Cision Reports Fourth Quarter and Full Year 2018 Results; Provides Updated Full Year 2019 Outlook
CHICAGO, Feb. 28, 2019 /PRNewswire/ -- Cision Ltd. (NYSE: CISN), a leading global provider of software and services to public relations and marketing communications professionals, today reported results for the fourth quarter and year ended December 31, 2018.
Financial Highlights
Fourth Quarter 2018
-- Revenue increased 10.3% to $186.4 million
-- Revenue, excluding the impact of purchase accounting, increased 9.8% to
$186.4 million
-- Operating income increased 198.6% to $20.9 million
-- Net loss decreased 66.7% to $11.5 million
-- Adjusted EBITDA increased 11.1% to $68.0 million
-- Adjusted net income increased 36.7% to $31.4 million
-- Adjusted net income per share increased 25.6% to $0.24
Full Year 2018
-- Revenue increased 15.6% to $730.4 million
-- Revenue, excluding the impact of purchase accounting, increased 15.6% to
$731.9 million
-- Operating income increased 83.2% to $69.6 million
-- Net loss decreased 80.2% to $24.4 million
-- Adjusted EBITDA increased 13.2% to $255.2 million
-- Adjusted net income increased 88.7% to $110.6 million
-- Adjusted net income per share increased 49.2% to $0.86
"We are pleased to have delivered strong financial results for the fourth quarter, concluding a very successful 2018 for the company," said Kevin Akeroyd, Cision's Chief Executive Officer. "We continue to focus our efforts on delivering best-in-class products and services to our customers, and driving towards our long-term financial goals and objectives. Following our acquisitions of Falcon and TrendKite and the divestiture of our email marketing assets, we enter 2019 better positioned than ever to deliver unmatched value to the public relations and marketing communications industry."
Fourth Quarter Business Statistics and Operational Highlights
-- Americas revenues increased 9.6% to $129.4 million
-- EMEA revenues increased 10.8% to $48.4 million
-- APAC revenues increased 19.4% to $8.6 million
-- Non-core revenues declined 38.7% to $1.0 million
-- Average pro forma subscription customers increased 4.2% to approximately
42,300
-- Average annualized pro forma revenue per subscription customer,
excluding the impact of currency, decreased 1.3% to approximately
$11,100
-- Customers that purchased services from us on a transaction basis
decreased 6.0% to approximately 39,200
-- Average quarterly pro forma revenue per customer that purchased services
from us on a transaction basis, excluding the impact of currency,
increased 8.6% to approximately $1,530
-- Cross-sell bookings of software, distribution and insights in the US
increased 55.1% to $5.4 million
-- Cision Communications Cloud platform customers at December 31, 2018 were
approximately 9,800
-- Attribution and data bookings (measured in annual contract value) were
approximately $1.0 million
Recent Acquisitions
On January 3, 2019, we completed our acquisition of Falcon for approximately EUR105.2 million ($120.1 million). The purchase consideration consisted of approximately EUR54.1 million ($61.7 million) in cash and the issuance of approximately 5.1 million ordinary shares valued at EUR51.1 million ($58.4 million). The cash portion of the consideration was funded with a combination of cash on hand and borrowings under our revolving credit facility.
On January 23, 2019, we completed our acquisition of TrendKite for approximately $222.4 million. The purchase consideration consisted of approximately $94.1 million in cash and approximately 10.3 million ordinary shares valued at $128.3 million. The cash portion of the consideration was funded with a combination of cash on hand and incremental borrowings under our dollar-denominated term loan facility.
Recent Divestiture
On January, 22, 2019, we sold our email marketing assets to a strategic buyer. The sale of the email marketing assets resulted from a detailed review of Cision's long-term business strategy and desire to focus on our industry-leading communications cloud platform. We divested our email marketing assets for approximately $49.3 million of cash consideration, with up to an additional $4.0 million in cash consideration based upon meeting certain business performance measures over the next 12 months.
