITDA and EBITDA as such terms are defined under our credit facilities, dated as of October 31, 2019 and the indenture governing our secured notes due 2026 issued by Camelot Finance S.A. and guaranteed by certain of our subsidiaries, respectively. In addition, the credit facilities and the indenture contain certain restrictive covenants that govern debt incurrence and the making of restricted payments, among other matters. These restrictive covenants utilize Standalone Adjusted EBITDA as a primary component of the compliance metric governing our ability to undertake certain actions otherwise proscribed by such covenants. Standalone Adjusted EBITDA reflects further adjustments to Adjusted EBITDA for cost savings already implemented and excess standalone costs.
Because Standalone Adjusted EBITDA is required pursuant to the terms of the reporting covenants under the credit facilities and the indenture and because this metric is relevant to lenders and noteholders, management considers Standalone Adjusted EBITDA to be relevant to the operation of its business. It is also utilized by management and the compensation committee of the Board as an input for determining incentive payments to employees.
Excess standalone costs are the difference between our actual standalone company infrastructure costs, and our estimated steady state standalone infrastructure costs. We make an adjustment for the difference because we have had to incur costs under the transition services agreement, with Thomson Reuters after we had implemented the infrastructure to replace the services provided pursuant to the transition services agreement, thereby incurring dual running costs. Furthermore, there has been a ramp up period for establishing and optimizing the necessary standalone infrastructure. Since our separation from Thomson Reuters, we have had to transition quickly to replace services provided under the transition services agreement, with optimization of the relevant standalone functions typically following thereafter. Cost savings reflect the annualized "run rate" expected cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the relevant period.
Standalone Adjusted EBITDA is calculated under the credit facilities and the indenture by using our Consolidated Net Loss for the trailing 12-month period (defined in the credit facilities and the indenture as our U.S. GAAP net income adjusted for certain items specified in the credit facilities and the indenture) adjusted for items including: taxes, interest expense, depreciation and amortization, non-cash charges, expenses related to capital markets transactions, acquisitions and dispositions, restructuring and business optimization charges and expenses, consulting and advisory fees, run-rate cost savings to be realized as a result of actions taken or to be taken in connection with an acquisition, disposition, restructuring or cost savings or similar initiatives, "run rate" expected cost savings, operating expense reductions, restructuring charges and expenses and synergies related to the transition projected by us, costs related to any management or equity stock plan, other adjustments that were presented in the offering memorandum used in connection with the issuance of the secured notes due 2026 and earnout obligations incurred in connection with an acquisition or investment.
The following table bridges Net Loss to Adjusted EBITDA to Standalone Adjusted EBITDA, as Adjusted EBITDA reflects all but three of the adjustments that comprise Standalone Adjusted EBITDA for the periods presented:
Twelve Months |
|||
(in millions) |
2020 |
||
Net loss |
$ |
(149.4) |
|
(Benefit) provision for income taxes |
15.6 |
||
Depreciation and amortization |
206.9 |
||
Interest, net |
139.2 |
||
Transition Services Agreement costs(1) |
3.5 |
||
Transition, transformation and integration expense(2) |
14.1 |
||
Deferred revenues adjustment(3) |
5.5 |
||
Transaction related costs(4) |
48.0 |
||
Share-based compensation expense |
38.6 |
||
Restructuring(5) |
39.3 |
||
Legal settlement |
(39.4) |
||
Impairment on assets held for sale |
18.4 |
||
Other(6) |
(0.3) |
||
Adjusted EBITDA |
340.0 |
||
Realized foreign exchange gain |
(6.8) |
||
DRG Adjusted EBITDA Impact(7) |
35.8 |
||
Cost savings(8) |
39.7 |
||
Excess standalone costs(9) |
30.1 |
||
Standalone Adjusted EBITDA |
