Nielsen reports 4th quarter and full year 2021 results

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

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