Long-Term Debt
On December 28, 2018, we entered into an incremental facility amendment to our first lien credit agreement that increased available borrowings under the revolving credit facility from $75.0 million to $100.0 million. As of December 31, 2018, we had no amounts outstanding under our revolving credit facility and we had approximately $1,254 million of borrowings outstanding under our first lien credit facility, consisting of approximately $972.1 million of dollar-denominated term loan borrowings and approximately EUR246.9 million of Euro-denominated borrowings. On January 2, 2019, we borrowed approximately $40.0 million of dollar borrowings under our revolving credit facility in connection with the closing of the Falcon acquisition, which we repaid in full on January 31, 2019. On January 11, 2019, we entered into an incremental facility amendment to the credit agreement that increased our dollar-denominated term loan facility by $75.0 million. On January 17, 2019, we borrowed $75.0 million of dollar-denominated borrowings under our term loan facility in connection with the closing of the TrendKite acquisition. As of February 27, 2019, we had approximately $1,329 million of borrowings outstanding under our first lien credit facility, consisting of approximately $1,047 million of dollar-denominated term loan borrowings and approximately EUR246.9 million of Euro-denominated borrowings.
Subscription and Transaction Customer Trends
All of the figures below exclude our acquisitions of Falcon and TrendKite, and have been adjusted to exclude the impact of currency.
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q4 2018
compared
to Q4 2017
Average pro
forma
subscription
customers 39,761 40,833 40,532 40,628 40,252 41,249 41,661 42,349 4.2%
Average
annualized pro
forma revenue
per
subscription
customer $10,867 $10,882 $11,101 $11,227 $11,153 $11,186 $11,237 $11,086 (1.3%)
Pro forma
transaction
customers 42,869 44,451 40,829 41,670 40,216 41,172 38,152 39,173 (6.0%)
Average pro
forma revenue
per
transaction
customer $1,297 $1,361 $1,286 $1,405 $1,382 $1,454 $1,356 $1,526 8.6%
Updated Full Year 2019 Outlook
Our updated outlook for the full fiscal year ending December 31, 2019 appears below (all figures in millions, except share and per share amounts). Additionally, due to our acquisitions and divestiture in January 2019, we have provided an initial outlook for our first quarter ending March 31, 2019. These estimates are based on a number of assumptions that management believes to be reasonable and reflect our expectations as of the date of this release. Actual results may differ materially from these estimates as a result of various factors, and Cision refers you to the cautionary language regarding "Forward Looking Statements" included in this press release when considering this information.
Prior 2019
Updated 2019
Initial Q1 2019 Q1 2018
Revenue
$775 - $785
$775 - $785
$185 - $190 $179.3
Revenue, excluding the
impact from purchase
accounting
$782 - $792
$782 - $792
$187 - $192 $180.2
Net income (loss)
($5) - $2
($1) - $4
($6) - ($2) ($0.4)
Net income (loss) per
share
($0.03) - $0.01
($0.01) - $0.02
($0.04) - ($0.01) $0.00
Adjusted EBITDA
$270 - $275
$270 - $275
$61 - $63 $58.3
Adjusted net income
$122 - $125
$122 - $125
$28 - $30 $23.1
Adjusted net income
per diluted share
$0.82 - $0.84
$0.82 - $0.85
$0.19 - $0.20 $0.19
Pro-forma fully
diluted weighted
average shares
outstanding 149.8 148.0 147.5 123.9
Prior 2019
Updated 2019
Initial Q1 2019 Q1 2018
Depreciation expense
$30 - $33
$8 - $9 $7.4
Amortization expense
$105 - $110
$26 - $27 $25.9
Amortization expense
included in cost of
revenue
$24 - $26
$6 - $7 $5.6
Interest expense
$76 - $79
$19 - $20 $22.1
Debt extinguishment
costs
$0 - $0
$0 - $0 $2.4
Interest expense, net
of debt
extinguishment costs
$76 - $79
$19 - $20 $19.7
Cash interest expense
$64 - $66
$16 - $17 $18.9
Stock-based
compensation
$7 - $10
$2 - $3 $1.3
Capital expenditures,
inclusive of
capitalized software
development
$38 - $42
$8 - $9 $8.8
The above outlook assumes the inclusion of results from our acquisitions of Falcon and TrendKite from the date of their respective acquisitions through the respective periods ending March 31, 2019 and December 31, 2019, and the inclusion of results from our e-mail marketing assets from January 1, 2019 through the date of its divestiture. The updated outlook above assumes LIBOR of approximately 2.7%, EURIBOR of approximately 0%, and the following exchange rates with respect to the British Pound, the Euro and the Canadian Dollar for fiscal year 2019:
GBP to USD 1.29
---
EUR to USD 1.14
---
CAD to USD 0.76
---
Additionally, our outlook for 2019 excludes any additional acquisitions, divestitures, or other unanticipated events. See our discussion of non-GAAP financial measures included in this release.
