Cision Reports Third Quarter 2019 Results
CHICAGO, Nov. 7, 2019 /PRNewswire/ -- Cision Ltd. (NYSE: CISN), a leading global provider of earned media software and services to public relations and marketing communications professionals, today reported results for the third quarter ended September 30, 2019.
Financial Highlights
Third Quarter 2019
-- Revenue increased 4.7% to $185.7 million
-- Revenue, excluding the impact of purchase accounting, increased 6.7% to
$189.4 million
-- Operating income increased 46.3% to $20.6 million
-- Net income was $2.4 million versus a prior year net loss of $6.2 million
-- Adjusted EBITDA was $68.1 million
-- Adjusted net income increased 17.7% to $31.2 million
-- Adjusted net income per share was $0.21
"We are pleased to have delivered another strong quarter of financial results. Our business continues to perform well, with third quarter 2019 organic constant currency revenue growth of 4.7% versus the prior year," said Kevin Akeroyd, Cision's Chief Executive Officer. "We are well positioned for the remainder of 2019 and continue to make solid progress on both our operational priorities and delivering world-class products and services to our public relations and marketing communications customers."
Third Quarter Operational Highlights
-- Americas revenues increased 2.8% to $126.1 million
-- EMEA revenues increased 7.8% to $50.2 million
-- APAC revenues increased 15.8% to $9.3 million
Conference Call and Webcast
Cision will not be holding a conference call to review third quarter 2019 financial results.
Merger Agreement
On October 22, 2019, Cision Ltd. entered into a definitive agreement to be acquired by an affiliate of Platinum Equity in an all cash transaction valued at approximately $2.74 billion. Under the terms of the agreement, which has been unanimously approved by the members of Cision Ltd.'s board of directors, an affiliate of Platinum Equity will acquire all of the outstanding ordinary shares of Cision Ltd. for $10.00 per share in cash. The proposed transaction is expected to close in the first quarter of 2020 and is subject to approval by Cision Ltd.'s shareholders, along with the satisfaction of customary closing conditions and antitrust regulatory approvals, as necessary. Upon completion of the acquisition, Cision Ltd. will become wholly owned by an affiliate of Platinum Equity. Cision Ltd. may solicit alternative acquisition proposals from third parties during a "go-shop" period from the date of the agreement until November 12, 2019. There is no guarantee that this process will result in a superior proposal, and the agreement provides Platinum Equity with a customary right to match a superior proposal and termination fee if a superior proposal is accepted. Cision Ltd. expects the deal to close in Q1 2020.
Forward-Looking Statements
Certain statements in this communication are forward-looking statements, including, without limitation, the statements made concerning the proposed transaction, and are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the following words: "may," "will," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "project," "aim," "potential," "continue," "ongoing," "goal," "can," "seek," "target" or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. You should read any such forward-looking statements carefully, as they involve a number of risks, uncertainties and assumptions that may cause actual results to differ significantly from those projected or contemplated in any such forward-looking statement. Those risks, uncertainties and assumptions include: (i) the risk that the proposed transaction may not be completed in a timely manner or at all, which may adversely affect the Company's business and the price of the Company's ordinary shares; (ii) the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the authorization of the merger agreement by the Company's shareholders and the receipt of certain regulatory approvals; (iii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement; (iv) the effect of the announcement or pendency of the proposed transaction on the Company's business relationships, operating results and business generally; (v) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction; (vi) risks related to diverting management's attention from the Company's ongoing business operations; (vii) the outcome of any legal proceedings that may be instituted against the Company related to the merger agreement or the proposed transaction, (viii) unexpected costs, charges or expenses resulting from the proposed transaction; (ix) uncertainties as to Platinum Equity's ability to obtain financing in order to consummate the merger; and (x) other risks described in the Company's filings with the SEC, such as its Annual Report on Form 10-K for the year ended December 31, 2018. Forward-looking statements speak only as of the date of this communication or the date of any document incorporated by reference in this document. Except as required by applicable law or regulation, the Company does not assume any obligation to update any such forward-looking statements whether as the result of new developments or otherwise.
Additional Information and Where to Find It
In connection with the proposed transaction, the Company will file with the Securities and Exchange Commission (the "SEC") and furnish to the Company's shareholders a proxy statement. BEFORE MAKING ANY VOTING DECISION, THE COMPANY'S SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT (IF ANY) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Investors and shareholders may obtain a free copy of documents filed by the Company with the SEC at the SEC's website at http://www.sec.gov. In addition, investors and shareholders may obtain a free copy of the Company's filings with the SEC from the Company's website at http://investors.cision.com or by directing a written request to: Cision Ltd., Attn: Secretary, 130 E. Randolph St., 7th Floor, Chicago, IL 60601.
