Today, Nielsen Holdings plc (NYSE: NLSN) announced its results for the quarter ended June 30, 2020. The Company also refined its 2020 guidance, raising its adjusted EPS range, raising the low end of its adjusted EBITDA and Free Cash Flow estimates on strong cost discipline, and incorporating the impact of planned business exits on revenue. Additionally, the Company continues to make progress toward the planned separation of Nielsen Global Media and Nielsen Global Connect, with the spin-off transaction expected to close in early 2021.

David Kenny, Chief Executive Officer, commented, "We delivered solid results that were in line or above the outlook we provided in April amid a challenging environment due to the global COVID-19 pandemic, with both Media and Connect executing well. This is a testament to both the commitment and dedication of our teams and the strength of our client relationships. Our clients reacted quickly during a time of crisis to provide consumers with essential goods and services, and we also adapted quickly to provide clients with the essential measurement and analytics they need to drive business decisions in a dynamic environment. We took swift action in response to COVID-19 related revenue pressure by instituting greater discipline around operating costs and capital expenditures, enabling us to minimize the impact on EBITDA and free cash flow in the second quarter."

Kenny continued, "In July, we announced a broad-based plan to accelerate our business transformation. We are prioritizing resources to focus on key strategic initiatives, higher margin products and services, and greater efficiency, which will drive agility and scale. Importantly, we expect our actions will permanently reduce our cost structure, driving margin expansion, increased cash generation and providing added flexibility to invest in key growth initiatives that will enable us to better serve our clients in rapidly evolving ecosystems. We have confidence in our ability to deliver on our objectives and we are refining our guidance for the full year 2020. We remain focused on the separation of Nielsen Global Media and Nielsen Global Connect, which we expect to complete in the first quarter of 2021. We have two strong businesses and both are well-positioned for their futures as standalone companies."

Second Quarter 2020 Results

• 2nd quarter revenues were $1,496 million, down 8.1% on a reported basis, or down 5.9% on a constant currency basis, compared to the prior year.
• Nielsen Global Media revenues decreased 5.3% to $811 million on a reported basis, or a decrease of 4.6% on a constant currency basis, compared to the prior year.
  • Audience Measurement revenues decreased 3.1% on a reported basis, or a decrease of 2.4% on a constant currency basis, reflecting the impact of the COVID-19 pandemic on sports and non-contracted revenue and ongoing pressure in local television.
  • Plan/Optimize revenues decreased 11.1% on a reported basis, or a decrease of 10.3% on a constant currency basis, primarily reflecting the impact of the COVID-19 pandemic on sports, Gracenote auto and short-cycle revenue and ongoing pressure in Telecom.
• Nielsen Global Connect revenues decreased 11.3% to $685 million on a reported basis, or a decrease of 7.4% on a constant currency basis.
  • Measure revenues decreased 9.3% on a reported basis, or a decrease of 5.0% on a constant currency basis, reflecting the impact of the COVID-19 pandemic on retail measurement services in markets that are heavy in traditional trade.
  • Predict/Activate revenues decreased 15.9% on a reported basis, or a decrease of 13.2% on a constant currency basis, reflecting the impact of the COVID-19 pandemic, particularly in custom insights and innovation, partially offset by the January 2020 acquisition of Precima.
• Net loss for the second quarter was $30 million on a reported basis, compared to net income of $123 million in the second quarter of 2019. Net loss per share on a diluted basis was $0.08 per share, compared to net income per share on a diluted basis of $0.34 per share for the second quarter of 2019. Net loss was impacted by higher restructuring charges, higher depreciation and amortization expense, and the impairment of long-lived assets related to the exit of certain smaller, underperforming markets and non-core businesses primarily in the Media segment.
• Adjusted earnings per share was $0.41 per share, compared to $0.53 per share in the prior year, reflecting lower adjusted EBITDA and higher depreciation and amortization year over year, partially offset by lower taxes.
• Adjusted EBITDA for the second quarter decreased 9.4% to $426 million on a reported basis, or a decrease of 7.6% on a constant currency basis, compared to the prior year.
• Adjusted EBITDA margin decreased 39 basis points to 28.5% on a reported basis, or 51 basis points on a constant currency basis compared to the prior year, reflecting pressures in both segments from the COVID-19 pandemic and investments in Media, partially offset by cost savings.
• The reported amounts above were impacted by weaker currencies versus the dollar during the second quarter, which had a 220 basis negative impact on reported revenue growth and a 180 basis negative impact on EBITDA.

Financial Position

• In June, Nielsen refinanced $1 billion of debt, pushing out maturities and redeeming the $800 million outstanding principal amount of the 4.500% Notes due 2020 and redeeming $200 million of the $625 million outstanding aggregate principal amount of the 5.500% Senior Notes due 2021.
• As of June 30, 2020, Nielsen's cash and cash equivalents were $438 million and gross debt was $8,421 million.
• Net debt (gross debt less cash and cash equivalents) was $7,983 million and Nielsen's net debt leverage ratio was 4.46x at the end of the quarter.
• Cash flow from operations increased to $250 million for the second quarter of 2020, from $226 million in the second quarter of 2019. Cash flow performance was primarily driven by working capital improvements and lower tax payments, partly offset by lower EBITDA.
• Cash taxes were $41 million for the second quarter of 2020, compared to $76 million in the second quarter of 2019.
• Net capital expenditures were $120 million for the second quarter of 2020, compared to $108 million in the second quarter of 2019.
• Free cash flow for the second quarter of 2020 increased to $130 million, or $154 million excluding separation-related cost cash flows, compared to $118 million in the second quarter of 2019.

Dividend

On July 16, 2020, our Board of Directors declared a quarterly dividend of $0.06 per share of Nielsen's common stock. The dividend is payable on September 3, 2020 to shareholders of record at the close of business on August 20, 2020 and is an estimated $21 million.

2020 Full Year Guidance

The Company is refining full year 2020 guidance, as highlighted below:

• Total revenue growth on a constant currency basis: -4% to -2% (previously -4% to -1%)
• Adjusted EBITDA margin: 29% - 30% (previously 28.5% - 29.5%)
• Adjusted EBITDA: $1,800 - $1,860 million (previously $1,790 - $1,860 million)
• Adjusted earnings per share: $1.50 - $1.62 (previously $1.43 - $1.58)
• Free cash flow: $480 - $530 million (previously $460 - $530 million)

These estimates exclude $275 - $300 million of cash separation-related costs in 2020, the majority of which will occur close to the separation date.

2020 Guidance Non-GAAP Reconciliations

These reconciliations include preliminary forecasts based on current expectations and include certain assumptions on the classification and timing of certain separation-related costs and the tax deductibility of such costs.

About Nielsen

Nielsen Holdings plc (NYSE: NLSN) is a global measurement and data analytics company that provides the most complete and trusted view available of consumers and markets worldwide. Nielsen is divided into two business units. Nielsen Global Media provides media and advertising industries with unbiased and reliable metrics that create a shared understanding of the industry required for markets to function. Nielsen Global Connect provides consumer packaged goods manufacturers and retailers with accurate, actionable information and insights and a complete picture of the complex and changing marketplace that companies need to innovate and grow.

Our approach marries proprietary Nielsen data with other data sources to help clients around the world understand what's happening now, what's happening next, and how to best act on this knowledge.

An S&P 500 company, Nielsen has operations in approximately 100 countries, covering more than 90% of the world's population. For more information, visit www.nielsen.com.