Conference Call and Webcast
As previously announced, we will hold a conference call and webcast to review our fourth quarter and full year 2018 financial results on Thursday, February 28, 2019 at 5:00 pm EST. To hear the live event, visit the Cision investor website at http://investors.cision.com, or by dialing 1-877-443-4809 (participant dial in toll free) or 1-412-317-5235 (participant dial in International). For those accessing the call via Cision's investor website, we suggest logging in at least 15 minutes prior to the start of the live event. For those dialing in, participants should ask to be joined into the Cision Ltd. earnings call. A replay of the earnings webcast will be available approximately two hours after the conclusion of the live event on February 28, 2019. To access the webcast recording / conference replay, visit http://investors.cision.com or you can dial 1-877-344-7529 (US), 1-412-317-0088 (International), or 1-855-669-9658 (Canada). The replay access code for the earnings call is 10129049. The replay will be available through March 15, 2019. Supplemental materials regarding the conference call and webcast will be posted to the Cision website at http://investors.cision.com approximately one hour in advance of the conference call and webcast.
Forward-Looking Statements
This communication contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating performance outlook for the fiscal year ending December 31, 2019, as well as information relating to the acquisitions of Falcon.io and TrendKite and our divestiture of certain e-mail marketing assets and our realization of the expected benefits therefrom. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "anticipate," "intend," "plan," "goal," "seek," "aim," "strive," "believe," "see," "project," "predict," "estimate," "expect," "continue," "strategy," "future," "likely," "may," "might," "should," "will," "would," "target," similar expressions, and variations or negatives of these words. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Accordingly, you should not place undue reliance on these statements, as actual results may vary materially. A detailed discussion of some of the risks and uncertainties that could cause our actual results and financial condition to differ materially from the forward-looking statements is described under the caption "Risk Factors" in our most recent quarterly report on Form 10-Q filed on November 9, 2018 and our annual report on Form 10-K filed on March 13, 2018, along with our other filings with the U.S. Securities and Exchange Commission. Any forward-looking statement made by us in this communication is based only on information currently available to us and speaks only as of the date of this report. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings at www.sec.gov or www.Cision.com.
About Cision
Cision Ltd. (NYSE: CISN) is a leading global provider of earned media software and services to public relations and marketing communications professionals. Cision's software allows users to identify key influencers, craft and distribute strategic content, and measure meaningful impact. Cision has over 4,500 employees with offices in 22 countries throughout the Americas, EMEA, and APAC. For more information about its award-winning products and services, including the Cision Communications Cloud®, visit www.cision.com and follow Cision on Twitter @Cision.
Cision Ltd. and its Subsidiaries
Condensed Consolidated Balance Sheets
As of December 31, 2018 and December 31, 2017
(in thousands, except for per share amounts)
(Unaudited)
2018 2017
Assets
Current assets:
Cash and cash equivalents $104,769 $148,654
Accounts receivable, net 120,882 113,008
Prepaid expenses and other current
assets 22,824 19,896
Total current assets 248,475 281,558
Property and equipment, net 57,210 53,578
Other intangible assets, net 377,146 456,291
Goodwill 1,171,859 1,136,403
Deferred tax asset 4,034
Other assets 7,652 7,528
---
Total assets $1,866,376 $1,935,358
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $13,210 $13,349
Accounts payable 15,603 13,327
Accrued compensation and benefits 29,323 25,873
Other accrued expenses 82,507 73,483
Current portion of deferred revenue 139,725 140,351
Total current liabilities 280,368 266,383
Long-term debt, net of current portion 1,205,760 1,266,121
Deferred revenue, net of current portion 1,098 1,412
Deferred tax liability 69,232 62,617
Other liabilities 21,601 22,456
---
Total liabilities $1,578,059 $1,618,989
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value,
20,000,000 shares authorized; no
shares issued and outstanding at
December 31, 2018 and 2017 -
Common stock, $0.0001 par value,
480,000,000 shares authorized;
132,716,541 and 122,634,922 shares
issued and outstanding at December
31, 2018 and 2017, respectively 13 12
Additional paid-in capital 797,222 771,813
Accumulated other comprehensive loss (68,941) (35,111)
Accumulated deficit (439,977) (420,345)
Total stockholders' equity 288,317 316,369
Total liabilities and stockholders' equity $1,866,376 $1,935,358
Cision Ltd. and its Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except for per share amounts)
(Unaudited)
Three Months Ended December 31, Year Ended December 31,
2018 2017 2018 2017
Revenue $186,369 $168,959 $730,373 $631,637
Cost of revenue 66,580 53,265 266,792 200,836
---
Gross Profit 119,789 115,694 463,581 430,801
Operating costs and expenses:
Sales and marketing 30,750 31,519 116,095 114,750
Research and
development 7,713 5,423 29,995 22,102
