February 9, 2017 Last Updated 9:20 am

Nielsen wraps up ‘challenging year’ with Q4 revenue up 2%

NEW YORK, NY – February 9, 2017 — Nielsen Holdings plc  today announced fourth quarter and full year 2016 results. Revenues were $1,656 million for the fourth quarter of 2016, up 2.0%, or 3.4% on a constant currency basis, compared to the fourth quarter of 2015. Revenues were $6,309 million for the full year of 2016, up 2.2%, or 4.1% on a constant currency basis, compared to 2015.

“While 2016 was a challenging year, our results reflect the resiliency of our business. We remain focused on our key strategic initiatives and we continue to drive productivity and efficiency in our operations,” said Mitch Barns, Chief Executive Officer of Nielsen.

He continued, “In our Watch segment, our Total Audience Measurement initiative continued to excel, and we saw significant growth in adoption of its many components by both media buyers and sellers. With the approach of the 2017 Upfronts, our Total Audience system is ready to play a key role for our clients.”

“In our Buy segment, emerging markets continued to deliver solid growth. In developed markets, especially the U.S., trends in the fast moving consumer goods industry put pressure on our business. In response, we’ve accelerated investment in our Connected System initiative, designed to drive speed and efficiency for our clients. We expect this to lead to a stronger, higher margin business for Nielsen over time,” Barns concluded.

Fourth Quarter 2016 Operating Results

Revenues within the Buy segment for the fourth quarter of 2016 decreased 1.3% to $868 million, but increased 0.9% on a constant currency basis. Buy revenues in developed markets decreased 1.4%, but increased 0.4% on a constant currency basis, reflecting modest strength in Western Europe, partially offset by softness in our U.S. market. Buy emerging markets revenues increased 4.0%, or 7.2% on a constant currency basis, as our global footprint, coverage expansion, and broad product offerings continue to position us well with both local and multinational clients.

Revenues within the Watch segment for the fourth quarter of 2016 increased 5.8%, or 6.2% on a constant currency basis, to $788 million. Audience Measurement of Video and Text revenues increased 8.4%, or 9.0% on a constant currency basis, primarily due to our ongoing investments and continued client adoption of our Total Audience Measurement system. Audio revenues decreased 1.6% on a reported and constant currency basis. Marketing Effectiveness revenues increased by 6.4%, or 9.2% on a constant currency basis, driven by continued investments in our product portfolio.

Net income for the fourth quarter of 2016 decreased 36.7% on a reported and constant currency basis to $159 million, compared to the fourth quarter of 2015, due to gains of $206 million recorded during the fourth quarter of 2015, primarily associated with an increased stake in Nielsen Catalina Solutions that did not recur in 2016. Net income per share on a diluted basis decreased to $0.44 compared to $0.68 for the fourth quarter of 2015.

Adjusted EBITDA for the fourth quarter of 2016 increased 3.2%, or 3.8% on a constant currency basis, to $548 million, compared to the fourth quarter of 2015. Adjusted EBITDA margins grew 39 basis points, or 13 basis points on a constant currency basis, to 33.1%, due to the benefit of our ongoing productivity initiatives and the operating leverage of the business.

Year Ended December 31, 2016 Operating Results

Revenues for the full year increased 2.2%, or 4.1% on a constant currency basis, to $6,309 million, compared to 2015.

Revenues within the Buy segment decreased 0.7% to $3,322 million, but increased 2.3% on a constant currency basis. Buy revenues in developed markets decreased 0.7%, but increased 0.9% on a constant currency basis reflecting modest strength in Western Europe, partially offset by softness in our U.S. market. Buy emerging markets revenues increased 1.8%, or 8.6% on a constant currency basis, driven by our continued commitment to invest in coverage, which resulted in broad based demand for our services with both our multinational and local clients.

Revenues within the Watch segment increased 5.7%, or 6.3% on a constant currency basis, to $2,987 million. Audience Measurement of Video and Text revenues increased 7.5%, or 8.3% on a constant currency basis, primarily due to our ongoing investments and continued client adoption of our Total Audience Measurement system. Audio revenues decreased 0.8%, or 0.6% on a constant currency basis. Marketing Effectiveness revenues increased 14.3%, or 16.2% on a constant currency basis, due to our continued investments in our product portfolio and clients’ growing demand for our advertising ROI and precision targeting tools.

Net income for the year decreased 11.9%, or 11.2% on a constant currency basis, to $502 million, compared to 2015, as gains of $206 million recorded during the fourth quarter of 2015 did not recur in 2016, and higher restructuring charges were partially offset by solid operating earnings. Net income per share on a diluted basis was $1.39, compared to $1.54 in 2015.

Adjusted EBITDA for the year increased 4.3%, or 5.2% on a constant currency basis, to $1,938 million, compared to 2015. Adjusted EBITDA margins grew 62 basis points, or 31 basis points on a constant currency basis, to 30.7%, due to the benefit of our ongoing productivity initiatives and the operating leverage of the business.

Financial Position

As of December 31, 2016, Nielsen’s cash and cash equivalents were $754 million and gross debt was $7,926 million. Net debt (gross debt less cash and cash equivalents) was $7,172 million and our net debt leverage ratio was 3.70x at the end of 2016. Net capital expenditures were $391 million for the full year of 2016, compared to $401 million for the full year of 2015. Cash taxes were $157 million for the full year of 2016, compared to $159 million for the full year of 2015.

Cash flow from operations increased to $1,296 million for the full year of 2016 from $1,209 million in 2015. Free cash flow for the full year of 2016 increased to $941 million, compared to $808 million in 2015. Cash flow performance was driven by our continued focus on working capital, and lower net capital expenditures.

In January 2017, Nielsen completed the issuance of $500 million aggregate principal amount of 5.0% Senior Notes due 2025. The company intends to apply the net proceeds of this offering for general corporate purposes, which may include capital expenditures, working capital and redemption or repayment of debt, and to fund a portion of the purchase price for its previously announced acquisition of Gracenote from Tribune Media Company, which closed on February 1, 2017.

Capital Allocation

The company repurchased $418 million of shares of its common stock during the full year of 2016. The company has a total of $438 million remaining for repurchase under the existing share repurchase program.

2017 Full Year Guidance

We are updating our 2017 guidance to reflect operating performance, the acquisition of Gracenote, and the recent $500 million debt offering.

  • Total revenue growth on a constant currency basis: 5.0% – 6.0%
  • Adjusted EBITDA margin growth on a constant currency basis: Flat
  • GAAP net income per share: $1.40 – $1.46
  • Free cash flow: ~$900 million

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