$ |
438.8 |
|
(1) |
In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. In 2019, this includes payments to Thomson Reuters under the Transition Services Agreement. |
(2) |
Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. |
(3) |
Reflects the deferred revenues adjustment as a result of purchase accounting. |
(4) |
Includes costs incurred to complete business combination transactions, including acquisitions and dispositions, and typically include advisory, legal and other professional and consulting costs. |
(5) |
Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG in 2020. |
(6) |
Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance. |
(7) |
Represents DRG Adjusted EBITDA for the period beginning July 1, 2019 until the acquisition date of February 28, 2020 to reflect the company's Standalone EBITDA as though material acquisitions occurred at the beginning of the presented period |
(8) |
Reflects the estimated annualized run-rate cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the period (exclusive of any cost reductions in our estimated standalone operating costs), including synergies related to acquisitions. |
(9) |
Reflects the difference between our actual standalone company infrastructure costs, and our estimated steady state standalone operating costs, which were as follows: |
Twelve Months |
|||
(in millions) |
2020 |
||
Actual standalone company infrastructure costs |
$ |
164.1 |
|
Steady state standalone cost estimate |
(134.0) |
||
Excess standalone costs |
$ |
30.1 |
|
The foregoing adjustments (8) and (9) are estimates and are not intended to represent pro forma adjustments presented within the guidance of Article 11 of Regulation S-X. Although we believe these estimates are reasonable, actual results may differ from these estimates, and any difference may be material. See "Cautionary Note Regarding Forward-Looking Statements" in the annual report.
The following tables present the amounts of our subscription and transactional revenues, including as a percentage of our total revenues, for the periods indicated, as well the drivers of the variances between periods.
Variance |
Percentage of Factors Increase/(Decrease) |
||||||||||||||||||||
Three Months Ended |
Total |
Total |
Acquisitive |
Disposal |
FX |
Organic |
|||||||||||||||
(in millions, except percentages) |
2020 |
2019 |
|||||||||||||||||||
Subscription revenues |
$ |
216.5 |
$ |
202.7 |
$ |
13.9 |
6.8 |
% |
11.4 |
% |
(6.9) |
% |
(1.3) |
% |
3.6 |
% |
|||||
Transactional revenues |
60.4 |
39.7 |
20.7 |
52.1 |
% |
66.1 |
% |
(0.6) |
% |
(0.8) |
% |
(12.6) |
% |
||||||||
Deferred revenues adjustment(1) |
(3.4) |
(0.1) |
(3.3) |
NM |
NM |
— |
% |
— |
% |
75.5 |
% |
||||||||||
Revenues, net |
$ |
273.5 |
$ |
242.3 |
$ |
31.2 |
12.9 |
% |
18.9 |
% |
(5.9) |
% |
(1.3) |
% |
1.2 |
% |
|||||
Deferred revenues adjustment(1) |
3.4 |
0.1 |
3.3 |
NM |
NM |
— |
% |
— |
% |
(75.5) |
% |
||||||||||
Adjusted revenues, net |
$ |
276.9 |
$ |
242.4 |
$ |
34.5 |
14.2 |
% |
20.3 |
% |
(5.9) |
% |
(1.3) |
% |
1.1 |
% |
|||||
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting. |
|||||||||||||||||||||
Variance |
Percentage of Factors Increase/(Decrease) |
||||||||||||||||||||
Six Months Ended |
Total |
Total |
Acquisitive |
Disposal |
FX |
Organic |
|||||||||||||||
(in millions, except percentages) |
2020 |
2019 |
|||||||||||||||||||
Subscription revenues |
$ |
409.8 |
$ |
395.2 |
$ |
14.6 |
3.7 |
% |
8.3 |
% |
(7.1) |
% |
(1.0) |
% |
3.5 |
% |
|||||
Transactional revenues |
109.6 |
81.4 |
28.2 |
34.7 |
% |
44.0 |
% |
(1.1) |
% |
(0.8) |
% |
(7.4) |
% |
||||||||
Deferred revenues adjustment(1) |
(5.3) |
(0.3) |
(5.0) |
NM |
NM |
— |
% |
— |
% |
71.3 |
% |
||||||||||
Revenues, net |
$ |
514.1 |
$ |
476.3 |
$ |
37.8 |
7.9 |
% |
13.3 |
% |
(6.1) |
% |
(1.0) |
% |
1.7 |
% |
|||||
Deferred revenues adjustment(1) |
5.3 |
0.3 |
5.0 |
NM |
NM |
— |
% |
— |
% |
(71.3) |
% |
||||||||||
Adjusted revenues, net |
$ |
519.4 |
$ |
476.6 |
$ |
42.8 |
9.0 |
% |
14.4 |
% |
(6.1) |
% |
(1.0) |
% |
1.7 |
% |
|||||
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting. |
|||||||||||||||||||||
The following tables, and the discussion that follows, presents our revenues by Product Group for the periods indicated, as well as the drivers of the variances between periods, including as a percentage of such revenues.
