Slide 1: Q1 2022 Earnings Call
Q1 2022 Earnings Call May 9, 2022
Slide 2: Forward-Looking Statements
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 fina
Slide 3: Agenda
Introduction Mark Donohue, Vice President, Investor Relations Business Review Jerre Stead, Executive Chair and Chief Executive Officer Financial Review Jonathan Collins, Executive Vice President and Chief Financial Officer Question & Answer Agenda 3
Slide 4: Business Review
Business Review Jerre Stead Executive Chair & Chief Executive Officer
Slide 5: 2022 Q1 Business Highlights
5 2022 Q1 Business Highlights KEY HIGHLIGHTS Poised to deliver accelerated growth as Q1 was first quarter under new operating model Implemented ‘One Clarivate’ Strategy Delivered Early Cross-Selling Wins Achieved Cost Synergies Ahead of Schedule Progressed Key ESG Initiatives Launched Innovative New
Slide 6: Implemented 'One Clarivate' Operating Strategy
Implemented ‘One Clarivate’ Operating Strategy 6 1 ▪ Increased cross-sell and improved renewal rates are our biggest opportunities to grow ▪ Built out complete organization for the four customer verticals and functions ▪ Identified gaps to inform and prioritize hiring ▪ Streamlined sales analytics w
Slide 7: Delivered Early Cross-Selling Wins
Delivered Early Cross-Selling Wins 7 2 Early signs that the ‘One Clarivate’ model is beginning to work with deeper penetration Life Sciences & Healthcare Consumer, Manufacturing & Technology Professional Services For example...Web of Science sold outside of Academia & Government
Slide 8: Launched Innovative New Products
Launched Innovative New Products 8 3 Life sciences and healthcare portfolio integration Combining the power of Clarivate and DRG to deliver unmatched, deep insights into market opportunity for new and existing drugs Market landscape Only pipeline database adding critical competitive intelligence pow
Slide 9: Achieved Cost Synergies Ahead of Schedule
Achieved Cost Synergies Ahead of Schedule 9 Total savings Permanent savings Completed through March 2022 Timing ($M) 2019 cost savings program $75M $75M $75M Completed COVID related $30M At least $5M $5M Completed Acquisition synergies $30M $30M $30M Completed $100M (prev. $75M) $100M (prev. $75M) $
Slide 10: Progressed on ESG Initiatives
Progressed on ESG Initiatives 10 5 Mapping our solutions to Sustainable Development Goals There is currently no industry standard methodology for reporting individual sustainable development goals and reporting frameworks may vary. Clarivate has scored its performance against the United Nations sust
Slide 11: Financial Review
Financial Review Jonathan Collins Executive Vice President & Chief Financial Officer
Slide 12: Q1 2022 Financial Results
Q1 2022 Financial Results 12 Top line growth accelerated by cost synergies led to improved earnings $ in millions except EPS Q1 ‘22 Q1 ‘21 Change Revenues, net $662 $428 $234 Adjusted EBITDA 262 165 98 Margin 39.6% 38.2% 140 bps EBIT 145 (18) 163 Interest Expense, Net 60 37 23 Income Tax Expense 16
Slide 13: Q1 2022 Revenue and EBITDA Changes vs. 2021
’21 FY Growth Rate 4.5% Pricing 0.5% Renewal Rates 0.0% Cross-sell 0.1% Transactional -0.7% ’22 Q1 Growth Rate 4.4% ▪ Organic Growth of 4.4% delivered $19m of revenue at profit conversion of nearly 60% ▪ Inorganic growth largely from ProQuest delivered a profit conversion of >30% on a pre- cost syne
Slide 14: Q1 2022 Cash Flow
▪ $150m payments from CPA employee benefits trust are taken from restricted cash but are included in cash from operations in GAAP financial statements ▪ Working capital changes from prior year contemplates change in seasonality from ProQuest acquisition and timing of payments of CPA servicing busine
Slide 15: FY 2022 Outlook
▪ Affirming full year guidance ranges, which are unchanged ▪ Expect revenue growth of nearly $1B bolstered by full year of ProQuest business and ~6.5% organic constant currency growth ▪ Anticipate Adj. EBITDA conversion on revenue growth of nearly 40%; approaching $1.2B at the mid-point of the range
Slide 16: FY 2022 Revenue and EBITDA Changes vs. 2021
▪ 6.5% organic growth expected to deliver meaningful margin expansion with >55% profit conversion ▪ Expect inorganic growth from full year of PQ at >30% margins pre-cost synergies ▪ Cost synergies from CPA and PQ transactions ▪ Anticipating continued strong dollar ▪ 200 bp Y/Y increase in organic gr
Slide 17: FY 2022 Quarterly Progression
▪ Expect normal revenue seasonality with slightly elevated levels in Q2 and Q4 ▪ Anticipate organic growth rate to progressively improve from 2021 exit rate ▪ Q2 organic growth expected at ~5.5% to 6% and will deliver a~$700m of revenue but could be as low as $690m if the USD maintains its recent mo
Slide 18: FY 2022 Cash Flow Outlook
▪ Expect incremental profit will fund higher integration and interest costs associated with PQ acquisition and will be partially offset by higher cash taxes and capital spending to fuel organic growth FY 2022 Cash Flow Outlook 18 Expect >60% of profit growth to converted to incremental Adj. FCF Chan
