Clarivate Analytics Reports Fourth Quarter and Full Year 2019 Results
LONDON and PHILADELPHIA, Feb. 27, 2020 /PRNewswire/ -- Clarivate Analytics Plc (NYSE: CCC, CCC.WS) (the "Company" or "Clarivate"), a global leader in providing trusted insights and analytics to accelerate the pace of innovation, today reported results for the fourth quarter and full year ended December 31, 2019.
Financial Highlights
-- Fourth quarter 2019 revenues of $255.0 million increased 4% on a
reported basis and up 4.2% at constant currency* for the quarter
-- Fourth quarter 2019 net loss of $84.8 million compared to a net loss of
$43.5 million in the prior year quarter; adjusted net income* of $41.9
million increased 31.3% for the quarter
-- Fourth quarter 2019 adjusted EBITDA* of $84.6 million increased 11.6%
for the quarter
-- Net cash from operating activities increased to $117.6 million in 2019
compared to a use of cash of $26.1 million in the prior year
-- Free cash flow* increased $119.3 million to $47.8 million in 2019
compared to a use of cash of $71.5 million in the prior year
"Clarivate had an outstanding year in 2019, achieving numerous strategic and financial initiatives, which positions us for continued growth," said Jerre Stead, Executive Chairman and CEO of Clarivate. "We closed out 2019 with strong financial performance in the fourth quarter with total revenue growth of 4% including subscription revenue growth of 6% and Annual Contract Value of subscription-based agreements increasing 3.5%. We also delivered double-digit adjusted EBITDA growth of more than 11%. Our positive momentum is continuing in 2020 with the acquisition of Decision Resources Group, which, when consummated, will more than double the size of our life sciences business and sets us up to be the leading data and analytics provider in that industry."
Selected Financial Information
Three Months Ended
Change Year Ended
Change
December 31, December 31,
(in millions, except percentages and per share data) 2019 2018
$ % 2019 2018
$ %
Revenues, net 255.0 245.2 9.8 4.0 974.3 968.5 5.9 0.6
% %
Adjusted revenues* 255.1 245.4 9.7 4.0 974.8 951.2 23.6 2.5
% %
Annual Contract Value (ACV) 793.7 767.0 26.7 3.5 793.7 767.0 26.7 3.5
% %
Net loss (84.8) (43.5) (41.3) (94.9) (211.0) (242.2) 31.2 12.9
% %
Adjusted net income* 41.9 31.9 10.0 31.3 152.1 125.2 26.9 21.5
% %
Adjusted EBITDA* 84.6 75.8 8.8 11.6 294.0 272.8 21.2 7.7
% %
Net cash provided by (used in) operating activities 5.2 (51.1) 56.3 110.2 117.6 (26.1) 143.7 550.6
% %
Free cash flow* (20.9) (60.3) 39.4 65.3 47.8 (71.5) 119.3 166.9
% %
(Amounts in tables may not sum due to rounding)
* Non-GAAP measure. Please see "Reconciliation to Certain Non-GAAP measures" in this earnings release for important disclosures and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this earnings release.
Fourth Quarter 2019 Operating Results
Revenues, net, for the fourth quarter of 2019 increased $9.8 million, or 4%, to $255.0 million, compared to the prior-year period.
Subscription revenues for the fourth quarter of 2019 increased $11.9 million, or 6%, to $209.5 million, compared to the prior-year period, primarily due to price increases and new business within both the Science Product Group and IP Product Group.
Transactional revenues for the fourth quarter of 2019 decreased $2.2 million, or 4.6%, to $45.6 million, compared to the prior-year period, primarily due to a decrease in backfile sales, lower CompuMark(TM) search volumes and IP services offset by an increase from the Techstreet products.
Net loss for the fourth quarter of 2019 was $84.8 million, or ($0.28) per share, compared to a net loss of $43.5 million, or $(0.20) per share, in the prior-year period. The decline in the fourth quarter of 2019 is primarily due to the impact of debt refinancing charges, restructuring charges and an impairment on assets held for sale resulting from the MarkMonitor asset divestitures.
Adjusted EBITDA for the fourth quarter of 2019 increased by 11.6% to $84.6 million, compared to the prior-year period, driven by higher revenues and ongoing cost savings initiatives.
Adjusted net income for the fourth quarter of 2019 increased 31.3% to $41.9 million, or $0.13 per diluted share, compared to $31.9 million, or $0.15 per diluted share, in the prior-year period. The fourth quarter of 2019 adjusted earnings per diluted share was lower compared to the prior-year period due to a 51% or 110.7 million increase in the weighted average common shares outstanding as a result of the merger with Churchill Capital Corp in May 2019.
Full Year Operating Results
Revenues, net, for the full year 2019 increased by $5.9 million, or 0.6%, to $974.3 million, compared to the prior year.
