3Q 2011 Investor Presentation
Transcript of 3Q 2011 Investor Presentation
NLSN 3Q 2011
Investor
Presentation
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 2
Forward Looking Statements
The following discussion contains forward-looking statements, including those about Nielsen’s outlook
and prospects, in the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are those which are not historical facts. These and other statements that relate to future
results and events are based on Nielsen’s current expectations.
Our actual results in future periods may differ materially from those currently expected because of a
number of risks and uncertainties. The risks and uncertainties that we believe are material are outlined
in our disclosure filings and materials, which you can find on http://ir.nielsen.com. Please consult these
documents for a more complete understanding of these risks and uncertainties. We disclaim any
intention or obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required by law.
Our outlook is provided as of October 27, 2011 for the purpose of providing information about current
expectations for 2011. This information may not be appropriate for other purposes.
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 3
Who is Nielsen
Deliver critical media and marketing information, analytics and
industry expertise about “What Consumers Buy” and
“What Consumers Watch” on a global and local basis
What
we do
Operate in over 100 countries worldwide
Over 90 years of operating experience
Private equity ownership since 2006
Incorporated in Netherlands
January 2011 Initial Public Offering NYSE: NLSN
2010 Revenues of $5.1 billion
Adjusted EBITDA of $1.4 billion
Our
history
Recent
results
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Investment Highlights
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Comprehensive understanding of what consumers buy and watch
Global leader in our segments with market presence in ~100 countries
“Mission critical” measurement and analytics embedded in client workflows
Syndicated, scalable products and services
Favorable market trends provide organic growth opportunities
Proven track record of growth and economic resilience
Accelerated earnings growth through deleveraging
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
• Multi-year contract
• 70+ year relationship
• Multi-year contract
• 50+ year relationship
Retail sale measurement
of consumer goods in stores
Measurement of TV viewing,
online surfing and mobile phone activity
Consumer packaged goods clients
• Enhance sales and marketing
• Optimize pricing and promotion
• Monitor distribution and inventory
Media clients
• Price advertising inventory
• Maximize value of content
• Plan, optimize and measure ad spending
5
Foundation of Nielsen’s Business Model
What Consumers Buy What Consumers Watch
Our measurements and analytics are embedded in client metrics, strategy and daily operations
We provide:
This helps:
An example:
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 6
What Consumers Buy: 2010 revenue $3,260M
We provide a comprehensive view of the global consumer
InformationRetail sales measurement
and market share information
InsightsAdvanced analytical
capabilities and solutions
• Presence in ~100 countries
• Measure billions of
monthly point-of-sale
transactions
• Proprietary data
• 250,000 household
panelists in 25 countries
• Demand strategy
• Product innovation
• Pricing and promotion
• Marketing ROI
• Help clients “see
around corners”
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 7
What Consumers Watch: 2010 revenue $1,698M
InformationGlobal audience measurement
across devices and platforms
InsightsAudience analytics, advertising
effectiveness and consumer research
We measure consumption across all distribution channels
• Television: 29 countries
Online: 46 countries
Mobile: 10 countries
• “Currency” for U.S
television advertising
• Proprietary, privacy-
protected data methods
• Innovation around
changing viewer behavior
(online, tablet, mobile, social)
• Solutions for advertisers
to increase impact
• Analytics to enhance the
value of media inventory
• Leader in social media
measurement
• Strategic relationships(Google, Facebook, McKinsey)
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Buy Watch Highlights
Long-Term, Best-In-Class Client Base
• More than 20,000 clients
• Relationships with top 10
clients for over 30 years
• Long term contracts provide
stable, recurring revenues
• No client represents more
than 4% of 2010 revenue
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Expositions Segment
9
Highlights
• 2010 revenue of $168 million - 3.3% of total revenue
• Completed disposition of publishing assets in 2010
• One of the largest operators of business-to-business trade shows in US
• Produce ~40 shows, connecting ~270,000 buyers and sellers across 20 industries
• Strong margins and cash flows
Expositions Properties
Growth expected from late cycle recovery, audience expansion, and product extensions
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 10
Industry Trends Generate Opportunities
Favorable Industry Trends
• Growth in developing markets
• Media and consumer fragmentation
• Global consumer demographic shifts
• Consumers more connected, in control
• Consumers looking for greater value
• Privacy and industry quality standards
Nielsen is
more important
today than
ever before
No provider brings you closer to the consumer
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 11
Framework for Growth
Stable base with numerous growth opportunities
• Developing markets
• Insight & analytics
• Online & mobile
• Developed markets
• Syndicated products
• Blue chip clients
• Multi-year contracts
• Predictable results in all
market environments
Revenue Contribution
Steady growth businesses
Higher growth businesses
• Developing markets
• Cross-platform initiatives
• Insights and analytics
• Innovative platform investments
• Tuck-in acquisitions
Growth Priorities
~2/3
~1/3
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
7%
8%
3%
1%
GDP growth Middle class pop growth
Developing Developed
2007 2010
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Emerging middle class represents ~2 billion people and ~$7 trillion annual spend4
Developing Markets
Key drivers of opportunity
1 Source: International Monetary Fund, World Economic Outlook Database, October 2009
6%
4 Source: McKinsey Quarterly, August 2010 “Capturing the World’s Emerging Middle Class”; David Court and Laxman Narasimhan.
