NLSN - Nielsen Reports 4th Quarter and Full Year 2021 Results; Provides 2022 Guidance

- 2021 revenues of $3.5 billion increased 4.1% on a reported basis, 3.4% on a constant currency basis & 4.9% organic constant currency, above guidance

- Net income per share of $1.53 (diluted, from continuing operations) in 2021; Adjusted EPS of $1.81, above guidance

- Other key metrics at the high end or above guidance ranges

- Executed on key product milestones in 2021; on track to deliver Nielsen ONE cross-media measurement solution in 2022

- 2022 guidance issued; progressing toward medium-term targets

- Board of Directors approves $1 billion share repurchase authorization

PR Newswire

NEW YORK , Feb. 28, 2022 /PRNewswire/ -- Nielsen Holdings plc (NYSE: NLSN) announced fourth quarter and full year 2021 results. For the full year, revenues increased 4.1% on a reported basis, 3.4% on a constant currency basis, and 4.9% on an organic constant currency basis, above guidance. Adjusted EBITDA and Adjusted EPS exceeded the guidance range, and Free Cash Flow was at the high end of the guidance range. Nielsen also issued 2022 guidance and announced a $1 billion share repurchase authorization.

David Kenny , Chief Executive Officer, commented, "We delivered strong results in 2021. We successfully sold Nielsen Global Connect, hit significant product milestones, and exceeded all of our original 2021 guidance metrics despite facing some unanticipated challenges. We are strongly positioned within the media ecosystem, with growing relevance as audiences shift to streaming, and we are delivering value to clients across our three essential solutions. We made measurable progress toward becoming a digital-first company, and our strategy aligns with where growth in the industry is coming from. We are piloting the first iteration of Nielsen ONE, which we launched in January, with a representative group of clients across media buyers and sellers and feedback has been positive."

"We also made progress on strengthening our balance sheet, reducing our net debt leverage by over half a turn in 2021. We now have the flexibility to return more capital to shareholders while continuing to invest in organic growth initiatives and pursue strategic, tuck-in M&A. Our $1 billion share repurchase authorization reflects our Board's confidence in both our short and long-term growth prospects and enables us to deliver value to our shareholders."

Fourth Quarter 2021 Results
Unless indicated otherwise, the results referenced in this press release relate to Nielsen's continuing operations. Beginning in the first quarter of 2021, our former Global Connect business was sold and therefore reclassified to discontinued operations for all periods presented. For comparability, non-GAAP metrics have been adjusted to exclude certain interest costs, as if the sale of Global Connect and resulting de-levering occurred on January 1, 2020 .

Our business consists of two major product categories: One Measurement Solutions ("Measurement") and Impact Marketing Solutions/ Gracenote Content Solutions ("Impact" and "Content" respectively, and together "Impact / Content"). Previously, Measurement was referred to as "Audience Measurement" and Impact / Content was referred to as "Outcomes / Content." The updated names are a result of Nielsen's corporate rebranding which we believe better reflects the company's transformation and focus on the global future of media.

