Slide 1: Q4 and Full Year 2019 Earnings Supplemental Materials
Q4 and Full Year 2019 Earnings Supplemental Materials February 27, 2020
Slide 2: Forward-Looking Statements
2 Forward - Looking Statements This presentation contains “forward - looking statements” as defined in the Private Securities Litigation Reform Act of 1995 . These statements, which express management’s current views concerning the future of our business, future plans and strategies, projections, ou
Slide 3: Significant Operational and Strategic Accomplishments in 2019
Significant Operational and Strategic Accomplishments in 2019 3 • Completed the refinancing of debt capital structure: – Significantly improved weighted average cost of debt and extended maturity profile – Lowered interest expense by approximately $18 million per year • Completed secondary offerings
Slide 4: Not Slowing Down in 2020…Announced Acquisition of DRG in January
Not Slowing Down in 2020…Announced Acquisition of DRG in January 4 Decision Resources Group (“DRG”) Definitive Agreement Terms Financing / Capital Structure Synergies Approximate Timing • A premier provider of high - value data, analytics and insights solutions to the Life Sciences (LS) industry, se
Slide 5: DRG - Strategic Highlights
DRG - Strategic Highlights 5 • Combines Clarivate’s leading pre - clinical solutions with DRG’s commercialization solutions to deliver a complete data - driven solution across the entire Life Sciences, drug, device and medical technology value chain • Creates a leading Life Sciences data and analyti
Slide 6: DRG - Financial Highlights
DRG - Financial Highlights 6 • In 2019, DRG generated $207 million in revenue, with 9% organic growth and $47 million of Adjusted EBITDA (1) • DRG’s 2019 revenue composition is 42% subscription, 27% re - occurring and 31% value - add analytical and consultative services • Approximately $30 million i
Slide 7: Q4 2019 Financial results
7 Q4 2019 Financial results
Slide 8: Q4 2019 Financial Highlights
Q4 2019 Financial Highlights 8 • Revenues up 4% actual; 4.2% on constant currency basis • Subscription revenue increased 6%; Annual Contract Value (ACV) of subscription - based agreements increased 3.5% at constant currency • Net loss of $84.8 million compared to Q4 2018 net loss of $43.5 million •
Slide 9: Q4 Results
30.9% 33.2% Q4'18 Q4'19 $245.2 $255.0 Q4'18 Q4'19 Q4 Results 9 (1) See the Appendix for a reconciliation of Net Loss to Adjusted EBITDA. (2) Adjusted EBITDA Margin equals Adjusted EBITDA divided by Adjusted Revenue. See the Appendix for a reconciliation of Revenue t o A djusted Revenue and Net Loss
Slide 10: Full year 2019 financial results
10 Full year 2019 financial results
Slide 11: 2019 Financial Highlights
2019 Financial Highlights 11 • Revenues up 1.2% at constant currency; adjusted revenues (1) up 3.1% on constant currency basis • Adjusted Subscription (1) revenue increased 4.3% at constant currency; Annual Contract Value (ACV) of subscription - based agreements increased 3.5% at constant currency (
Slide 12: Full Year Results
$272.8 $294.0 2018 2019 $968.5 $974.4 2018 2019 Full Year Results 12 + 0.6% actual f/x + 1.2% constant f/x Revenue Adjusted Revenue (1) Adjusted EBITDA (2) + 7.7% actual f/x ($ in millions, actual f/x) + 2.5% actual f/x + 3.1% constant f/x $951.2 $974.8 2018 2019 Adjusted EBITDA Margin (3) (1) Adjus
Slide 13: Quarterly Improvement in Revenue Growth Rate
Quarterly Improvement in Revenue Growth Rate $232 $238 $236 $245 $234 $242 $243 $255 Q1 Q2 Q3 Q4 Adjusted Revenue (1) ($M) 2018 2019 2.1% 2.5% 3.6% 4.2% Growth constant FX (1) Adjusted Revenue refers to a non - GAAP measure. See the Appendix for a reconciliation of Revenue to Adjusted Revenue. incre
Slide 14: Revenue Growth and Operational Improvements Driving Margin Expansion
Revenue Growth and Operational Improvements Driving Margin Expansion $63 $68 $66 $76 $59 $73 $77 $85 Q1 Q2 Q3 Q4 Adjusted EBITDA (1) ($M) and Adjusted Margin (2) 2018 2019 Adjusted margins (2) 27.3% 25.3% 28.3% 30.2% 28.1% 31.7% 30. 9% 33.2% (1) Adjusted EBITDA refers to a non - GAAP measure. See th
Slide 15: Selected Balance Sheet Items
Selected Balance Sheet Items 15 ($ in millions) December 31, 2019 December 31, 2018 Cash & cash equivalents $76.1 $25.6 Total debt outstanding $1,665 . 0 $2,029.0 Net debt $1,588.9 $2,003.4 Gross leverage ratio (1) 5.0x 6.5x Net leverage ratio (1) 4.7x 6 . 4x (1) Calculated using LTM Standalone Adju
Slide 16: Historical Annualized Contract Value (ACV)
$731 $755 $759 $767 $764 $783 $789 $794 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Historical Annualized Contract Value (ACV) (1) 16 + $27 mm YoY + 3.5% constant f/x ($ in millions) (1) Annualized Contract Value refers to the annualized value for a 12 - month period following a given da
Slide 17: Updated 2020 Outlook