Slide 19: Key Financial Metrics Trends
$0.9 $1.2 $1.9 ~$2.8 ~$3.0 3.1% 1.2% 4.5% ~6.5% 2019A 2020A 2021A 2022P 2023T Revenue, Net Organic CC Growth $283 $478 $800 ~$1,190 32.7% 38.9% 42.6% 42% 2019A 2020A 2021A 2022P 2023T Adj EBITDA Profit Margin $0.53 $0.64 $0.72 ~$0.90 288 449 670 ~742 2019A 2020A 2021A 2022P 2023T Adjusted Diluted EP
Slide 20: Investment Highlights
Leading Brands Global Customer Base $100B Addressable Market ~80% Subscription / Re-occurring Revenue 90%+ Subscriber Retention Rates Significant Operating Leverage Substantial Free Cash Flow Generation Accomplished Leadership Team 20 Investment Highlights
Slide 21: Appendix
© Clarivate” APPENDIX
Slide 22: Non-GAAP financial measures
This presentation contains financial measures which have not been calculated in accordance with generally accepted accounting principles in the United States of America (“US GAAP“), including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS and Adjusted Free Cash Fl
Slide 23: Adjusted EBITDA
Adjusted EBITDA The use of Adjusted EBITDA instead of US GAAP 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 US GAAP. For example, Adjus
Slide 24: Adjusted Net Income and Adjusted Diluted EPS
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 Diluted EPS are meaningful measures of the performance of
Slide 25: Free Cash Flow and Adjusted Free Cash Flow
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 flow is useful to investors because similar measures are frequently used by securities analysts, investors,
Slide 26: 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. Although inconsistent with the requirements of ASC 260, but for illustrative purposes, this analysis uses hypothetical shares prices and not the actua
Slide 27: Reconciliation of Non-GAAP Financial Measures (QTD)
Reconciliation of Non-GAAP Financial Measures (QTD) 1 Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In the fourth quarter of 2021, Clar
Slide 28: Descriptions: Adjusted EBITDA adjustments
Descriptions Adjusted EBITDA adjustments 1. Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In the fourth quarter of 2021, Clarivate adop
Slide 29: Descriptions: Adjusted EBITDA adjustments
Descriptions Adjusted EBITDA adjustments 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 Liabilities from Contracts with Customers. In the fourth quarter of 2021, Clarivate
Slide 30: Descriptions: Adjusted EBITDA and Standalone Adjusted EBITDA
Descriptions Adjusted EBITDA and Standalone Adjusted EBITDA Adjustments 1. Reflects the deferred revenues adjustment made as a result of purchase accounting prior to the adoption of ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In the fourth
Slide 31: Descriptions: 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 the adoption of ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In the fourth qu
Slide 32: Descriptions: 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 the adoption of FASB ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In the four
Slide 33: Descriptions: Free Cash Flow and Adjusted Free Cash Flow
Descriptions Free Cash Flow and Adjusted Free Cash Flow Adjustments 1. Includes cash funded by a trust related to CPA Global equity plan payout upon vesting. 2. Reflects cash payments for costs primarily related to restructuring and lease-exit activities associated with the One Clarivate, ProQuest a
Slide 34: Descriptions: Free Cash Flow and Adjusted Free Cash Flow
Descriptions Free Cash Flow and Adjusted Free Cash Flow Adjustments 1. Reflects cash payments for costs primarily related to restructuring and lease-exit activities associated with the acquisition of DRG, CPA Global and ProQuest, as well as the One Clarivate program. This includes cash paid for cost
Slide 35: FY2022 Forecast Adjusted EBITDA Reconciliation
Year Ending December 31, 2022 (Forecasted) Low High (in millions) Net loss attributable to ordinary shares $ (166.2) $ (106.2) Dividends on preferred shares(1) 75.5 75.5 Net loss (90.7) (30.7) Provision for income taxes 60.1 60.1 Depreciation and amortization 560.1 560.1 Amortization of ProQuest acq
Slide 36: FY2022 Forecast Adjusted Diluted EPS Reconciliation
Year Ending December 31, 2022 (Forecasted) (in millions, except per share amounts) Low High Per Share Per Share Net loss attributable to ordinary shares (0.23) (0.13) Dividends on preferred shares(1) 0.10 0.10 Net loss (0.13) (0.03) Restructuring and impairment(2) 0.12 0.12 Share-based compensation
Slide 37: FY2022 Forecast Free Cash Flow Reconciliation
Year Ending December 31, 2022 (Forecasted) Low High (in millions) Net cash provided by operating activities $ 606.5 $ 656.5 Capital expenditures (185.0) (185.0) Free Cash Flow $ 421.5 $ 471.5 Cash paid for restructuring costs(1) 87.5 87.5 Cash paid for CPA Global equity plan(2) 166.0 166.0 Adjusted