Clarivate Plc · NYSE:CLVT
Clarivate — Q2 2020 Earnings Presentation
26 slides from Clarivate's earnings presentation, Jul 30, 2020
Slide 1: Q2 2020 Earnings Supplemental Materials
Q2 2020 Earnings Supplemental Materials July 30, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements These materials contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current belie
Slide 3: Q2 Highlights
Q2 Highlights Well-positioned business model to weather current environment SCIENCE GROUP: • New Web of Science beta released; New UI, Open Access content added to Journal Citation Reports • COVID Novel Super Virus data lake launched for advanced virology and infectious disease analytics Enhanced •
Slide 4: Q2 Results
Q2 Results Revenue growth driven by acquisitions, new business and pricing; reported revenue increased 13%, excluding divestitures adjusted revenue increased 21%(1) Reported Revenue Adjusted Revenue(1) Adjusted EBITDA(1) +13% actual f/x +14% actual f/x Adjusted EBITDA +14% constant f/x +16% constant
Slide 5: Q2 Financial Highlights
Q2 Financial Highlights… Solid topline growth and cost efficiencies drove double-digit Adjusted EBITDA(1) growth and significant margin expansion June 30, Excluding ($ in millions except per share data) 2020 2019 % Change Organic(2) Commentary Divestitures(2) Recent acquisitions, new business includ
Slide 6: Q2 Financial Highlights Continued
…Q2 Financial Highlights Continued Significant resources including $609 million in cash and untapped $250 million revolver to continue to invest in strategic growth opportunities June 30, December 31, ($ in millions) $ Change Commentary on Change 2020 2019 Proceeds of ~$278 million received from the
Slide 7: Efficiently Managing Cost Structure and Freeing up Resources
Efficiently Managing Cost Structure and Freeing up Resources Approximately $105-$110 million in permanent cost reductions ($ in millions) Total Savings Permanent Savings Timing NEW $30M $5 million Q1-Q4 2020 COVID related $45 million in 2020; $70-75 million run- Cost savings 2019 $70-$75 million $70
Slide 8: 2020 Outlook Assumptions
2020 Outlook Assumptions Business Model to Weather Current Environment • “Must-have” products and services focused on B2B markets with unique content • Sell into durable end markets including government, research institutions and life sciences • Solutions to clients on digital basis and consumed any
Slide 9: 2020 Outlook
2020 Outlook*(1) ($ in millions, except per share information) Outlook Low High Adjusted Revenue $1,130 $1,160 Adjusted EBITDA $395 $420 Adjusted EBITDA margin % 35% 36% Adjusted Diluted EPS(2) $0.53 $0.59 Adjusted Free Cash Flow $220 $240 Our target is to exit 2021 with 6% - 8% organic revenue grow
Slide 10: Historical Annualized Contract Value (ACV)
Historical Annualized Contract Value (ACV)(1) • Q2 ’20 includes the acquisition of DRG completed on February 28, 2020 • All periods exclude divested products at actual F/X; divested on January 1, 2020 ($ in millions) $853 $820 + $112 mm YoY + 16% constant f/x Ongoing ACV +5% $759 $750 $741 $727 $723
Slide 11: Colleague engagement survey
Our recent colleague engagement survey had a response rate of 91%, up 10% from 2019 Engagement score = 76 2019 = 69 (Benchmark Average is 72) 2020 goal: 74 Company’s response to COVID-19 scored 93% favorable 11
Slide 12: Improving customer delight scorecard
Improving customer delight scorecard reflects our commitment to delivering high-value to our customers May ‘20 2019 Information & insights 90 85 Quality of products & services 85 86 Overall Easy to do business with 59 55 customer delight = 79 Overall customer delight 79 76 (Best Practice is 82) Cust
Slide 13: Appendix
(5 Clarivate” APPENDIX
Slide 14: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures This presentation contains financial measures which have not been calculated in accordance with GAAP, including Adjusted Revenues and Adjusted EBITDA, because they are a basis upon which our management assesses our performance and we believe they r
