Clarivate Plc · NYSE:CLVT
Clarivate — Merger or Acquisition (June 2021)
54 slides from Clarivate's merger presentation, Jun 8, 2021
Slide 1: Investor Presentation June 2021
Investor Presentation June 2021 NYSE: CLVT
Slide 2: Forward-Looking Statements
Forward - Looking Statements The accompanying materials contain certain forward - looking statements regarding Clarivate Plc (“ Clarivate or the “Company”), its financial condition and its results of operations, anticipated synergies and other future expectations . Forward - looking statements shoul
Slide 3: Key Management Presenters
Key Management Presenters Jerre Stead Executive Chairman & Chief Executive Officer Richard Hanks Chief Financial Officer Mark Donohue VP, Investor Relations 1 Mukhtar Ahmed President, Science Group
Slide 4: World-leading assets serving large and stable end-markets
We have world - leading assets serving large and stable end - markets Leading provider of intellectual property and scientific information , analytical tools & services Products support customers’ critical decisions in discovery, protection and commercialization of ideas and brands Global, diversifi
Slide 5: Five large innovation-intensive customer segments over $100B opportunity
We are serving the end - to - end needs of five large innovation intensive customer segments representing over $100B of addressable opportunity Life Sciences & Healthcare Manufacturing 1 Technology & Consumer Products 2 Professional Services Process (incl. Chemicals) and Discrete (incl. Automotive)
Slide 6: Global market trends continue to support Clarivate strategy
Global market trends continue to support Clarivate strategy Clarivate — the only company with an integrated global data set covering the entire IP universe, including global case law analytics to analyze risk Innovation and brand activity continues despite 2020 macro conditions +5.2% increase in pat
Slide 7: Complementary assets create most robust end-to-end research platform
Bibliometric databases Other reference databases eBook Marketplace & Collection Integrated Library Systems Discovery Citation Management CRIS Institutional Repositories Funding Opportunities Content Aggregation Databases Research Management Life Sciences Research Cycle Complete the value chain acros
Slide 8: Key Terms & Structure
Key Terms & Structure • Purchase price of $5.3B, including refinancing of ~$1.0B of net debt • Cash and stock transaction in which ProQuest shareholders will receive ~$1.3B of Clarivate ordinary shares, representing ~7% combined ownership of the combined company and ~$ 3 .0B of cash • Including the
Slide 9: Transaction highlights: EBITDA expansion, cash flow, revenue scale
EBITDA Expansion • ~$1. 2 B 2020 combined adjusted EBITDA, including $100 million run - rate cost savings 2 • 2020 combined adjusted EBITDA margins of ~45% • More than $100M cost - savings expected to be fully achieved within 15 – 18 months 3 Robust Cash Flow & Balance Sheet • ~$65M in annual cash t
Slide 10: ProQuest Overview
ProQuest Overview | Oo ae
Slide 11: Aggregator of Multi-Type Content Solutions for Research, Teaching & Learning
Aggregator of Multi - Type Content Solutions for Research, Teaching & Learning 1. % mix based on 2020 combined revenue. Excludes Print Books segment, which represents 4% of 2020 revenue . Access to >5 million Dissertations 824 million issues and three centuries of global, national, regional and spec
Slide 12: ProQuest's Geographic Reach and Global Distribution Capabilities
Legend Headquarters Sales Offices Countries of Operation Primary Knowledge Centers Michigan U.K. Israel 43 Office Locations 2,723 FTEs 538 Engineers 440 Sales & Marketing Reps Clients in 158 Countries Languages ProQuest platform caters to more than 23 languages, with users in over 150 countries Loca
Slide 13: Loyal, Established and Diverse Client Base
1. Represents ~82% of total re - oc curring revenue . Selected Customers 25,000+ Customers Including Each of the Top 50 Universities Worldwide ~100% Customer Retention Rate Among Top 2,500 Re - Occurring Revenue Customers 1 No Single Customer Accounts for >1% of Revenue Higher Ed Research Public Lib
Slide 14: ProQuest – Summary Financial Highlights
