Clarivate Plc · NYSE:CLVT
Clarivate — Q4 2021 Earnings Presentation
41 slides from Clarivate's earnings presentation, Mar 10, 2022
Slide 1: Q4 and FY 2021 Earnings Call
Q4 and FY 2021 Earnings Call March 10, 2022
Slide 2: Safe Harbor Statement and Non-GAAP Financial Measures
Safe Harbor Statement and Non-GAAP Financial Measures 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,
Slide 3: Agenda
Agenda Mark Donohue, Introduction Vice President, Investor Relations Jerre Stead, Business Review Executive Chair and Chief Executive Officer Jonathan Collins, Financial Review Executive Vice President and Chief Financial Officer Question & Answer 3
Slide 4: Business Review
Business Review Jerre Stead Executive Chair & Chief Executive Officer
Slide 5: The Clarivate Story
The Clarivate Story 2022 – 2023 • Launched ‘One Clarivate’ • Targeting organic growth rate of 2021 ~6.5% (+200 bps) • Outlined ‘One Clarivate’ • Adjusted EBITDA Margin • Launched inside sales expansion of ~300-500 bps • Continued inorganic growth • Poised to achieve mid-term 2019 – 2020 targets and
Slide 6: 2021 Highlights
2021 Highlights Acquired ProQuest, creating a world-leading information and analytics provider Completed inside sales customer migration and One Clarivate infrastructure Focused on building a better company for Launched more than 90 new product offerings and enhancements customers, colleagues and De
Slide 7: Acquired ProQuest
Acquired ProQuest Advances our position as a full-service information and analytics provider fueling discovery and innovation by empowering research-focused organizations around the globe Aggregator of Multi-Type Content Solutions for Offers a SaaS Platform with Deeply Integrated Research, Teaching
Slide 8: Implemented One Clarivate
Implemented One Clarivate Over $100B of Addressable Opportunity Our strategy to capture growth opportunity while increasing Academia & Government Life Sciences & Healthcare customer delight Academia; Applied R&D; Pharma; Healthcare; Publishing; Gov’t; Non-Profit ~$1.36B Medical Devices ~$590M With t
Slide 9: Launched New Products and Enhancements
Launched New Products and Enhancements Launched more than 90 new product offerings and enhancements Continuing to provide enhanced value to the customer interface and experience 9
Slide 10: Delivered on Cost Savings Programs Ahead of Schedule
Delivered on Cost Savings Programs Ahead of Schedule Completed through Total savings Permanent savings Timing Dec. 2021 ($M) 2019 cost savings program $75M $75M $75M Completed COVID related $30M At least $5M $5M Completed Acquisition synergies $30M $30M $30M Completed $100M $100M $100M Completed (pr
Slide 11: Committed to Sustainability
Committed to Sustainability • Inaugural Environmental reporting for 75%+ of global workspaces • Inaugural CDP assessment • Supplier ESG evaluation for 100+ suppliers. • Corporate Equality Index score of 75 • Signatory to the CEO Action on Diversity & • First annual Sustainability report Inclusion, s
Slide 12: Completed Leadership Team Transition
Completed Leadership Team Transition 2022P Experienced team in $2.8B place to scale business $1.2B Enhanced go-to-market and 2021A $1.9B $0.8B critical corporate functions 2020A Improved focus on customer delight $1.2B and technology $0.5B 2019A Streamlined 7 businesses to 2 product groups $0.9B $0.
Slide 13: Fourth-Quarter Performance
Fourth-Quarter Performance Accelerating inflation Omicron variant created Tight labor market drove pressured customer’s year- continued uncertainty and higher vacancies late in the end budgets for transactional staffing gaps in go-to-market year and led to missed purchases (i.e. data sets) and fulfi
Slide 14: Financial Review
Financial Review Jonathan Collins Executive Vice President & Chief Financial Officer
Slide 15: 2021 Financial Results
2021 Financial Results Strong inorganic and solid Changes from Prior Year organic growth drove revenue $ in millions except EPS Q4 ‘21 Q4 ‘20 Change FY ’21 FY ’20 Change increase of 50% Revenues, net $561 $456 $105 $1,877 $1,254 $623 Net loss attributable to ordinary shares improved by Adjusted
Slide 16: FY 2021 Revenue and EBITDA Changes vs. 2020
Year + Better - Worse FY 2021 Revenue and EBITDA Changes vs. 2020 Adj. Revenue Adj. EBITDA $ millions 4.5% adjusted organic revenue growth delivered meaningful $530 $17 $1,881 margin expansion with >50% profit conversion Inorganic growth from CPA (9 +4.5% mo.), DRG (2 mo.), IncoPat (1 $57 mo.),
Slide 17: FY 2021 Cash Flow
FY 2021 Cash Flow Profit growth partially offset Changes from Prior Year by higher one-time costs to $ in millions 2021 Actuals 2020 Actuals Change complete and integrate acquisitions and incremental Adj. EBITDA $800 $487 $314 interest to fund acquisitions One Time Costs1 (218) (146) (72) Increa
Slide 18: FY 2022 Outlook
FY 2022 Outlook Revenue growth of nearly Full Year Guidance Ranges $1B bolstered by full year of ProQuest business and ~6.5% organic constant currency growth ~$2.84B Anticipate Adj. EBITDA Revenue $2.8B $2.88B conversion on revenue growth of nearly ~$1.19B 40%; approaching $1.2B at Adj. EBITDA $
Slide 19: FY 2022 Revenue and EBITDA Changes vs. 2021
Year + Better - Worse FY 2022 Revenue and EBITDA Changes vs. 2021 Adj. Revenue Adj. EBITDA $ millions 6.5% organic growth expected to deliver meaningful margin expansion with >55% profit conversion ~$865 ~$30 ~$2,840 Inorganic growth from full year +/- 1.5% of PQ at >30% margins pre- cost synerg
Slide 20: FY 2022 Quarterly Progression
FY 2022 Quarterly Progression Expect normal revenue Revenue Phasing seasonality with slightly $ millions elevated levels in Q2 and Q4 $900 Anticipate organic growth rate to progressively improve $800 from 2021 exit rate $700 $600 $500 $400 $300 $200 $100 $0 Q1 Q2 Q3 Q4 2021 Actual Revenue 2021 P
Slide 21: FY 2022 Cash Flow Outlook
FY 2022 Cash Flow Outlook Expect incremental profit will Changes from Prior Year fund higher integration and $ in millions 2022 Outlook 2021 Actuals Change interest costs associated with PQ acquisition and will be Adj. EBITDA ~$1,190 $800 ~$390 partially offset by higher cash taxes and capital spe
Slide 22: Key Financial Metrics Trends
Key Financial Metrics Trends Revenue set to triple in 5 years Revenue Adjusted EBITDA bolstered by M&A and $ billions $ millions ~$2.8 ~$3.0 improving organic growth ~$1,190 ~6.5% $800 Adj. EBITDA expected to $1.9 increase by ~50% in 2022 and 4.5% $478 $1.2 ~ 42% margins are poised to expand $0.
