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NYSE: NLSN
1ST QUARTER 2015 RESULTS
WEDNESDAY APRIL 22, 2015 8:00AM ET
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NLSN 1Q 2015 Results
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 1995. 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 April 22, 2015.
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 http://ir.nielsen.com. 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 2015. This
information may not be appropriate for other purposes.
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NLSN 1Q 2015 Results
AGENDA AGENDA
First Quarter
Business Update
Financials and Guidance
Appendix and Reconciliations
Q&A
MITCH BARNS CHIEF EXECUTIVE OFFICER
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NLSN 1Q 2015 Results
FIRST QUARTER 2015 OVERVIEW
Solid 1Q performance; broad-based growth and execution on Total Audience
- Revenue of $1.5 billion…up 4.4% constant currency
- Adjusted EBITDA of $380 million…up 7.3% constant currency
- Adjusted net income per share of $0.46…up 17.9% constant currency
Continued execution on our balanced capital allocation framework
- Raised quarterly dividend by 12% to $0.28; up 75% since inception
- On track to repurchase $1 billion by mid-2016
Acquisition of eXelate
- Data and technology to drive better precision in advertising
- Enhancing our capability in the programmatic ecosystem
Updating 2015 guidance to reflect the impact of FX; operational guidance reaffirmed
STRONG EXECUTION…DELIVERING SHAREHOLDER VALUE
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NLSN 1Q 2015 Results
UPDATE ON KEY GROWTH CATALYSTS • Watch: Total Audience Measurement progress
Total Audience: framework for comprehensive measurement of the consumer
Traction with signature-based VOD solution
Gaining critical mass in mobile measurement with SDK adoption…video and audio
Digital Ad Ratings (fka OCR) momentum and market expansion
Rollout of Digital Content Ratings (with Adobe) on track
• Marketing Effectiveness: Strong growth in demand for marketing ROI products
• Buy: Unmatched global presence
New client wins
Stronger discretionary spend on innovation and analytics
Broad-based Emerging market growth
Progress in eCommerce: new partnerships, New Offer Advisor launch
EXECUTING AND DELIVERING
JAMERE JACKSON CHIEF FINANCIAL OFFICER
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NLSN 1Q 2015 Results
TOTAL NIELSEN RESULTS ($ in millions except per share amounts, growth in constant currency)
• Revenues +4.4%, solid growth in Watch and Buy
• Margin expansion +70bps while reinvesting for long-term growth
• Strong growth in earnings fueled by operating leverage and share repurchase
1Q 2015 1Q 2014 V%
Revenues $1,458 $1,489 4.4%
Adjusted EBITDA $380 $376 7.3%
Adjusted EBITDA margin % 26.1% 25.3% 70 bps
Adjusted Net Income (ANI) $173 $165 14.6%
Diluted ANI per share (a) $0.46 $0.43 17.9%
Free Cash Flow $(1) $13 NM
(a) Calculated using weighted average shares outstanding of 375.4 million for 1Q 2015 and 384.7 million for 1Q 2014. See appendix for detail
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NLSN 1Q 2015 Results
WATCH SEGMENT RESULTS ($ in millions, growth in constant currency)
REVENUE
PROFITABILITY
1Q DYNAMICS
Total Watch
Adjusted EBITDA
Margin
$660
$278
42.1%
1Q 15
$652
$267
41.0%
1Q 14
3.6%
6.1%
99bps
V%
• Non-core products ~220bps drag on revenue • Solid revenue growth +5.8% ex-impact: - Audience Measurement (ex-Audio) +5.5% - Audio +1.7% - Marketing Effectiveness +22.7% - Strong renewals
• Legacy rankings to be replaced by Digital
Content Ratings in Fall of 2015
• Shedding non-core assets and investing in faster growth products (eXelate)
• Margin improvement driven by continued
productivity & operating leverage
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NLSN 1Q 2015 Results
BUY SEGMENT RESULTS ($ in millions, growth in constant currency)
REVENUE
PROFITABILITY
1Q DYNAMICS
Developed
Adjusted EBITDA
Margin
$549
$110
13.8%
1Q 15
$577
$118
14.1%
1Q 14
3.0%
8.9%
47bps
V%
Emerging $249 $260 10.2%
Total Buy $798 $837 5.1%
• Solid revenue growth +5.1%
• Developed: investments driving growth in analytics & subscription services
• Emerging: broad-based growth
• New client wins
• Margin improvement driven by cost out initiatives and scaling emerging markets
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NLSN 1Q 2015 Results
FOREIGN CURRENCY IMPACT
(a) Projected impact assumes rates in effect at 4/21/15 remain in effect for the balance of 2015. Also based on company estimates for future quarters on distribution of revenue and EBITDA by currency.