2 Based on data from Kharas, H. (2010),« The Emerging Middle Class in Developing Countries »,p. 28, OECD Development Centre Working Papers, No. 285, doi : 10.1787/5kmmp8lncrns-en
1 2
2%
<1%
Developing markets revenue 3
$716
$996CAGR = 13.5%
9%
3 Revenue growth rate derived on a constant currency basis; figures are as reported
($ millions)
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Nielsen's Global Breadth and Depth
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Well-positioned to fulfill our clients’ needs around the world
Nielsen presence
Past: West East
Future: West East
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 14
Unique capability to track audiences across multiple channels and devices
Nielsen Measures Cross-Platform Consumption
1 Source: Nielsen. Viewership data as of August 31, 2011
2 Source: Veronis Suhler Stevenson, Communications Industry Forecast 2009–2013
US TV viewership continues to rise1…
1949-1950
4 hrs 35 mins
2009-2010
8 hrs 27 mins
Individual daily time
viewing (4Q 2009)1
2009
US ad spend2
0:53
0:07
$70bn
$37bn
$2bn
5:08(hrs : mins)
TV
PC
Mobile
Ave
rag
e d
ail
y h
ou
se
ho
ld v
iew
ing
...online and mobile are additive
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 15
Focus on Innovation
Answers on
DemandIntegrated information and
technology platform for Buy
China Consumer
InsightsIntegrating purchasing
behavior with media exposure
• Cutting edge decision support platform
• 25% faster response times
• On demand flexibility
• Launched Kraft, P&G and Safeway
• Linking Buy and Watch data
• Coverage across 8 major provinces
• Powerful insights at national and local level
• Open, scalable platform
• On the fly analytics
Strategic
RelationshipsFurther Integration of
Buy and Watch
Specific investments to build capabilities that anticipate clients’ needs
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 16
Compelling Financial Model
Consistent
revenue
growth
Recurring
revenue
Operating
leverage
Deleveraging
• Growth in existing and new solutions
• Stability through recession
• Developing market exposure
• Embedded nature of solutions
• Multi-year contracts
• Leading market positions
• Culture of cost leadership
• Scalable platform
• Global, low-cost talent management
• Strong free cash flow generation
• Favorable tax attributes
• Disciplined capital spending
• 5.2% CAGR from 2007 to 2010
• Developing markets revenue
grew 17% in 2010
• High renewal rates
• 70% recurring Watch & Buy revenue
• 30+ year relationship with top clients
• Sustainable operating efficiencies
• Adj. EBITDA margin benefit
• Significant product investments
• Net debt leverage reduced from 9.1x
in 12/31/06 to 4.2x as of 9/30/11
• Low, sustainable cash tax rate
Priorities Results
Note: Revenue growth rates derived on a constant currency basis
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 17
Consistent Annual Financial Performance
Revenue Adjusted EBITDA
Note: Revenue and EBITDA growth rates derived on a constant currency basis; figures are as reported
2007 2008 2009 2010 2007 2008 2009 2010
7.4% 6.1% 4.0%
Constant currency growth
24.2% 25.1% 27.3%
Adjusted EBITDA Margin
27.5%6.1%
$4,808$4,458
$4,806$5,126
$1,081
$1,205
$1,411$1,312
($ millions) ($ millions)CAGR = 5.2% CAGR = 9.7%
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Quarterly Financial Performance
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Revenue Adjusted EBITDA
Note: Revenue growth rates derived on a constant currency basis; figures are as reported
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
6.8%
Constant currency growth
28.8%
Adjusted EBITDA Margin
29.3%7.2%
$1,289
$1,371$402
$371
($ millions) ($ millions)
$1,302
$320
7.3% 24.6%
$1,396
$386
27.7%4.9%
$1,413
5.8%
$408
28.9%
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
$2,993$3,260
$1,339$1,480 $1,635
$1,698
$3,084$2,868
$168
$180$240
$248
2007 2008 2009 2010
Buy Watch Expo
Annual Segment Revenue Performance
Revenue Segment Growth Rates (constant currency)
Note: Revenue growth rates derived on a constant currency basis; figures are as reported
6.1%5.0%
2.7%
8.2%
9.5%10.4% 11.5%
-3.9%
-6.7%
3.7%
7.6%
2007 2008 2009 2010
Buy Watch Expo
($ millions)
-24.6%
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Quarterly Performance by Segment