Variance |
Percentage of Factors Increase/(Decrease) |
||||||||||||||||||||
Revenues by Product Group |
Three Months Ended |
Total |
Total |
Acquisitive |
Disposal |
FX |
Organic |
||||||||||||||
(in millions, except percentages) |
2020 |
2019 |
|||||||||||||||||||
Science Product Group |
$ |
183.6 |
$ |
136.1 |
$ |
47.5 |
34.9 |
% |
34.3 |
% |
— |
% |
(1.8) |
% |
2.4 |
% |
|||||
IP Product Group |
93.3 |
106.3 |
(13.0) |
(12.3) |
% |
2.5 |
% |
(13.5) |
% |
(0.6) |
% |
(0.7) |
% |
||||||||
Deferred revenues adjustment (1) |
(3.4) |
(0.1) |
(3.3) |
NM |
NM |
— |
% |
— |
% |
75.5 |
% |
||||||||||
Revenues, net |
$ |
273.5 |
$ |
242.3 |
$ |
31.2 |
12.9 |
% |
18.9 |
% |
(5.9) |
% |
(1.3) |
% |
1.2 |
% |
|||||
Deferred revenues adjustment(1) |
3.4 |
0.1 |
3.3 |
NM |
NM |
— |
% |
— |
% |
(75.5) |
% |
||||||||||
Adjusted revenues, net |
$ |
276.9 |
$ |
242.4 |
$ |
34.5 |
14.2 |
% |
20.3 |
% |
(5.9) |
% |
(1.3) |
% |
1.1 |
% |
|||||
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting. |
|||||||||||||||||||||
Variance |
Percentage of Factors Increase/(Decrease) |
||||||||||||||||||||
Revenues by Product Group |
Six Months Ended |
Total |
Total |
Acquisitive |
Disposal |
FX |
Organic |
||||||||||||||
(in millions, except percentages) |
2020 |
2019 |
|||||||||||||||||||
Science Product Group |
$ |
330.9 |
$ |
265.3 |
$ |
65.6 |
24.7 |
% |
24.0 |
% |
— |
% |
(1.4) |
% |
2.1 |
% |
|||||
IP Product Group |
188.5 |
211.3 |
(22.8) |
(10.8) |
% |
2.4 |
% |
(13.7) |
% |
(0.5) |
% |
1.0 |
% |
||||||||
Deferred revenues adjustment (1) |
(5.3) |
(0.3) |
(5.0) |
NM |
NM |
— |
% |
— |
% |
71.3 |
% |
||||||||||
Revenues, net |
$ |
514.1 |
$ |
476.3 |
$ |
37.8 |
7.9 |
% |
13.3 |
% |
(6.1) |
% |
(1.0) |
% |
1.7 |
% |
|||||
Deferred revenues adjustment(1) |
5.3 |
0.3 |
5.0 |
NM |
NM |
— |
% |
— |
% |
(71.3) |
% |
||||||||||
Adjusted revenues, net |
$ |
519.4 |
$ |
476.6 |
$ |
42.8 |
9.0 |
% |
14.4 |
% |
(6.1) |
% |
(1.0) |
% |
1.7 |
% |
|||||
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting. |
|||||||||||||||||||||
The following table presents our calculation of Adjusted Revenues for the Outlook for 2020 and a reconciliation of this measure to our Revenues, net for the same period:
Year Ending December 31, 2020 |
|||||||
(in millions) |
Low |
High |
|||||
Revenues, net |
$ |
1,130.0 |
$ |
1,160.0 |
|||
Adjusted revenues, net(1) |
$ |
1,130.0 |
$ |
1,160.0 |
|||
(1) |
The Company is evaluating the purchase accounting impact, including the deferred revenue adjustment, related to the DRG acquisition. |
The following table presents our calculation of Adjusted EBITDA for the Outlook for 2020 and reconciles this measure to our Net loss for the same period:
Year Ending December 31, 2020 |
|||||||
(in millions) |
Low |
High |
|||||
Net loss |
$ |
(70.6) |
$ |
(45.6) |
|||
Provision for income taxes |
7.8 |
7.8 |
|||||
Depreciation and amortization |
236.9 |
236.9 |
|||||
Interest, net |
93.0 |
93.0 |
|||||
Transition, transition services agreement, and integration expense(1) |
46.4 |
46.4 |
|||||
Transaction related costs(2) |
50.0 |
50.0 |
|||||
Share-based compensation expense |
30.6 |
30.6 |
|||||
Other |
0.9 |
0.9 |
|||||
Adjusted EBITDA |
$ |
395.0 |
420.0 |
||||
Adjusted EBITDA margin |
35 |
% |
36 |
% |
|||
(1) |
Includes restructuring costs, other cost optimization activities, and payments and receipts under transition service agreements. |
(2) |
Includes cost associated with merger and acquisition related activities. |
The following table presents our calculation of Adjusted Diluted EPS for the Outlook for 2020 and reconciles these measures to our Net loss for the same period:
Year Ending December 31, 2020 |
|||||||
Low |
High |
||||||
Per Share |
Per Share |
||||||
Net loss |
$ |
(0.17) |
$ |
(0.11) |
|||
Transition, transition services agreement, and integration expense(1) |
0.12 |
0.12 |
|||||
Transaction related costs(2) |
0.13 |
0.13 |
|||||
Share-based compensation expense |
0.08 |
0.08 |
|||||
Amortization related to acquired intangible assets |
0.40 |
0.40 |
|||||
Income tax impact of related adjustments |
(0.03) |
(0.03) |
|||||
Adjusted Diluted EPS |
$ |
0.53 |
$ |
0.59 |
|||
Weighted average ordinary shares (Diluted) |
394,077,974 |
||||||
(1) |
Includes restructuring costs, other cost optimization activities, and payments and receipts under transition service agreements. |
(2) |
Includes cost associated with merger and acquisition related activities. |
The following table presents our calculation of Free Cash Flow and Adjusted Free Cash Flow for the Outlook for 2020 and reconciles this measure to our Net cash provided by operating activities for the same period:
Year Ending December 31, 2020 |
|||||||
(in millions) |
Low |
High |
|||||
Net cash provided by operating activities |
$ |
212.8 |
$ |
228.4 |
|||
Capital expenditures |
(87.8) |
(91.4) |
|||||
Free Cash Flow |
125.0 |
137.0 |
|||||
Transition, transition services agreement, and integration expense(1) |
53.0 |
60.0 |
|||||
Transaction related costs(2) |
42.0 |
43.0 |
|||||
Adjusted Free Cash Flow |
$ |
220.0 |
$ |
240.0 |
|||
(1) |
Includes cash payments related to restructuring and other cost optimization activities. |
(2) |
Includes cash payments related to merger and acquisition related activities. |
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