General and
administrative 40,298 48,940 167,060 166,759
Amortization of
intangible assets 20,134 22,853 80,815 89,159
Total operating costs and expenses 98,895 108,735 393,965 392,770
Operating income 20,894 6,959 69,616 38,031
Non operating income (expense):
Foreign exchange
gains (losses) 3,013 (3,626) 13,290 (5,458)
Interest and other
income (expense),
net (589) (318) (117) 2,132
Interest expense (18,067) (20,160) (78,014) (116,466)
Loss on
extinguishment of
debt (6,992) (9,424) (51,872)
Total non operating loss (22,635) (24,104) (74,265) (171,664)
Loss before income taxes (1,741) (17,145) (4,649) (133,633)
Provision for (benefit from) income taxes 9,729 17,347 19,745 (10,591)
---
Net loss (11,470) (34,492) (24,394) (123,042)
Other comprehensive income (loss)-foreign
currency translation adjustments (12,048) 2,826 (32,844) 38,791
---
Comprehensive loss $(23,518) $(31,666) $(57,238) $(84,251)
Net loss per share:
Basic and diluted $(0.09) $(0.28) $(0.19) $(1.63)
Weighted average shares outstanding used in computing per share amounts:
Basic and diluted 132,714,691 121,917,531 128,819,858 75,696,880
Cision Ltd. and its Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Years Ended December 31, 2018 and December 31, 2017
(in thousands)
(Unaudited)
2018 2017
Cash flows from operating activities
Net loss $(24,394) $(123,042)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 133,821 139,474
Non-cash interest charges and amortization
of debt discount and deferred financing
costs 17,498 65,554
Equity-based compensation expense 5,267 4,138
Provision for doubtful accounts 4,409 3,493
Deferred income taxes (105) (23,278)
Unrealized currency translation losses
(gains) (13,533) 5,011
Gain on sale of business (1,785)
Other 5,441 (194)
Changes in operating assets and
liabilities, net of effects of
acquisitions and disposal:
Accounts receivable (7,784) (6,349)
Prepaid expenses and other current
assets 1,682 1,579
Other assets 742 737
Accounts payable 728 (3,831)
Accrued compensation and benefits 3,530 (6,235)
Other accrued expenses (3,466) 4,068
Deferred revenue 1,808 4,887
Other liabilities 1,484 4,621
Net cash provided by operating activities 127,128 68,848
Cash flows from investing activities
Purchases of property and equipment (14,629) (10,734)
Software development costs (19,804) (14,953)
Acquisitions of businesses, net of cash received of $2,711 and $12,355 (66,463) (78,528)
Proceeds from disposal of business 23,675
Other (24) 552
Net cash used in investing activities (100,920) (79,988)
Cash flows from financing activities
Proceeds from revolving credit facility 5,000
Repayment of revolving credit facility (38,475)
Payment of amounts due to Cision Owner (1,940)
Proceeds from term credit facility, net of debt discount of $10,466 1,350,259
Repayments of term credit facility (63,297) (1,497,838)
Payments on capital lease obligations (171)
Payments of deferred financing costs (850)
Proceeds from merger and recapitalization 305,110
Payment of contingent consideration (2,873)
-
Net cash provided by (used in) financing activities (67,020) 121,945
Effect of exchange rate changes on cash and cash equivalents (3,073) 2,714
---
Increase (decrease) in cash and cash equivalents (43,885) 113,519
Cash and cash equivalents
Beginning of year 148,654 35,135
End of the year $104,769 $148,654
===
Supplemental disclosure of cash flows information
Cash paid during the year for:
Interest $69,816 $102,400
Income taxes 17,538 10,250
Supplemental non-cash information:
Issuance of securities by Cision Owner in Connection with acquisitions 7,000
Non-cash contribution from Cision Owner in connection with merger 451,139
Issuance of shares for acquisition 20,143
Use of Non-GAAP Financial Measures
Non-GAAP results are presented only as a supplement to our financial statements based on US generally accepted accounting principles (GAAP). Non-GAAP financial information is provided to enhance the reader's understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP, and non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures, such as Adjusted EBITDA, and Adjusted net income per share, are provided within the schedules attached to this release. We use non-GAAP measures in our operational and financial decision-making, believing that it is useful to exclude certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. As a result, internal management reports used during monthly operating reviews include Adjusted EBITDA, and Adjusted net income per share. Additionally, we believe that the presentation of non-GAAP measures provides information that is useful to investors as it indicates, for example, our ability to meet capital expenditures and working capital requirements and otherwise meet our obligations as they become due. Investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures. This communication also includes certain forward-looking non-GAAP financial measures. We are unable to present without unreasonable efforts a reconciliation of forward-looking non-GAAP financial information to the corresponding GAAP financial information because management cannot reliably predict all of the necessary information. Forward-looking non-GAAP financial information is based on numerous assumptions, including assumptions with respect to general business, economic, market, regulatory and financial conditions and various other factors, all of which are difficult to predict and many of which are beyond our control. Accordingly, investors are cautioned not to place undue reliance on this information.
Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to Cision, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as an analytical tool. Non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies. They are not presentations made in accordance with GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such performance measures in isolation from, or as a substitute analysis for, results of operations as determined in accordance with GAAP.
Cision Ltd. and its Subsidiaries
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
(in millions)
(Unaudited)
Three Months Ended
Three Months Ended
Year Ended
Year Ended
December 31, 2017 December 31, 2018 December 31, 2017 December 31, 2018
---
Net loss $(34.5) $(11.5) $(123.0) $(24.4)
Depreciation and amortization 36.1 33.6 139.5 133.8
Interest expense and loss on
extinguishment of debt 20.2 25.1 168.3 87.5
Provision (benefit) for income
taxes 17.3 9.7 (10.6) 19.7
EBITDA (1) 39.1 56.9 174.2 216.6
Acquisition and offering related
costs 16.7 12.7 42.2 45.3
Stock-based compensation 1.2 1.6 4.1 5.3
Deferred revenue reduction from
purchase accounting 0.7 1.5 1.5
Gain on sale of business - (1.8)
Sponsor fees and expenses - 0.3
Unrealized translation (gain) loss 3.5 (3.2) 5.0 (13.5)
Adjusted EBITDA (2) $61.2 $68.0 $225.5 $255.2
===
Cision Ltd. and its Subsidiaries
Reconciliation of Net Loss to Adjusted Net Income and Adjusted Net Income per Diluted Share
(in millions, except for per share and share amounts)
(Unaudited)
Three Months Ended
Three Months Ended
Year Ended
Year Ended
December 31, 2017 December 31, 2018 December 31, 2017 December 31, 2018
---
Net loss $(34.5) $(11.5) $(123.0) $(24.4)
Provision (benefit)
for income taxes 17.3 9.7 (10.6) 19.7
Acquisition and
offering related
costs 16.7 12.7 42.2 45.3
Gain on sale of
business - (1.8)
Stock-based
compensation expense 1.2 1.6 4.1 5.3
Deferred revenue
reduction from
purchase accounting 0.7 1.5 1.5
Amortization related
to acquired
intangible assets 29.2 26.0 113.8 104.1
Non-recurring
interest and loss on
extinguishment of
debt - 7.1 55.9 11.4
Sponsor fees and
expenses - 0.3
Unrealized translation
(gain) loss 3.5 (3.2) 5.0 (13.5)
Adjusted Income before
income taxes 34.1 42.4 87.4 149.4
Less: Income tax at a
26% rate for 2018,
and a 33% rate for
2017 (11.2) (11.0) (28.8) (38.8)
Adjusted net income
(3) $22.9 $31.4 $58.6 $110.6
===
Pro forma fully-
diluted weighted
average shares
outstanding 121,917,531 132,714,891 102,035,003 128,819,858
Adjusted net income
per diluted share (4) $0.19 $0.24 $0.57 $0.86
Cision Ltd. and its Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities to Adjusted Net Cash Provided by
Operating Activities
(in millions)
(Unaudited)
Three Months Ended
Three Months Ended
Year Ended
Year Ended
December 31, 2017 December 31, 2018 December 31, 2017 December 31, 2018
---
Net cash
provided by
operating
activities $30.5 $37.3 $68.8 $127.1
Acquisition
and offering
related
costs 16.7 12.7 42.2 45.3
Adjusted net
cash
provided by
operating
activities
(5) $47.2 $50.0 $111.0 $172.4
===
(1) Cision defines EBITDA as net income
(loss), plus depreciation and
amortization expense, plus interest
expense and loss on extinguishment of
debt, plus provision for (or minus
benefit from) income taxes.