Revenue
Note: Figures are as reported
$815$911 $906
$418
$443
$431
$447 $443
$808$910
$63
$18
$56
$38 $64
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Buy Watch Expo
($millions)
Adjusted EBITDA
$134
$194 $192
$165
$175
$163
$185 $180
$240
$169
$37$13
$33
$2
$36
Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11
Buy Watch Expo
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
2011-12 2013 2014 2015 2016 2017 2018
9.1x7.9x 7.4x
6.2x 5.8x4.2x
2006 2007 2008 2009 2010 Q3 2011
Proactive Balance Sheet Management
Debt Maturity Profile
$197
$1,670
$230
$500
$2,891
$27
$1,084
Note: Debt maturity excludes $131M of capital leases and miscellaneous debt and $288M of Mandatory Convertible Subordinated Bonds due 2013 that convert into common stock upon maturity.
Deleveraging amounts include capital leases
Recent Actions and Results
• Demonstrated consistent access to
capital markets during credit crisis
• Extended $3.25bn of our 2013
maturities to 2016 / 2017
• Refinanced $1.1bn of our 2014
maturities to 2018
• IPO and Convertible Bond proceeds
of $1.8bn used to repay debt
• Net debt ratio reduced from 5.8x at
12/31/10 to 4.2x at 9/30/11
• Achieved credit rating upgrades to
Ba3 (Moody’s), BB- (S&P)
($millions)
Deleveraging Progress
(as of 9/30/11)
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
2011 Guidance – October 27, 2011
Capital Expenditures $320M - $360M
Cash Restructuring $70M - $100M
Net Book Interest (a) $455M - $465M
Net Cash Interest $440M - $450M
Cash Taxes $130M - $140M
Estimated Wtd. Avg.
Diluted Shares
Outstanding for
FY 2011(c)
367M
(a) Excludes mandatory convertible subordinated bond interest(b) Reflects adjustments in 2010 of $168M to remove comparable period interest on debt retired with IPO proceeds(c) On as-converted basis, includes 10,416,700 shares associated with mandatory convertible bonds
(amounts presented on constant currency basis)
Revenue Growth 5-7%
Adjusted EBITDA Margin
Growth30 to 50 bps
Adjusted Net Income
Growth (a)~ 26 to 30% (b)
Deleveraging (a) ~ 0.5x (b)
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Investment Highlights
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Comprehensive understanding of what consumers buy and watch
Global leader in our segments with market presence in ~100 countries
“Mission critical” measurement and analytics embedded in client workflows
Syndicated, scalable products and services
Favorable market trends provide organic growth opportunities
Proven track record of growth and economic resilience
Accelerated earnings growth through deleveraging
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Appendix
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Certain non-GAAP measures
Overview of Non-GAAP Presentations
We consistently use the below non-GAAP financial measures to evaluate the results of our operations. 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 and that when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. 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 or any other performance measures of operating performance or liquidity 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.
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, consistent with how we evaluate our 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.
Net Debt Leverage Ratio
The net debt leverage ratio is defined as net debt as of the balance sheet date divided by Adjusted EBITDA for the twelve months then ended. Net debt and the net debt leverage ratio are not presentations made in accordance with GAAP, and 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.
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Certain non-GAAP measures (cont’d)
Adjusted EBITDA
We define Adjusted EBITDA as net income or loss from our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, restructuring charges, goodwill and intangible asset impairment charges, stock compensation expense and other non-operating items from our consolidated statements of operations as well as certain other items considered unusual or non-recurring in nature. 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. We use Adjusted EBITDA to consistently measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors.