Updated 2020 Outlook (1) ($ in millions, except per share information) 2019 Actuals Low High Adjusted Revenue $975 $1,160 $1,190 Adjusted EBITDA $294 $395 $420 Adjusted EBITDA margin % 30.2% 34% 35% Adjusted Diluted EPS (2) $0.53 $0.53 $0.59 Adjusted Free Cash Flow $101 $220 $240 17 (1) The updated
Slide 18: Appendix
18 Appendix
Slide 19: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non - GAAP Financial Measures This presentation contains financial measures which have not been calculated in accordance with GAAP, including Adjusted Revenues and Adjusted EBITDA, because they are a basis upon which our management assesses our performance and we believe they
Slide 20: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non - GAAP Financial Measures The use of Adjusted EBITDA instead of GAAP measures has limitations as an analytical tool, and you should not consider Adjusted EBITDA in isolation, or as a substitute for analysis of the Company’s results of operations and operating cash flows a
Slide 21: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non - GAAP Financial Measures Adjusted Net Income and Adjusted Diluted EPS We have begun to use Adjusted Net Income and Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS") in our analysis of the financial performance of the Company . We believe Adjusted Net Income an
Slide 22: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non - GAAP Financial Measures Free Cash Flow and Adjusted Free Cash Flow We use free cash flow and adjusted free cash flow in our operational and financial decision - making and believe free cash flow and adjusted free cash is useful to investors because similar measures are
Slide 23: Reconciliation of Non-GAAP Financial Measures and Required Reported Data
Reconciliation of Non - GAAP Financial Measures and Required Reported Data Reconciliation ($ in millions) December 31 QTD 2019 QTD 2018 Revenue, Net $ 255.0 $ 245.2 (+) Deferred revenue adjustment 0.1 0.2 Adjusted revenue $ 255.1 $ 245.4 Net (loss) $ (84.8) $ (43.5) ( - ) Provision for income taxes
Slide 24: Reconciliation of Non-GAAP Financial Measures and Required Reported Data
Reconciliation of Non - GAAP Financial Measures and Required Reported Data Reconciliation ($ in millions) December 31 Full Year 2019 Full Year 2018 Revenue, Net $ 974.4 $ 968.5 (+) Deferred revenue adjustment 0.4 3.2 ( - ) IPM Divested revenue - (20.5) Adjusted revenue $ 974.8 $ 951.2 Net (loss) $ (
Slide 25: Reconciliation of Non-GAAP Financial Measures and Required Reported Data
Reconciliation of Non - GAAP Financial Measures and Required Reported Data Reconciliation ($ in millions, except per share amounts) December 31 QTD 2019 QTD 2018 Amount Per Share Amount Per Share Revenue, Net $ 255.0 $ 245.2 (+) Deferred revenue adjustment 0.1 0.2 Adjusted revenue $ 255.1 $ 245.4 Ne
Slide 26: Reconciliation ($ in millions, except per share amounts)
Reconciliation ($ in millions, except per share amounts) December 31 Full Year 2019 Full Year 2018 Amount Per Share Amount Per Share Revenue, Net $ 974.4 $ 968.5 (+) Deferred revenue adjustment 0.4 3.2 ( - ) IPM Divested revenue - (20.5) Adjusted revenue $ 974.8 $ 951.2 Net loss $ (211.0) $(0.77) $
Slide 27: DRG Adjusted EBITDA Reconciliation
27 Insert footer Reconciliation of Non - GAAP Financial Measures and Required Reported Data DRG Adjusted EBITDA for the Years Ended December 31, 2019 and 2018 (unaudited) Descriptions Adjusted EBITDA adjustments 1. Includes costs incurred related to various restructuring efforts as a result of chang
Slide 28: 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 28 Reconciliation ($ in million) Twelve Months Ended December 31, 2019 2018 Net cash provided by (used in) operating activities $117.6 $(26.1) Capital expenditures (69.8) (45.4
Slide 29: Non GAAP Reconciliation – Revenues, Net to Adjusted Revenues
Non GAAP Reconciliation – Revenues, Net to Adjusted Revenues 29 Reconciliation Year Ending December 31, 2020 (Forecasted) ($ in millions) Low High Revenues, net $ 1,160.0 $ 1,190.0 Reconciliation Year Ending December 31, 2020 (Forecasted) Low High ($ in millions) Net (loss) income $(70.6) $(45.6) Be
Slide 30: 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 30 Reconciliation Year Ending December 31, 2020 (Forecasted) Low High (in millions) Net cash provided by operating activities $ 201.8 $ 217.4 Capital expenditures $ (68.8) $ (72.4) Free Cash Flow
Slide 31: Quarterly Financial Summary
Quarterly Financial Summary 31 1. Adjusted Revenue excludes the divested IPM business revenues for the period, and adds back the deferred revenue purchase acco unt ing adjustment. 2. See the Appendix for a reconciliation of Net Loss to Adjusted EBITDA. ($ in millions) Q1 2018 Q2 2018 Q3 2018 Q4 2018
Slide 32: Diluted Share Count Comments
32 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 aver
Slide 33: Thank You
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