No single currency is >3%, excluding USD, CAD, EUR, CNY
& GBP
(650)
(750) (680)
(430)
(630) (620) (600)
(540)
(370)
(530)
1Q15 2Q15E 3Q15E 4Q15E FY15E
Rev (bps) EBITDA (bps)
Note: we report on a constant currency basis to reflect operating performance
56%
11%
4% 3% 3%
23%
USD EUR CAD GBP CNY Other
2014 CURRENCY PROFILE - REVENUE PROJECTED FX IMPACT(a):
REPORTED VS CONSTANT CURRENCY
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NLSN 1Q 2015 Results
2015 GUIDANCE - APRIL 22, 2015 (Revenue and adj. EBITDA margin growth in constant currency)
Total Revenue 4.0% - 6.0%
Adj. EBITDA margin growth 50 - 70bps
Adj. Net Income Per Share (a) $2.60 - $2.66
Leverage
~3.6x
Free Cash Flow
$850 - $900M
Net book interest
$310M - $320M
Cash taxes $160M - $170M
Cash restructuring $50M - $75M
Est. wtd. avg. diluted shares outstanding for FY 2015 ~371M
ANI PER SHARE LOWER DUE TO FX; OPERATING GUIDANCE REAFFIRMED
OTHER FINANCIAL METRICS
(a) Prior ANI per share guidance range: $2.68 – $2.74
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NLSN 1Q 2015 Results
&
APPENDIX
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NLSN 1Q 2015 Results
CERTAIN NON-GAAP MEASURES Overview of Non-GAAP Presentations We use the non-GAAP financial measures discussed below to evaluate the results of our operations. We believe that the presentation of these non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations, cash flows and indebtedness and that when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. None of the non-GAAP measures presented should be considered as an alternative to net income or loss, operating income or loss, cash flows from operating activities, total indebtedness or any other measures of operating performance and financial condition, liquidity or indebtedness derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.
Constant Currency Presentation We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, 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 (gross debt less cash and cash equivalents) as of the balance sheet date divided by Adjusted EBITDA for the twelve months then ended. Net debt and the net debt leverage ratio are commonly used metrics to evaluate and compare leverage between companies and are not presentations made in accordance with GAAP.
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NLSN 1Q 2015 Results
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. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors.
Adjusted Net Income
We define Adjusted Net Income as net income or loss from our consolidated statements of operations before income taxes, depreciation and amortization associated with acquired tangible and intangible assets, equity in net income of affiliates, restructuring charges, goodwill and intangible asset impairment charges, other non-operating items from our consolidated statements of operations and certain other items considered unusual or non-recurring in nature, reduced by cash paid for income taxes. Free Cash Flow We define free cash flow as net cash provided by operating activities, plus the excess tax benefit on stock-based compensation, less capital expenditures. We believe providing free cash flow information provides valuable supplemental information regarding the cash flow that may be available for discretionary use by us. Free cash flow is not a presentation made in accordance with GAAP.