Adjusted Revenues for the full year 2019, which exclude the impact of the deferred revenues adjustment and revenues from the IPM Product Line divested in October 2018, increased $23.6 million, or 2.5%, to $974.8 million, compared to the prior year. On a constant currency basis, Adjusted Revenues increased $29.5 million, or 3.1%, for the full year 2019.
Subscription revenues for the full year 2019 increased 1.4% to $805.5 million, compared to the prior year. Adjusted subscription revenues for the full year 2019, which exclude the impact of the deferred revenues adjustment and revenues from the IPM Product Line as noted above, increased 3.7%, and on a constant currency basis increased 4.3%, compared to the prior year primarily due to price increases and new business within the Science Product Group and IP Product Group.
Transactional revenues for the full year 2019 decreased 4.7% to $169.3 million, compared to the prior year. Adjusted transactional revenues for the full year 2019, which exclude the impact of the deferred revenues adjustment and revenues from the IPM Product Line as noted above, decreased 3.1% on a reported basis, and decreased 2.3% on a constant currency basis, compared to the prior year, due to demand for patent services in the period, and reflected timing and product offerings within the Science and IP Product Group.
Net loss for the full year 2019 was $211.0 million, or $(0.77) per share, compared with a net loss of $242.2 million, or $(1.11), for the full year 2018.
Adjusted EBITDA for the full year 2019 increased 7.7%, to $294.0 million, compared to the prior year, driven by higher revenues and ongoing cost savings initiatives.
Adjusted net income for the full year 2019 increased 21.5% to $152.1 million, or $0.53 per diluted share, compared with adjusted net income of $125.2 million, or $0.58 per diluted share for the full year 2018. Adjusted earnings per diluted share for the full year 2019 was lower compared to 2018 primarily due to a 32% or 70.4 million increase in the weighted average common shares outstanding as a result of the merger with Churchill Capital Corp in May 2019.
Balance Sheet and Cash Flow
At December 31, 2019 cash and cash equivalents increased $50.6 million to $76.1 million, compared to December 31, 2018.
The Company's total debt outstanding at December 31, 2019 was $1,665.0 million, a decrease of $364.0 million compared to December 31, 2018, due primarily to proceeds received from the 2019 merger with Churchill Capital Corp, which were used to reduce the Company's outstanding debt.
Net cash provided by operating activities was $117.6 million for the twelve months ended December 31, 2019, compared to a use of cash of $26.1 million for the prior year. The increase in net cash provided by operating activities was driven principally by a lower operating loss, which included the impact of a $39.4 million gain on a legal settlement and a decrease in Transition, integration and other related expenses of $47.0 million.
Free cash flow was $47.8 million for the twelve months ended December 31, 2019, an increase of $119.3 million, compared to $(71.5) million for the prior-year period, primarily due to higher net cash provided by operating activities. Adjusted free cash flow increased to $100.5 million for the full year 2019, compared to $77.0 million for the prior-year, primarily due to higher net cash provided by operating activities, lower Transition Services Agreement costs and lower transition, integration an other related expenses.
Updated Outlook for 2020 (forward-looking statement)
For the year ending December 31, 2020, Clarivate expects:
-- Adjusted Revenues in a range of $1.16 billion to $1.19 billion
(previously $950 million to $970 million)
-- Adjusted EBITDA in a range of $395 million to $420 million (previously
$330 million to $350 million)
-- Adjusted EBITDA margins in a range of 34% to 35% (previously 35% to 36%)
-- Adjusted diluted EPS in a range of $0.53 to $0.59 (previously not
provided)
-- Adjusted Free Cash Flow in a range of $220 million to $240 million
(previously $195 million to $210 million)
The updated outlook includes 10 months of financial results for the acquisition of Decision Resources Group, which the Company expects to close within the next few days.
Adjusted diluted EPS for 2020 is calculated based on approximately 381.9 million fully diluted weighted average shares outstanding, an increase of approximately 52.1 million shares or 16%, compared to 329.8 million shares outstanding at the end of December 31, 2019. The increase in shares is primarily driven by the February 2020 offering of 27.6 million shares, with proceeds used to fund a portion of the cash consideration for the acquisition of Decision Resources Group, and the issuance of approximately 24 million ordinary shares upon exercise of outstanding warrants.
The above outlook assumes no further currency movements, acquisitions, divestitures, or unanticipated events. See discussion of non-GAAP financial measures at the end of this release.
Conference Call and Webcast
Clarivate will host a conference call and webcast to review the results for the fourth quarter on Thursday, February 27(th) at 8:00 a.m. Eastern Time. The conference call will be simultaneously webcast on the Investor Relations section of the company's website.