• Fourth quarter revenues of $894 million increased 2.5% on a reported basis, 2.9% on a constant currency basis, and 4.7% on an organic constant currency basis compared to the prior year period.
• Measurement revenues of $647 million increased 3.7% on a reported basis, 4.0% on a constant currency basis, and 5.2% on an organic constant currency basis compared to the prior year period. Overall growth was solid, with national and digital measurement products showing strength, and a third consecutive quarter of modest growth in local products.
• Impact / Content revenues of $247 million decreased 0.4% on a reported basis, were flat on a constant currency basis, and increased 3.4% on an organic constant currency basis compared to the prior year period. Revenue in Impact grew in the high single digits on an organic constant currency basis, driven by growth in short-cycle revenue and recovery in the Sports business, offset in part by a timing-related decline in Content.
• Net income from continuing operations attributable to Nielsen shareholders for the fourth quarter was $242 million , compared to $8 million in the fourth quarter of 2020. Net income from continuing operations per share on a diluted basis for the fourth quarter was $0.67 , compared to $0.02 for the fourth quarter of 2020. The improvement in net income from continuing operations was driven by a tax benefit in the quarter due to discrete items (primarily the utilization of foreign tax credits, benefits associated with closing audits and open tax years, and a reduction in deferred tax liabilities) and lower interest expense, partially offset by the increased costs to operate as a standalone company without Global Connect. In addition, Nielsen recorded a non-cash charge of $97 million , or $0.27 per share, related to impairment of intangible assets in the fourth quarter 2020.
• Reported EPS of $0.59 includes EPS of $0.67 from continuing operations and EPS of $(0.08) from discontinued operations.
• Adjusted EPS was $0.46 for the fourth quarter, compared to $0.32 in the prior year period, reflecting a lower tax rate year over year, offset in part by lower Adjusted EBITDA and higher depreciation & amortization
• Adjusted EBITDA for the fourth quarter was $351 million , compared to $380 million in the fourth quarter of 2020, down 7.6% on a reported basis and 7.4% on a constant currency basis.
• As expected, Adjusted EBITDA margin of 39.3% decreased 432 basis points on a reported basis, or a decrease of 435 basis points on a constant currency basis, compared to the prior year, reflecting the return of the temporary costs savings realized in 2020 in response to the COVID-19 pandemic and investments in growth initiatives, partially offset by the strong revenue performance in the quarter and benefits from the 2020 optimization plan.
• Reported results were impacted by weaker currencies versus the dollar during the fourth quarter, which had a 40 basis point negative impact on reported revenue growth and a 20 basis point negative impact on Adjusted EBITDA growth.
• On a reported basis for the fourth quarter of 2021, as compared to the fourth quarter of 2020 (which included Global Connect for the full quarter):
• Cash flow from operations decreased to $227 million from $337 million in the prior year period; free cash flow decreased to $124 million . Cash taxes were $32 million , compared to $61 million in the prior year period.
• Net capital expenditures of $103 million versus $174 million in the prior year period, decreased largely due to timing and the absence of Global Connect in the current period.
• As it relates to continuing operations for the fourth quarter of 2021, as compared to the fourth quarter of 2020:
• Cash flow from operations decreased to $232 million from $297 million in the prior year period, primarily driven by working capital timing, higher cash taxes and lower Adjusted EBITDA, partially offset by lower interest payments.
• Cash taxes were $32 million , compared to $20 million in the prior year period.
• Free cash flow was $133 million compared to $203 million in the prior year period. Free cash flow has been adjusted to exclude certain interest costs and to exclude separation-related costs. The prior year period includes an adjustment for cash costs to position Nielsen as a stand-alone company. Net capital expenditures of $103 million were flat.

Full Year 2021 Results

• 2021 revenues of $3,500 million increased 4.1% on a reported basis, 3.4% on a constant currency basis, and 4.9% on an organic constant currency basis compared to the prior year period.
• Measurement revenues of $2,545 million increased 3.7% on a reported basis, 3.2% on a constant currency basis, and 4.0% on an organic constant currency basis compared to the prior year period. Overall growth was solid, with strength in national and digital measurement products and local products returning to positive growth.
• Impact / Content revenues of $955 million increased 5.4% on a reported basis, 3.9% on a constant currency basis, and 7.5% on an organic constant currency basis compared to the prior year period. This was driven in part by improving trends in short-cycle revenues, solid growth in Content, and recovery in the Sports business.
• Net income from continuing operations attributable to Nielsen shareholders for the year was $551 million , compared to $191 million in 2020. Net income from continuing operations per share on a diluted basis was $1.53 , compared to $0.53 in 2020. During 2020, Nielsen recorded impairment charges of $146 million , or $0.41 per share, primarily related to impairment of intangible assets. Net income from continuing operations was also impacted by lower depreciation and amortization expense and lower restructuring charges in 2021.
• Reported EPS on a diluted basis of $2.67 includes EPS of $1.53 from continuing operations and $1.14 of EPS from discontinued operations. The $1.14 includes the gain on the sale of Global Connect of $1.36 , net of taxes, partially offset by a $0.21 net loss primarily due to the net loss from Global Connect (through the date of sale).
• Adjusted EPS was $1.81 , compared to $1.45 in the prior year. This reflected higher Adjusted EBITDA, lower depreciation and amortization, lower interest expense, and lower tax expense versus 2020.
• Adjusted EBITDA was $1,491 million , compared to $1,411 million in the prior year, up 5.7% on a reported basis and 5.4% on a constant currency basis.
• Adjusted EBITDA margin of 42.6% increased 62 basis points on a reported basis, or an increase of 79 basis points on a constant currency basis, compared to the prior year, driven by the strong revenue performance and benefits from the 2020 restructuring, partially offset by the return of the temporary costs savings realized in 2020 in response to the COVID-19 pandemic and investments in growth initiatives.
• Reported results were impacted by stronger currencies versus the dollar during the year, which had a 70 basis point positive impact on reported revenue growth and a 30 basis point positive impact on Adjusted EBITDA growth.
• On a reported basis for the full year of 2021, as compared to 2020 (which included Global Connect for the full year):
• Cash flow from operations decreased to $666 million from $999 million in the prior year period; free cash flow decreased to $328 million . The year over year comparison reflects the absence of Global Connect in the current period. Cash taxes were $128 million , compared to $189 million in the prior year period.
• Net capital expenditures were $338 million versus $519 million in the prior year period, decreased largely due to timing and the absence of Global Connect for the full year of 2021.
• As it relates to continuing operations for the full year of 2021, as compared to the full year of 2020:
• Cash flow from operations decreased to $911 million from $936 million in the prior year period, primarily driven by working capital timing and higher cash taxes, offset in part by higher Adjusted EBITDA and lower interest payments.
• Cash taxes were $107 million , compared to $67 million in the prior year period.
• Free cash flow was $647 million compared to $586 million in the prior year period. Free cash flow has been adjusted to exclude certain interest costs and to exclude separation-related costs. The prior year period also includes an adjustment for cash costs to position Nielsen as a stand-alone company. Net capital expenditures were $313 million , compared to $305 million in the prior year period.