Participants in the Solicitation
The Company and certain of its directors, executive officers, and certain other members of management and employees of the Company may be deemed to be participants in the solicitation of proxies from shareholders of the Company in favor of the proposed merger. Information about directors and executive officers of the Company is set forth in the proxy statement for Cision's 2019 annual general meeting of shareholders, as filed with the SEC on Schedule 14A on August 9, 2019. Additional information regarding the interests of these individuals and other persons who may be deemed to be participants in the solicitation will be included in the proxy statement with respect to the merger that the Company will file with the SEC and furnish to the Company's shareholders.
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 4,800 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
(in thousands, except per share and share amounts)
(Unaudited)
September 30, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents $94,929 $104,769
Accounts receivable, net 126,975 120,882
Prepaid expenses and other
current assets 38,897 22,824
Total current assets 260,801 248,475
Property and equipment, net 62,788 57,210
Other intangible assets, net 376,860 377,146
Goodwill 1,411,646 1,171,859
Operating lease right-of-use assets 59,993
Deferred tax asset 4,123 4,034
Other assets 9,296 7,652
---
Total assets $2,185,507 $1,866,376
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-
term debt $13,881 $13,210
Accounts payable 12,867 15,603
Accrued compensation and
benefits 35,057 29,323
Operating lease
liabilities 14,139
Other accrued expenses 61,820 82,507
Current portion of
deferred revenue 161,848 139,725
Total current liabilities 299,612 280,368
Long-term debt, net of current portion 1,261,926 1,205,760
Deferred revenue, net of current portion 968 1,098
Operating lease liabilities, net of current portion 59,514
Deferred tax liability 74,062 69,232
Other liabilities 9,986 21,601
---
Total liabilities 1,706,068 1,578,059
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001
par value, 20,000,000
shares authorized; no
shares
issued
and outstanding at
September 30, 2019 and
December 31, 2018
- -
Common stock, $0.0001 par
value, 480,000,000 shares
authorized; 148,478,535
and 132,716,541
shares issued and
outstanding at September
30, 2019 and December 31,
2018, respectively
15 13
Additional paid-in
capital 988,364 797,222
Accumulated other
comprehensive loss (75,204) (68,941)
Accumulated deficit (433,736) (439,977)
Total stockholders' equity 479,439 288,317
Total liabilities and
stockholders' equity $2,185,507 $1,866,376
Cision Ltd. and its Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except for per share amounts)
(Unaudited)
Three months ended September 30, Nine months ended September 30,
2019 2018 2019 2018
Revenue $185,653 $177,236 $561,953 $544,004
Cost of revenue 63,408 69,177 198,240 200,212
---
Gross Profit 122,245 108,059 363,713 343,792
Operating costs and expenses:
Sales and
marketing 30,708 27,503 96,370 85,630
Research and
development 7,153 7,292 23,021 22,282
General and
administrative 44,988 39,002 142,464 126,762
Amortization of
intangible assets 18,770 20,167 56,444 60,681
Total operating costs and expenses 101,619 93,964 318,299 295,355
Operating income 20,626 14,095 45,414 48,437
Non operating income (expense):
Foreign exchange
gains 8,062 2,196 5,918 10,277
Interest and other
income, net 279 380 840 472
Gain on sale of
business 28,144 -
Interest expense (18,209) (19,785) (56,392) (59,947)
Loss on
extinguishment of
debt (355) (2,432)
Total non operating loss (9,868) (17,209) (21,845) (51,630)
Income (loss) before income taxes 10,758 (3,114) 23,569 (3,193)
Provision for income taxes 8,393 3,070 17,328 10,016
Net income (loss) $2,365 $(6,184) $6,241 $(13,209)
Other comprehensive loss-
foreign currency
translation
adjustments (12,169) (2,479) (6,263) (20,796)
Comprehensive loss $(9,804) $(8,663) $(22) $(34,005)
Net income (loss) per share:
Basic $0.02 $(0.05) $0.04 $(0.10)
Diluted $0.02 $(0.05) $0.04 $(0.10)
Weighted average shares outstanding used
in computing per
share amounts:
Basic 148,131,135 131,104,859 147,215,180 127,507,314
Diluted 148,520,974 131,104,859 147,257,092 127,507,314
Cision Ltd. and its Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Nine months ended September 30,
2019 2018
Cash flows from operating activities
Net income (loss) $6,241 $(13,209)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and
amortization 93,709 100,186
Non-cash interest
charges and