Note: ProQuest combined financials reflect the full year impact of ProQuest’s prior acquisitions . See the Appendix for a reconciliation of GAAP to Non - GAAP measures. 1. Excludes Print Books segment . 2. Based on top 2,500 re - oc curring revenue customers, which represents approximately 82% of re
Slide 15: Combined Business Highlights
Combined Business Highlights
Slide 16: Aligned Culture with Shared Core Principles
• Proud heritage • Customer - first focus • Commitment to excellence and innovation • Dedication to colleague engagement ~2,700 Colleagues ~8,500 Colleagues Our Connected Workplace strategy enables us to build inspired and highly collaborative teams across multiple global locations 43 Global Offices
Slide 17: Combined 2020 Clarivate Overview
Note: Figures represent 2020 combined financials . 1. See the Appendix for a reconciliation of GAAP to Non - GAAP measures . 2. For illustrative purposes only based on historical FY 2020 financial statements of Clarivate and ProQuest, as well as additio nal adjustments to reflect the full year impac
Slide 18: Broadens content offering; attractive academic and government market
• Significantly broadens and complements content offering – On completion, Clarivate will provide learners, researchers and innovators in academia, corporations, governments, schools and libraries with the world’s largest collection of curated content and data from ideation to outcomes – Combined wi
Slide 19: Significant Cost Synergies Identified to Accelerate Earnings Growth
Direct Costs More than $100M of Run - Rate Cost and $10M of CapEx Synergies Identified 1 Expected to be fully Realized within 15 - 18 months Content Sources Technology Infrastructure Corporate & Real Estate >$100M $ - $20M $40M $60M $80M $100M $120M 2021E 2022E 2023E Significant Cost Synergies Ident
Slide 20: Substantial Revenue Synergy Opportunities Represent Further Upside
• Opens new sales opportunities to drive growth across complementary industry and geographical markets, and to expanded end - user communities • ProQuest data cloud complements Clarivate Research Intelligence Cloud, providing unique analytical opportunities across the entire research value chain • W
Slide 21: Clarivate Overview
Clarivate Overview | Oo ae
Slide 22: Business model provides clear path to long-term profitable growth
Business model provides clear path to long - term profitable growth Recurring subscription revenue with high retention and revenue visibility ‘Build once, sell many times’ creates significant operating leverage Low capital requirements allow high cash flow conversion and strong reinvestment capacity
Slide 23: Significant Progress Across Four Strategic Goals in 2020
Significant Progress Across Four Strategic Goals in 2020 Provide superior investor returns Targeting $1.1B - $1.2B free cash flow 1 exiting 2023 Further increase customer delight score Goal 82+ (best practice 82) Continue to improve colleague engagement score Goal 80+ (benchmark 74) Sustainability F
Slide 24: Strategic acquisitions established market-leading businesses in Science and IP
Clarivate’s strategic acquisitions have established market - leading businesses in Science and IP Tuck - ins to add product capabilities Complete IP value chain, transform our platform Complete the life sciences value chain 19
Slide 25: Q1 Highlights
12 Q1 Highlights “One Clarivate” Operational Highlights 1. Revenue at constant currency. 2. See the Appendix for a reconciliation of GAAP to Non - GAAP measures. 3. Adjusted EBITDA Margin equals Adjusted EBITDA divided by Adjusted Revenue. x Transforming from being a collection of distinct market -
Slide 26: Q1 Results
13 $241 $428 Q1'20 Q1'21 $78 $165 Q1'20 Q1'21 Q1 Results ($ in millions, actual f/x) Adjusted Revenue 3 $112 $49 $84 $193 $235 Q1'20 Q1'21 +78 % actual f/x +75% constant f/x $243 $432 Subscription +22% Transactional +71% Adjusted EBITDA 3 Adjusted EBITDA Margin 4 38% up 600 basis points +111% Growth
Slide 27: Q1 Financial Highlights
14 Q1 Financial Highlights ($ in millions except per share data) 2021 2020 Change Excluding Divestitures 2 Organic 2 Commentary Subscription revenue 1 $235 $193 22% 23% 6% Acquisitions, timing benefits due to tighter operating procedures and price increases, partially offset by divested products Tra