Interested parties may access the live audio broadcast by dialing 1-888-317-6003 in the United States, 1-412-317-6061 for international, and 1-866-284-3684 in Canada. The conference ID number is 3291626. An audio replay will be available approximately two hours after the completion of the call at 1-877-344-7529 in the United States, 1-412-317-0088 for international, and 1-855-669-9658 in Canada. The Replay Conference ID number is 10138014. The recording will be available for replay through March 12, 2020.
The webcast can be accessed at https://services.choruscall.com/links/ccc200227.html and will be available for replay.
Investor Day Conference on May 19, 2020
Clarivate will host an Investor Day Conference in New York City on Tuesday, May 19, 2020. Management will provide an update on the business, with presentations starting at 1:00 P.M. eastern time and concluding at 4:00 P.M. eastern time. Registration is required to attend the event. The event will be simultaneously webcast on the Investor Relations section of the company's website. If you wish to be considered for attendance to the Investor Day Conference, please contact investor.relations@clarivate.com.
Use of Non-GAAP Financial Measures
We currently qualify as a foreign private issuer ("FPI") under SEC rules. We will retain FPI status until at least December 31, 2020. Even though we qualify as an FPI, we report our financial results in accordance with GAAP and, beginning with our 2019 annual report, we have elected to file our periodic and current reports on Forms 10-K, 10-Q and 8-K.
Non-GAAP results are presented only as a supplement to our financial statements based on U.S. 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 should not be considered in isolation from, or as a substitute for, financial measures calculated in accordance with GAAP.
Definitions and reconciliations of the non-GAAP measures, such as adjusted revenues, EBITDA, adjusted EBITDA and free cash flow to the most directly comparable GAAP measures are provided within the schedules attached to this release.
Forward-Looking Statements
This communication contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and may use words like "aim," "anticipate," "assume," "believe," "continue," "could," "estimate," "forecast," "future," "goal," "intend," "likely," "may," "might," "plan," "potential," "predict," "project," "see," "seek," "should," "strategy," "strive," "target," "will," and "would" and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, the anticipated benefits therefrom, and our success in integrating acquired businesses; anticipated levels of capital expenditures in future periods; our ability to successfully realize cost savings initiatives and transition services expenses; our belief that we have sufficiently liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities, and governmental and regulatory investigations and proceedings; and our strategy for customer retention, growth, product development, market position, financial results, and reserves. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management's 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 difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are more fully discussed under the caption "Risk Factors" in our Annual Report on Form 10-K, along with our other filings with the U.S. Securities and Exchange Commission ("SEC"). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements, are based only on information currently available to our management and speaks only as of the date of this communication. 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 with the SEC or on our website at www.clarivate.com.
About Clarivate Analytics
Clarivate Analytics(TM) is a global leader in providing trusted insights and analytics to accelerate the pace of innovation. We have built some of the most trusted brands across the innovation lifecycle, including Web of Science(TM), Cortellis(TM), Derwent(TM), CompuMark(TM), MarkMonitor(TM) and Techstreet(TM). Today, Clarivate Analytics is on a bold entrepreneurial mission to help our clients reduce the time from new ideas to life-changing innovations. For more information, please visit clarivate.com.
Consolidated Balance Sheets
(in thousands)
As of December 31,
2019 2018
---
Assets
Current assets:
Cash and cash equivalents $
76,130 $
25,575
Restricted cash 9 9
Accounts receivable, net of allowance for
doubtful accounts of $16,511 and $14,076
at December 31, 2019 and December 31,
2018, respectively 333,858 331,295
Prepaid expenses 35,243 31,021
Other current assets 11,750 20,712
Assets held for sale 30,619
Total current assets 487,609 408,612
Computer hardware and other property, net 18,042 20,641
Other intangible assets, net 1,828,640 1,958,520
Goodwill 1,328,045 1,282,919
Other non-current assets 18,632 26,556
Deferred income taxes 19,488 12,426
Operating lease right-of-use assets 85,448
Total Assets $
3,785,904 $
3,709,674
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $
26,458 $
38,418
Accrued expenses and other current
liabilities 153,750 153,849
Current portion of deferred revenues 407,325 391,102
Current portion of operating lease
liabilities 22,130
Current portion of long-term debt 9,000 60,345
Liabilities held for sale 26,868