Financial Position

• As of December 31, 2021 , the Company had cash and cash equivalents of $380 million and gross debt of $5.626 billion , resulting in net debt of $5.246 billion and a net debt leverage ratio of 3.52x at the end of the year compared to 4.09x at the end of 2020.

Return of Capital

On February 10, 2022 , Nielsen's Board of Directors declared a quarterly dividend of $0.06 per share of Nielsen's common stock. The dividend is payable on March 17, 2022 to shareholders of record at the close of business on March 3, 2022 .

On February 26, 2022, Nielsen's Board of Directors authorized the repurchase of up to $1 billion of the Company's ordinary shares. The Board of Directors authorization may be suspended, modified or terminated at any time without prior notice subject to compliance with applicable laws and regulations. This share repurchase authorization replaces all previous authorizations.

This authorization has been executed within the limitations of the authority granted to Nielsen at its annual shareholders meeting held on May 25, 2021 , such authority to remain in place until the end of the 2022 annual shareholders meeting, or close of business on August 25, 2022 , whichever is earlier. As is customary for a UK company that is NYSE listed, the Company intends to request reauthorization from shareholders at the 2022 annual shareholder meeting.

Information regarding share repurchases will be available in the Company's periodic reports on Form 10-Q and 10-K filed with the Securities and Exchange Commission as required by the applicable rules of the Exchange Act.

2022 Nielsen Full Year Guidance

The Company is providing full year 2022 guidance as highlighted below.

• Total revenue growth on a constant currency basis: +3.5% to 4.5%
• Organic revenue growth on a constant currency basis: +4.0% to 5.0%
• Adjusted EBITDA margin: 42.6% - 42.9%
• Adjusted earnings per share: $1.81 - $1.91
• Free cash flow: $650 - $700 million

2022 Guidance Non-GAAP Reconciliations

These reconciliations include preliminary forecasts based on current expectations.

Conference Call and Webcast

Nielsen will hold a conference call to discuss today's announcements at 8:00 a.m. U.S. Eastern Time (ET) on February 28, 2022 . The audio and slides for the call can be accessed live by webcast at http://nielsen.com/investors or by dialing +1-888-330-2022. Callers outside the U.S. can dial +1-646-960-0690. Please note that the conference ID is required to access this call; the conference ID is 3610696.

A replay of the event will be available on Nielsen's Investor Relations website, http://nielsen.com/investors , from 11:00 a.m. ET , February 28, 2022 , until 11:59 p.m. ET , March 7, 2022 . The replay can be accessed from within the U.S. by dialing +1-800-770-2030. Other callers can access the replay at +1-647-362-9199. The replay pass code is 3610696.

Forward-looking Statements

This communication includes information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements include those relating to "2022 Full Year Guidance" as well as those that may be identified by words such as "will," "intend," "expect," "anticipate," "should," "could" and similar expressions. These statements are subject to risks and uncertainties, and actual results and events could differ materially from what presently is expected. Factors leading thereto may include, without limitation, the risks related to the COVID-19 pandemic on the global economy and financial markets, the uncertainties relating to the impact of the COVID-19 pandemic on Nielsen's business, the failure of our new business strategy in accomplishing our objectives, economic conditions in the markets Nielsen is engaged in, impacts of actions and behaviors of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules and processes affecting Nielsen's business and other specific risk factors that are outlined in our disclosure filings and materials, which you can find on http://www.nielsen.com/investors , such as our 10-K, 10-Q and 8-K reports that have been filed with the Securities and Exchange Commission. Please consult these documents for a more complete understanding of these risks and uncertainties. This list of factors is not intended to be exhaustive. Such forward-looking statements only speak as of the date of these materials, and we assume no obligation to update any written or oral forward-looking statement made by us or on our behalf as a result of new information, future events or other factors, except as required by law.

About Nielsen

Nielsen shapes the world's media and content as a global leader in audience measurement, data and analytics. Through our understanding of people and their behaviors across all channels and platforms, we empower our clients with independent and actionable intelligence so they can connect and engage with their audiences—now and into the future.

An S&P 500 company, Nielsen (NYSE: NLSN) operates around the world in more than 55 countries. Learn more at www.nielsen.com or www.nielsen.com/investors and connect with us on Instagram, Facebook, Twitter, LinkedIn.