Slide 28: Selected Balance Sheet and Cash Flow Information
1 Selected Balance Sheet and Cash Flow Information ($ in millions) March 31, 2021 December 31, 2020 $ Change Commentary on Change Cash and cash equivalents $399 $258 $143 Increase a result of significant growth in cash flow from operations Total debt outstanding $3,540 $3,547 ($7) N/A Net debt 1,2 $
Slide 29: 2021 Clarivate Standalone Outlook
2 ($ in millions) Low High Adjusted Revenue $1,790 $1,840 Adjusted EBITDA $790 $825 Adjusted EBITDA margin % 44% 45% Adjusted diluted EPS $0.74 $0.79 Adjusted Free Cash Flow $450 $500 1. See Appendix for reconciliation of GAAP to Non - GAAP measures. Excludes proposed acquisition of ProQuest. 24 202
Slide 30: Annualized Contract Value (ACV)
3 $712 $720 $727 $786 $817 $823 $907 $909 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1'21 Annualized Contract Value (ACV) 1 ($ in millions) 1. Annualized Contract Value refers to the annualized value for a 12 - month period following a given date of all subscription - based client license agr
Slide 31: Efficiently Managing Cost Structure and Freeing up Resources
4 Efficiently Managing Cost Structure and Freeing up Resources 1 Total Savings Permanent Savings Completed Through 2020 Timing 2019 cost savings program $75 million $75 million $73 million Completed $75 million run - rate COVID related $30 million At least $5 million $5 million Q1 - Q4 2020 DRG syne
Slide 32: Clarivate Continues to Deliver on its Priorities
Clarivate Continues to Deliver on its Priorities Strategic Acquisitions Relentless Operational Improvement 1 Complete the IP Value Chain & Transform Our Platform Complete the Life Sciences Value Chain • More than $100M of run - rate cost savings expected to be achieved within 15 – 18 months • $75M o
Slide 33: Appendix
Appendix Oe oS
Slide 34: Customer use cases for Clarivate products
A professor planning a research program accesses Web of Science {"WOS"} to evaluate the current state of research in her discipline, identifying trends within highly regarded and relevant academic journals A university provost evaluating her university's chemistry department accesses lnCites to meas
Slide 35: Financial Measures
Non - GAAP Financial Measures Non - GAAP Financial Measures The non - GAAP financial measures discussed herein are not recognized terms under, and should not be considered as a substitute for, financial measures calculated in accordance with U . S . generally accepted accounting principles (“GAAP”)
Slide 36: Financial Measures: Adjusted EBITDA limitations
Non - GAAP Financial Measures 30 The use of Adjusted EBITDA instead of GAAP measures has limitations as an analytical tool, and you should not consider Adjusted EBITDA in isolation, or as a substitute for analysis of the Company’s results of operations and operating cash flows as reported under GAAP
Slide 37: Financial Measures: Combined Adjusted Net Leverage
Non - GAAP Financial Measures Combined Adjusted Net Leverage Combined adjusted Net Leverage represents the net debt of Clarivate and ProQuest (total debt less cash and equivalents) divided by the latest twelve month adjusted EBITDA . ProQuest Adjusted Organic Revenue ProQuest adjusted organic revenu
Slide 38: Combined Adjusted Revenue and EBITDA reconciliation
Value ($ in billions) Revenue Clarivate Revenue 1.3$ ProQuest Revenue 0.9 Adjustments to Revenue: Clarivate Adjustments to Revenue - DRG, CPA Global, Techstreet and Other 0.5 Combined Adjusted Revenue 2.6$ Combined Adjusted EBITDA Clarivate Net Loss (0.3)$ Clarivate Adjustments to EBITDA: Depreciati
Slide 39: Quarterly revenue and Adjusted EBITDA
12 ($ in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Revenues, net $234.0 $242.3 $243.0 $255.0 $240.6 $273.5 $284.4 $455.6 $428.4 Deferred revenue adjustment $0.2 $0 . 1 $0.1 $0.1 $1.9 $3.4 $2.1 $15.7 $3.0 Adjusted Revenue 1,2 $234.2 $242.4 $243.1 $255.1 $242.5
Slide 40: Organic revenue growth reconciliation
13 Growth in organic revenue illustrates growth in businesses owned by the Company as of January 1, 2020, the beginning of the e arl iest period presented. The following tables present the amounts of our subscription and transactional revenues, including as a percentage of our total revenues, f or t