Adjusted Net Income
We define Adjusted Net Income as net income or loss from our consolidated statements of operations before income taxes, depreciation and amortization associated with acquired tangible and intangible assets, restructuring charges, goodwill and intangible asset impairment charges, other non-operating items from our consolidated statements of operations and certain other items considered unusual or non-recurring in nature, reduced by cash paid for income taxes. Also excluded from Adjusted Net Income is interest expense attributable to the mandatory convertible subordinated bonds due 2013.
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Captures benefit of deleveraging
Incorporates attractive tax attributes
• Long-term planning opportunities
• Sustainable, low cash tax rate
Provides additional insight into profitability
• Excludes non-recurring and accounting adjustments
Internal performance measurement tool
Adjusted Net Income – Useful Performance Metric
27
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.(a) (b) See footnotes on next page
Adjusted Net Income Reconciliation: 3rd QuarterThird Quarter Reconciliation
Quarter ended September 30,(Unaudited)
2011 2010
Net income $ 103 $ 11
Loss from discontinued operations, net -- 11
Interest expense, net 112 168
Provision for income taxes 44 2
Depreciation and amortization 125 142
EBITDA 384 334
Equity in net income of affiliates 2 (1)
Other non-operating expense / (income), net 4 10
Restructuring charges 9 11
Stock-based compensation expense 8 4
Other items (a) 1 13
Adjusted EBITDA 408 371
Interest expense, net (112) (168)
Depreciation and amortization (125) (142)
Depreciation and amortization of acquisition-related tangible and intangible assets 41 51
Cash paid for income taxes (29) (25)
Stock-based compensation expense (8) (4)
Interest expense attributable to mandatory convertible bonds 6 --
Adjusted net income $ 181 $ 83
Adjusted net income per share of common stock, diluted (b) $0.48 $0.30
($ in millions except per share amounts)
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Adjusted Net Income Reconciliation: 3rd Quarter (cont’d)
(a) Other items primarily consist of Sponsor Advisory Fees, costs related to our initial public offering
and other deal related fees.
(b) Adjusted Net Income per share of common stock presented on a diluted basis includes potential
common shares associated with stock-based compensation plans that may have been considered
anti-dilutive in accordance with GAAP. The amount also includes the weighted-average amount of
shares of common stock convertible associated with the mandatory convertible bonds based
upon the average price of our common stock during the period.
Weighted-average shares of common stock outstanding as of
September 30, 2011, basic359,381,233
Dilutive shares of common stock from
stock compensation plans5,090,571
Shares of common stock convertible associated
with the mandatory convertible bonds10,416,700
Weighted-average shares of common stock outstanding,
diluted374,888,504
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Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V. 30
Selected Cash Flow & Balance Sheet Items
Cash Flow – 3Q 11
Free Cash Flow $198
Capex $71
Cash Taxes $29
Restructuring $19
Balance Sheet – 9/30/11
Gross Debt (a) $6,723
Cash $404
Net Debt (a) $6,319
Net Debt Ratio (b) 4.2x
(a) Does not include $288 million of mandatory convertible subordinated bonds; weighted avg. interest rate calculated based on amount outstanding at end of quarter
(b) Reflects Adjusted EBITDA calculated on last twelve months basis, divided by Net Debt. See Appendix for detail
Capital Table
6/30/11 9/30/11 Change
Term Loan Debt (secured) $ 5,001 $ 4,843 $ (158)
11.625% Sr. Notes 202 203 1
11.5% Sr. Notes 305 306 1
7.75% Sr. Notes 1,084 1,084 --
EMTNs 165 160 (5)
Capital lease/misc. debt 143 127 (16)
Total Debt (a) $ 6,900 $ 6,723 $ (177)
Less Cash 374 404 30
Net Debt $ 6,526 $ 6,319 $ (207)
Net Debt Ratio (b) 4.4x 4.2x (0.2)x
Weighted avg. interest rate (a) 5.47% 5.57% 10 bps
($ in millions)
Q3 11 Investor PresentationCopyright © 2011 Nielsen Holdings N.V.
Free Cash Flow Reconciliation
31
Full Year Quarter ended Sept 30,
Free Cash Flow 2009 2010 2010 2011
($ in millions)
Net cash provided by
Operating Activities $517 $543 $165 $269
Capital Expenditures (282) (334) (80) (71)
Free Cash Flow $235 $209 $ 85 $ 198
online: ir.nielsen.com
email: [email protected]