Condensed Consolidated Financial Statements
The following sets forth our unaudited financial statements for the periods indicated:

• Condensed Consolidated Statements of Operations
• Condensed Consolidated Balance Sheets
• Condensed Consolidated Statements of Cash Flows

These financial statements are unaudited, but in our opinion contain necessary adjustments for a fair presentation in accordance with GAAP.  Given the sale of our Global Connect business in the first quarter of 2021, Global Connect amounts are presented in separate discontinued operations line items in the Statements of Operations and in the Balance Sheets. The Condensed Consolidated Statement of Cash Flows presents combined cash flows from continuing operations with cash flows from discontinued operations within each cash flow statement category.

Certain Non-GAAP Measures

We use the non-GAAP financial measures discussed below to evaluate our results of operations, financial condition, liquidity and indebtedness. We believe that the presentation of these non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations, cash flows and indebtedness and that, when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance.  These non-GAAP measures are also consistent with how management evaluates the company's operating performance and liquidity. In addition, these non-GAAP measures address questions the Company routinely receives from analysts and investors, and in order to assure that all investors have access to similar data, we have determined that it is appropriate to make this data available to all investors. None of the non-GAAP measures presented should be considered as an alternative to net income or loss, operating income or loss, cash flows from operating activities, total indebtedness or any other measures of operating performance and financial condition, liquidity or indebtedness derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Our use of these terms may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.

Constant Currency Presentation

We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company's performance. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period exchange rates and comparing these adjusted amounts to our current period reported results. No adjustment has been made to foreign currency exchange transaction gains or losses in the calculation of constant currency net income.

Organic Constant Currency Presentation

We define organic constant currency revenue as constant currency revenue excluding the net effect of business acquisitions and divestitures over the past 12 months. Refer to the Constant Currency Presentation section above for the definition of constant currency. We believe that this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Adjusted EBITDA

We define Adjusted EBITDA as net income or loss from continuing operations of our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, impairment of goodwill and other long-lived assets, share-based compensation expense and other non-operating items from our consolidated statements of operations, as well as certain other items that arise outside the ordinary course of our continuing operations specifically described below.

Impairment of goodwill and other long-lived assets : We exclude the impact of charges related to the impairment of goodwill and other long-lived assets. We believe that the exclusion of these impairments, which are non-cash, allows for more meaningful comparisons of operating results to peer companies. We believe that this increases period-to-period comparability and is useful to evaluate the performance of the total company.

Share-based compensation expense : We exclude the impact of costs relating to share-based compensation. Due to the subjective assumptions and a variety of award types, we believe that the exclusion of share-based compensation expense, which is typically non-cash, allows for more meaningful comparisons of operating results to peer companies. Share-based compensation expense can vary significantly based on the timing, size and nature of awards granted.

Restructuring charges : We exclude restructuring expenses, which primarily include employee severance, office consolidation and contract termination charges, from our Adjusted EBITDA to allow more accurate comparisons of the financial results to historical operations and forward-looking guidance. By excluding these expenses from our non-GAAP measures, management is better able to evaluate our ability to utilize our existing assets and estimate the long-term value these assets will generate for us. Furthermore, we believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.

Other non-operating expenses, net : We exclude foreign currency exchange transaction gains and losses primarily related to intercompany financing arrangements as well as other non-operating income and expense items, such as, gains and losses recorded on business combinations or dispositions, sales of investments, net income attributable to noncontrolling interests and early redemption payments made in connection with debt refinancing. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.

Other items : To measure operating performance, we exclude certain expenses and gains that arise outside the ordinary course of our continuing operations. Such costs primarily include legal settlements and related fees, acquisition related expenses, business optimization costs and other transaction costs. We believe the exclusion of such amounts allows management and the users of the financial statements to better understand our financial results.

Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Adjusted EBITDA margin is Adjusted EBITDA for a particular period expressed as a percentage of revenues for that period.

We use Adjusted EBITDA to measure our performance from period to period to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. In addition to Adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance.

Adjusted EBITDA should not be considered as an alternative to net income or loss, operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.  In addition, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies and may, therefore, have limitations as a comparative analytical tool.

Adjusted Earnings per Share

We define Adjusted Earnings per Share as net income attributable to Nielsen shareholders from continuing operations per share (diluted) from our consolidated statements of operations, excluding depreciation and amortization associated with acquired tangible and intangible assets, restructuring charges, impairment of goodwill and other long-lived assets, share-based compensation expense, other non-operating items from our consolidated statements of operations, certain other items considered unusual or non-recurring in nature, adjusted for income taxes related to these items. Management believes that this non-GAAP measure is useful in providing period-to-period comparisons of the results of the Company's ongoing operating performance.