(2) Cision defines Adjusted EBITDA as
EBITDA, further adjusted for
acquisition and offering related
costs, stock-based compensation,
deferred revenue reduction from
purchase accounting, (gains) losses
related to divested businesses or
assets, sponsor fees and expenses,
and unrealized translation losses
(gains). All of the items included in
the reconciliation from net income to
Adjusted EBITDA are either non-cash
items or are items that we consider
to be less useful in assessing our
operating performance. In the case of
the non-cash items, we believe that
investors can better assess our
operating performance if the measures
are presented without such items
because, unlike cash expenses, these
adjustments do not affect our ability
to generate free cash flow or invest
in our business. For example, by
excluding depreciation and
amortization from EBITDA, users can
compare operating performance without
regard to different accounting
determinations such as useful life.
In the case of the other items, we
believe that investors can better
assess operating performance if the
measures are presented without these
items because their financial impact
does not reflect ongoing operating
performance.
(3) Cision defines Adjusted net income as
net income (loss) plus provision for
(or minus benefit from) income taxes,
further adjusted for acquisition and
offering related costs, (gains)
losses related to divested businesses
or assets, stock-based compensation,
deferred revenue reduction from
purchase accounting, amortization
related to acquired intangibles, non-
recurring interest and losses on
extinguishment of debt, sponsor fees
and expenses, and unrealized
translation losses (gains), which
together, sum to Adjusted net income
(loss) before income taxes. Adjusted
net income (loss) before income taxes
is then taxed at an assumed long term
corporate tax rate of 33% for 2017
and periods prior, and 26% for 2018
and beyond, pursuant to our
preliminary analysis with respect to
recent U.S. tax law changes, to
determine Adjusted net income. The
enactment of the Tax Cuts and Jobs
Act in December 2017 resulted in a
provisional net one-time tax of
$11.9 million in the fourth quarter
of 2017 based on a reasonable
estimate of the income tax effects,
primarily from a tax on accumulated
foreign earnings, the remeasurement
of deferred tax assets and
liabilities and new limitations on
the deductibility of interest. Our
calculation of Adjusted net income
excludes this provisional net one-
time tax. We continue to finalize the
analysis of the tax reform provisions
in 2018. All of the items included in
the reconciliation from net income to
Adjusted net income are either non-
cash items or are items that we
consider to be less useful in
assessing our operating performance.
In the case of the non-cash items,
we believe that investors can better
assess our operating performance if
the measures are presented without
such items because, unlike cash
expenses, these adjustments do not
affect our ability to generate free
cash flow or invest in our business.
For example, by excluding the
amortization related to acquired
intangibles, users can compare
operating performance without regard
to highly variable amortization
expenses related to our acquisitions.
In the case of the other items, we
believe that investors can better
assess operating performance if the
measures are presented without these
items because their financial impact
does not reflect ongoing operating
performance.
(4) Cision defines Adjusted net income per
diluted share as Adjusted net income,
as defined above, divided by the
fully-diluted pro forma weighted
average shares outstanding for the
period. The fully-diluted pro forma
weighted average shares outstanding
for the respective period assume that
the exchange of shares pursuant to
our merger with Capitol Acquisition
III had taken effect as of the
beginning of such period.
Additionally, for purposes of
calculating the number of fully
diluted shares outstanding, we have
excluded the potential impact of
dilution from outstanding warrants to
purchase shares of our common stock
prior to the dates of their
conversion, and stock options and
restricted units issued and
outstanding pursuant to our 2017
Omnibus Incentive Plan. During the
second quarter of fiscal 2018, we
issued an aggregate of 6,342,989
ordinary shares (6,100,209 ordinary
shares on May 18, 2018 and 242,780
ordinary shares on June 4, 2018), in
exchange for all of our outstanding
warrants, pursuant to the completion
of our warrant exchange transactions.
During the third quarter of 2018, we
issued 2,000,000 ordinary shares for
the earn-out achieved during the
quarter. Commencing on these
respective issuance dates, we
included the issued shares in our
fully-diluted pro forma weighted
average share count.
(5) Cision defines Adjusted net cash
provided by operating activities is
defined as net cash provided by
operating activities adjusted for
acquisition related costs and
expenses.
Investor Contact:
Jack Pearlstein
Chief Financial Officer
Jack.Pearlstein@cision.com
Media Contact:
Jenn Deering Davis
VP, Communications
Jenn.Deering.Davis@cision.com
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SOURCE Cision Ltd.