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NLSN 1Q 2015 Results
ADJUSTED NET INCOME RECONCILIATION: Q1 ($ in millions except per share amounts)
Quarter ended March 31 (Unaudited)
2015 2014 Net income $ 63 $ 55
Interest expense, net 72 76
Provision for income taxes 38 33
Depreciation and amortization 142 141
EBITDA 315 305
Equity in net income of affiliates -- (1)
Other non-operating expense, net 26 30
Restructuring charges 14 24
Stock-based compensation expense 14 12
Other items (a) 11 6
Adjusted EBITDA 380 376
Interest expense, net (72) (76)
Depreciation and amortization (142) (141)
Depreciation and amortization of acquisition-related tangible and intangible assets 50 50
Cash paid for income taxes (29) (32)
Stock-based compensation expense (14) (12)
Adjusted net income $ 173 $ 165
Adjusted net income per share of common stock, diluted (b) $0.46 $0.43
(a), (b) See footnotes on next page
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NLSN 1Q 2015 Results
ADJUSTED NET INCOME RECONCILIATION: Q1 (continued)
(a) For the three months ended March 31, 2015 and 2014, other items primarily consist of non-recurring costs.
(a) Adjusted Net Income per share of common stock presented on a diluted basis includes potential common shares associated with stock-based compensation plans that may have been considered anti-dilutive in accordance with GAAP.
Weighted-average shares of common stock outstanding as of quarter ended March 31, 5015, basic
371,169,651
Dilutive shares of common stock from stock compensation plans 4,192,306
Weighted-average shares of common stock outstanding, diluted 375,361,957
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NLSN 1Q 2015 Results
FREE CASH FLOW RECONCILIATION ($ in millions)
QUARTER ENDED MARCH 31 2015 2014
Net cash provided by operating activities
$75 $90
Plus: Excess tax benefit on stock based compensation
$26 --
Less: Capital expenditures (102) (77)
Free cash flow $(1) $13
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NLSN 1Q 2015 Results
($ in millions)
1Q 15 Reported
1Q 14 Reported
% V Reported
1Q 14 Constant Currency
% V Constant Currency
BUY $798 $837 (4.7)% $759 5.1%
WATCH $660 $652 1.2% $637 3.6%
TOTAL $1,458 $1,489 (2.1)% $1,396 4.4%
REVENUE RECONCILIATION
ADJUSTED EBITDA RECONCILIATION
1Q 15 Reported
1Q 14 Reported
% V Reported
1Q 14 Constant Currency
% V Constant Currency
BUY $110 $118 (6.8)% $101 8.9%
WATCH $278 $267 4.1% $262 6.1%
CORPORATE $(8) $(9) NM $(9) NM
TOTAL $380 $376 1.1% $354 7.3%
($ in millions)
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NLSN 1Q 2015 Results
DEBT CAPITAL TABLE ($ in millions)
(a) Reflects Net Debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis (b) Excludes capital leases
DEBT CAPITAL TABLE
3/31/15 12/31/14 Change
Loan Debt (secured) $3,489 $3,758 $(269)
4.50% Sr. Notes (10/1/20) 800 800 --
5.50% Sr. Notes (10/1/21) 625 625 --
5.00% Sr. Notes (4/15/22) 2,308 1,553 $755
Capital lease/misc. debt 125 126 ($1)
Total Debt $7,347 $6,862 $485
Less Cash 343 273 70
Net Debt $7,004 $6,589 $415
Net Debt Ratio (a) 3.8x 3.6x 0.2x
Weighted avg. interest rate (b) 4.00% 3.79% 21 bps
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NLSN 1Q 2015 Results
SELECTED FINANCIAL METRICS & BALANCE SHEET ITEMS ($ in millions)
FINANCIAL METRICS
1Q 15
Free Cash Flow $(1)
Capital Expenditures $102
D&A $142
Net Book Interest $72
Cash Taxes $29
Cash Restructuring $22
Wtd. avg. diluted shares 375.4
BALANCE SHEET – 3/31/15
Gross Debt $7,347
Cash $343
Net Debt $7,004
Net Debt Ratio (a) 3.80x
CURRENT DEBT MATURITY PROFILE – 3/31/15(b)
$73 $118
$639
$212
$1,041
$814
$1,942
$2,308
2015 2016 2017 2018 2019 2020 2021 2022
(a) Reflects net debt (gross debt minus cash), divided by Adjusted EBITDA calculated on last twelve months basis (b) Excludes Revolver ($75M), Capital Leases ($116M) and Miscellaneous Debt ($9M)