Slide 23: Capital Allocation Priorities
Capital Allocation Priorities Expect to utilize majority of Illustrative Capital Allocation Net Debt / Leverage capital to repurchase shares given current stock price $5.1B <$5.0B Net leverage (net debt / adj. >$1.5B 2-Year Cumulative Adj. FCF EBITDA) improvement driven almost entirely by expect
Slide 24: Investment Highlights
Investment Highlights Leading Brands Accomplished Global Leadership Customer Team Base Substantial >$100B Free Cash Addressable Flow Market Generation ~80% Significant Subscription / Operating Re-occurring Leverage Revenue >90% Subscriber Retention Rates 24
Slide 25: Appendix
(S Clarivate” APPENDIX
Slide 26: 2022 Sustainability Strategy
2022 Sustainability Strategy Identify areas for growth opportunities and integrate them with go-to market strategies and pursue new product innovation ideas. • Map how our solutions across Clarivate are advancing a more sustainable world in line with the United Nations Sustainable Development Goals
Slide 27: 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 US GAAP, including Adjusted Revenues and Adjusted EBITDA, because they are a basis upon which our management assesses our performance and we believe the
Slide 28: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Adjusted EBITDA The use of Adjusted EBITDA instead of US 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 opera
Slide 29: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Adjusted Net Income and Adjusted Diluted EPS We 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 Adjusted Dilute
Slide 30: 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 31: Diluted Share Count
Diluted Share Count Comments Note: The analysis is not intended to replace the Treasury Stock Method as required under ASC 260, Earnings per Share 1. Inconsistent with the requirements of ASC 260, but for illustrative purposes, this analysis uses hypothetical shares prices and not the actual average
Slide 32: Reconciliation of Non-GAAP Financial Measures (QTD)
Reconciliation of Non-GAAP Financial Measures (QTD) Growth in organic revenue illustrates growth in businesses owned by the Company as of January 1, 2020, the beginning of the earliest period presented. The following tables present the amounts of our subscription and transactional revenues, includin
Slide 33: Reconciliation of Non-GAAP Financial Measures (YTD)
Reconciliation of Non-GAAP Financial Measures (YTD) Growth in organic revenue illustrates growth in businesses owned by the Company as of January 1, 2020, the beginning of the earliest period presented. The following tables present the amounts of our subscription and transactional revenues, includin
Slide 34: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Descriptions Adjusted EBITDA adjustments Net Loss to Adjusted EBITDA 1. Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilit
Slide 35: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Loss to Standalone Adjusted EBITDA Descriptions Adjusted EBITDA and Standalone Adjusted EBITDA Adjustments Year Ended 1. Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of FASB ASU No. December
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Loss and Net Loss Per Share to Adjusted Net Income and Adjusted Diluted EPS Descriptions Adjusted Net Income and Adjusted Diluted EPS adjustments 1. Reflects the deferred revenues adjustment made as a result of purchase accounting prior to Three Mont
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Loss and Net Loss Per Share to Adjusted Net Income and Adjusted Diluted EPS Year Ended December 31, Year Ended December 31, Descriptions 2021 2020 Adjusted Net Income and Adjusted Diluted EPS adjustments (in millions, except per share amounts); (unau
Slide 38: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Debt to Net Debt December 31, 2020 (in millions); (unaudited) December 31, 2021 (As Restated) Total debt outstanding $ 5,567.2 $ 3,547.4 Cash and cash equivalents 430.9 257.7 Total net debt outstanding $ 5,136.3 $ 3,289.7 Net Cash Provided By (Used In) O
Slide 39: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Revenues, net, Adjusted EBITDA and Adjusted EBITDA Margin for the Outlook for 2022 and reconciles this measure to Revenues for the same period: Revenues, Net Variance Increase/(Decrease) Percentage of Facto
Slide 40: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted Diluted EPS for the Outlook for 2022 and reconciles this measure to our Net loss for the same period: Net Loss Per Fully Diluted Weighted Shares Outstanding to Adjusted Diluted EPS Year Ending Dece
Slide 41: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Free Cash Flow and Adjusted Free Cash Flow for the Outlook for 2022 and reconciles this measure to our Net cash provided by operating activities for the same period: Net Cash Provided by Operating Activitie