Slide 41: Adjusted EBITDA adjustments descriptions
14 Descriptions Adjusted EBITDA adjustments 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. 2. Includes costs incurred in connection with and after our separation from Thomson Reuters in 2
Slide 42: Clarivate Fiscal Year 2020 Adjusted EBITDA reconciliation
Reconciliation of Non - GAAP Financial Measures Clarivate Fiscal Year 2020 Adjusted EBITDA Descriptions Adjusted EBITDA adjustments 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. 2. Inclu
Slide 43: Net debt and Free Cash Flow reconciliation
16 Debt to Net debt Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow 37 Reconciliation of Non - GAAP Financial Measures December 31, 2020 December 31, 2019 (in millions) Total debt outstanding $ 3,547.4 $ 1,665.0 Cash and cash equivalents 257.7 76.1 Total net d
Slide 44: Free Cash Flow adjustments descriptions
17 Descriptions Free Cash Flow and Adjusted Free Cash Flow Adjustments 1. 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 payment
Slide 45: Adjusted Revenue and ProQuest Organic Revenue Growth
Clarivate Fiscal Year 2020 Adjusted Revenue ProQuest Organic Revenue Growth (Excluding Print Books) 39 Reconciliation of Non - GAAP Financial Measures IC5
Slide 46: Adjusted EBITDA adjustments descriptions
1 2 3 4 5 6 Descriptions Adjusted EBITDA adjustments 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. 2. Includes costs incurred in connection with and after our separation from Thomson Reu
Slide 47: Combined Net income (loss) TTM March 31, 2021
41 Combined Net income (loss) TTM March 31, 2021 Reconciliation Twelve Months Ended Three Months Ended Three Months Ended 12/31/2020 3/31/2020 3/31/2021 TTM 3/31/2021 Revenues, net 2,495.8$ 602.1$ 647.9$ 2,541.6$ Operating costs and expenses: - Cost of revenues (911.6) (229.9) (222.7) (904.4) Sellin
Slide 48: Combined Adjusted Net Leverage Targets and Other Ratios
Combined Adjusted Net Leverage Targets and Other Ratios 1 42 Reconciliation of Non - GAAP Financial Measures Twelve Months Ended March 31, 2021 x End of 2022 (in millions) Historical Combined Pro Forma Targeted Deleveraging Combined Pro Forma Target Standalone Adjusted EBITDA $780 $1,136 Cash and ca
Slide 49: 2021 forecast Adjusted Revenue and EBITDA reconciliation
22 Revenues, Net to Adjusted Revenues Year Ending December 31, 2021 (Forecasted) Low High ($ in millions) Income from operations $178.2 $213.2 Depreciation and amortization 545.8 545.8 Transition, TSA and integration expenses 40.3 40.3 Share - based compensation expense 26.0 26.0 Other (0.3) (0.3) A
Slide 50: 2021 forecast Free Cash Flow reconciliation
23 Year Ending December 31, 2021 (Forecasted) Low High (in millions) Net cash provided by operating activities $ 559.7 $ 609.7 Capital expenditures (151.7) (151.7) Free Cash Flow 408.0 458.0 Transition, transformation and integration expense 42.0 42.0 Adjusted Free Cash Flow $ 450.0 $ 500.0 Descript
Slide 51: Reconciliation of Financial Measures: Standalone Adjusted EBITDA
45 Reconciliation of Non - GAAP Financial Measures Twelve Months Ended March 31, 2021 (in millions) Net loss (206.2)$ Provision for income taxes (13.5) Depreciation and amortization 383.4 Interest, net 118.4 Transition services agreement costs (0.9) Transition, transformation and integration expense
Slide 52: Reconciliation: Pro forma Adjusted EBITDA for ProQuest
46 Reconciliation of Non - GAAP Financial Measures Twelve Months Ended March 31, 2021 (in millions) Adjusted EBITDA 573.2$ Realized foreign exchange gain 0.9 DRG Adjusted EBITDA impact - CPA Global Adjusted EBITDA impact 137.6 IncoPat Adjusted EBITDA impact (0.2) Hanlim Adjusted EBITDA impact 0.2 Co
Slide 53: Reconciliation: ProQuest EBITDA
47 Reconciliation of Non - GAAP Financial Measures Descriptions Adjusted EBITDA adjustments 1. Reflects costs incurred to complete business combination transactions, including acquisitions, dispositions and related capital market activities and include advisory, legal and other professional and cons
Slide 54: Thank you
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