Slide 15: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures 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
Slide 16: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Adjusted Net Income and Adjusted Diluted EPS We have begun to use Adjusted Net Income and Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS") in our analysis of the financial performance of the Company. We believe Adjusted Net Income and A
Slide 17: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Free Cash Flow and Adjusted Free Cash Flow We use free cash flow and adjusted free cash flow in our operational and financial decision-making and believe free cash flow and adjusted free cash is useful to investors because similar measures are freq
Slide 18: Quarterly Financial Summary
Quarterly Financial Summary ($ in millions) Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Revenues, net $242.9 $245.2 $234.0 $242.3 $243.0 $255.0 $240.6 $273.5 Deferred revenue adjustment $0.5 $0.2 $0.2 $0.1 $0.1 $0.1 $1.9 $3.4 IPM Product Line ($7.8) $ - $ - $ - $ - $ - $ - $ - Ad
Slide 19: Diluted Share Count Enterprise Value Build
Diluted Share Count Enterprise Value Build @$21 @$23 @$26 (Forecasted as of and for the year ended December 31, 2020, $ in millions except for per share values) Share Price Ticker Current Share (Live) $ 21.00 $ 23.00 $ 26.00 1 Enterprise Value Build 2 Basic Shares Outstanding 373,517,786 373,517,786
Slide 20: Reconciliation of Non-GAAP Financial Measures and Required Reported Data
Reconciliation of Non-GAAP Financial Measures and Required Reported Data 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
Slide 21: Reconciliation of Non-GAAP Financial Measures and Required Reported Data
Reconciliation of Non-GAAP Financial Measures and Required Reported Data Descriptions Three Months Ended June 30, Six Months Ended June 30, Adjusted EBITDA adjustments (in millions) 2020 2019 2020 2019 1. In 2020, this is related to a new transition services agreement and offset by the reverse trans
Slide 22: Reconciliation of Non-GAAP Financial Measures and Required Reported Data
Reconciliation of Non-GAAP Financial Measures and Required Reported Data Descriptions Twelve Months Adjusted EBITDA adjustments Ended June 30, (in millions) 2020 1. In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale o
Slide 23: Reconciliation of Non-GAAP Financial Measures and Required Reported Data
Reconciliation of Non-GAAP Financial Measures and Required Reported Data Three Months Ended June 30, Six Months Ended June 30, Descriptions 2020 2020 Adjusted Net Income and Adjusted Diluted EPS adjustments (in millions, except per share amounts) Amount Per Share Amount Per Share 1. In 2020, this is
Slide 24: Non GAAP Reconciliation – Operating Cash Flow to Free Cash Flow
Non GAAP Reconciliation – Net Cash Provided By (Used In) Operating Activities to Free Cash Flow and Adjusted Free Cash Flow Descriptions Free Cash Flow and Adjusted Free Cash Flow Adjustments 1. Includes cash payments to Thomson Reuters under the Transition Services Agreement. These costs decreased
Slide 25: Non GAAP Reconciliation – Revenues, Net to Adjusted Revenues
Non GAAP Reconciliation – Revenues, Net to Adjusted Revenues Reconciliation Year Ending December 31, 2020 Descriptions (Forecasted) Adjusted Revenues, net Adjustments ($ in millions) Low High 1. The Company is evaluating the purchase accounting impact, including the deferred revenue adjustment, rela
Slide 26: Non GAAP Reconciliation – Net Loss Per Share to Adjusted Diluted EPS
Non GAAP Reconciliation – Net Loss Per Fully Diluted Weighted Shares Outstanding to Adjusted Diluted EPS Year Ending December 31, 2020 Descriptions Reconciliation (Forecasted) Adjusted Diluted EPS Adjustments (in millions, except per share amounts) Low High Per Share Per Share 1. Includes restructur