amortization of
debt discount and
deferred
financing costs 7,426 10,158
Equity-based
compensation
expense 8,206 3,713
Provision for
doubtful accounts 4,579 3,972
Deferred income
taxes (332) 3,437
Unrealized
currency
translation gains (6,528) (10,338)
Gain on sale of
business (28,144)
Payment of
contingent
consideration (4,296)
Other 86
Changes in
operating assets
and liabilities,
net of effects of
acquisitions and
disposal:
Accounts
receivable 609 967
Prepaid
expenses and
other current
assets (7,568) (848)
Other assets (976) (726)
Accounts
payable (4,889) (1,721)
Accrued
compensation
and benefits 3,229 (321)
Other accrued
expenses (16,944) (7,320)
Deferred
revenue 11,658 1,767
Other
liabilities
and net change
in operating
leases 1,488 (14)
Net cash provided by
operating activities 67,468 89,789
Cash flows from investing activities
Purchases of property and equipment (8,774) (10,325)
Software development costs (22,531) (12,026)
Acquisitions of businesses, net of
cash and restricted cash acquired of
$6,068 and $2,711 (148,541) (66,463)
Proceeds from disposal of business 44,865
Other 23 5
Net cash used in investing
activities (134,958) (88,809)
Cash flows from financing activities
Proceeds from revolving credit
facility 40,000
Repayment of revolving credit facility (40,000)
Proceeds from term credit facility,
net of debt discount of $1,013 73,987
Repayments of term credit facility (10,471) (59,989)
Payments of deferred financing costs (1,619) (294)
Proceeds from the exercise of stock
options 552
Payment of contingent consideration (3,695) (2,873)
Net cash provided by (used
in) financing activities 58,754 (63,156)
Effect of exchange rate changes on
cash, cash equivalents and restricted
cash (1,104) (2,286)
---
Decrease in cash, cash
equivalents and restricted
cash (9,840) (64,462)
Cash, cash equivalents and restricted cash
Beginning of period 104,769 148,654
End of the period $94,929 $84,192
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 Income (Loss) to EBITDA and Adjusted EBITDA
(in millions)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
---
2019 2018
Change 2019 2018
Change
---
Net income (loss) $2.4 $(6.2) $8.6 $6.3 $(13.2) $19.5
Depreciation and
amortization 31.5 33.3 (1.8) 93.7 100.2 (6.5)
Interest expense and
loss on
extinguishment of
debt 18.2 19.8 (1.6) 56.7 62.4 (5.7)
Income tax 8.4 3.1 5.3 17.4 10.0 7.4
---
EBITDA (1) 60.5 50.0 10.5 174.1 159.4 14.7
---
Acquisition and
offering-related
costs 8.7 12.8 (4.1) 39.1 32.6 6.5
Stock-based
compensation 3.6 1.5 2.1 8.2 3.7 4.5
Deferred revenue
reduction from
purchase accounting 3.7 0.3 3.4 10.6 1.5 9.1
Gain on sale of
business (28.1) (28.1)
Unrealized translation
gain (8.4) (2.1) (6.3) (6.6) (10.3) 3.7
Adjusted EBITDA (2) $68.1 $62.5 $5.6 $197.3 $186.8 $10.5
Cision Ltd. and its Subsidiaries
Reconciliation of Net Income (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 September 30, Nine Months Ended September 30,
---
2019 2018
Change 2019 2018
Change
---
Net income (loss) $2.4 $(6.2) $8.6 $6.3 $(13.2) $19.5
Income tax 8.4 3.1 5.3 17.4 10.0 7.4
Acquisition and
offering-related
costs 8.7 12.8 (4.1) 39.1 32.6 6.5
Gain on sale of
business (28.1) (28.1)
Stock-based
compensation expense 3.6 1.5 2.1 8.2 3.7 4.5
Deferred revenue
reduction from
purchase accounting 3.7 0.3 3.4 10.6 1.5 9.1
Amortization related
to acquired
intangible assets 23.8 26.0 (2.2) 71.4 78.1 (6.7)
Non-recurring
interest and loss on
extinguishment of
debt 0.4 (0.4) 0.4 4.3 (3.9)
Unrealized translation
gain (8.4) (2.1) (6.3) (6.6) (10.3) 3.7
---
Adjusted Income before
income tax 42.2 35.8 6.4 118.7 106.6 12.1
Less: Income tax at a
26% rate (11.0) (9.3) (1.7) (30.9) (27.7) (3.2)
---
Adjusted net income
(3) $31.2 $26.5 $4.7 $87.8 $78.9 $8.9
Pro forma fully-
diluted weighted
average shares
outstanding 148,131 131,105 17,026 147,215 127,507 19,708
Adjusted net income
per diluted share (4) $0.21 $0.20 $0.01 $0.60 $0.62 ($0.02)
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 September 30, Nine Months Ended September 30,
---
2019 2018
Change 2019 2018
Change
---
Net cash
provided by
operating
activities $34.7 $26.2 $8.5 $67.5 $89.8 $(22.3)
Acquisition
and
offering-
related
costs 8.7 12.8 (4.1) 39.1 32.6 6.5
---
Adjusted net
cash
provided by
operating
activities
(5) $43.4 $39.0 $4.4 $106.6 $122.4 $(15.8)
(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
26%. 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. 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
Third 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 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.