Total current liabilities 645,531 643,714
Long-term debt 1,628,611 1,930,177
Non-current portion of deferred revenues 19,723 17,112
Other non-current liabilities 18,891 24,838
Deferred income taxes 48,547 43,226
Operating lease liabilities 64,189
Total liabilities 2,425,492 2,659,067
Commitments and Contingencies (Note 16)
Shareholders' equity:
Ordinary Shares, no par value; unlimited
shares authorized at December 31, 2019
and December 31, 2018; 306,874,115 and
217,526,425 shares issued and outstanding
at December 31, 2019 and December 31,
2018, respectively; 2,208,529 1,677,510
Accumulated other comprehensive income
(loss) (4,879) 5,358
Accumulated deficit (843,238) (632,261)
Total shareholders' equity 1,360,412 1,050,607
Total Liabilities and Shareholders' Equity $
3,785,904 $
3,709,674
Consolidated Statement of Operations (unaudited)
(in thousands)
Three Months Ended December 31,
2019 2018
---
Revenues, net $
255,013 $
245,247
Operating costs and expenses:
Cost of revenues, excluding depreciation and amortization (82,490) (95,294)
Selling, general and administrative costs, excluding depreciation and amortization (87,909) (88,785)
Share-based compensation expense (4,708) (3,033)
Depreciation (2,718) (1,481)
Amortization (52,667) (55,945)
Impairment on assets held for sale (18,431) 0
Transaction expenses (4,141) (1,846)
Transition, integration and other related expenses (4,489) (10,014)
Restructuring (15,670)
Legal settlement -
Other operating income, net 1,779 4,696
Total operating expenses (271,444) (251,702)
Income (loss) from operations (16,431) (6,455)
Interest expense (63,751) (34,951)
Income (loss) before income tax (80,182) (41,406)
Provision for income taxes (4,605) (2,048)
Net income (loss) $
(84,787) $
(43,454)
Per Share
Basic $
(0.28) $
(0.20)
Diluted $
(0.28) $
(0.20)
Weighted-average shares outstanding
Basic 306,484,116 217,519,554
Diluted 306,484,116 217,519,554
Consolidated Statement of Operations
(in thousands)
Twelve Months Ended December 31,
2019 2018
---
Revenues, net $
974,345 $
968,468
Operating costs and expenses:
Cost of revenues, excluding depreciation and amortization (346,503) (396,499)
Selling, general and administrative costs, excluding depreciation and amortization (368,675) (369,377)
Share-based compensation expense (51,383) (13,715)
Depreciation (9,181) (9,422)
Amortization (191,361) (227,803)
Impairment on assets held for sale (18,431)
Transaction expenses (46,214) (2,457)
Transition, integration and other related expenses (14,239) (61,282)
Restructuring (15,670)
Legal settlement 39,399
Other operating income, net 4,826 6,379
Total operating expenses (1,017,432) (1,074,176)
Loss from operations (43,087) (105,708)
Interest expense (157,689) (130,805)
Loss before income tax (200,776) (236,513)
Provision for income taxes (10,201) (5,649)
Net loss $
(210,977) $
(242,162)
Per Share:
Basic $
(0.77) $
(1.11)
Diluted $
(0.77) $
(1.11)
Weighted-average shares outstanding
Basic 273,883,342 217,472,870
Diluted 273,883,342 217,472,870
Consolidated Statements of Cash Flows
(in thousands)
Twelve Months Ended December 31,
2019 2018
---
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $
(210,977) $
(242,162)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 200,542 237,225
Bad debt expense 1,331 6,507
Deferred income tax benefit 357 (14,103)
Share-based compensation 51,383 13,715
Loss on extinguishment of debt 50,676
Gain on sale of line of business - (39,104)
Impairment on assets held for sale 18,431
Deferred finance charges 2,496 9,182
Tax indemnity write-off - 33,819
Other operating activities (374) (3,979)
Changes in operating assets and liabilities:
Accounts receivable (593) (50,906)
Prepaid expenses (4,757) (2,936)
Other assets (975) 578
Accounts payable (13,838) (18,091)
Accrued expenses and other current liabilities (4,372) 9,842
Deferred revenue 33,480 33,539
Operating lease right of use assets 11,365
Operating lease liabilities (11,251)
Other liabilities (5,344) 774
Net cash (used in) provided by operating activities 117,580 (26,100)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (69,836) (45,410)
Acquisitions, net of cash acquired (68,424) (23,539)
Acquisition of intangible assets (2,625)
Proceeds from sale of product line, net of restricted cash - 80,883
Net cash (used in) provided by investing activities (140,885) 11,934
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility 70,000 45,000
Principal payments on term loan (641,509) (46,709)
Repayments of revolving credit facility (50,000) (30,000)
Payment of debt issuance costs (41,923)
Contingent purchase price payment (2,371) (2,470)
Proceeds from reverse recapitalization 682,087
Proceeds from issuance of debt 1,600,000
Extinguishment of debt (1,342,651)
Tax receivable agreement payout (200,000)
Proceeds from the exercise of warrants and employee share options 1,582 1,574
Net cash (used in) provided by financing activities 75,215 (32,605)
Effects of exchange rates (971) (5,193)
Net increase (decrease) in cash and cash equivalents, and restricted cash 50,939 (51,964)
Beginning of period:
Cash and cash equivalents 25,575 53,186
Restricted cash 9 24,362
Total cash and cash equivalents, and restricted cash, beginning of period 25,584 77,548
Less: Cash included in assets held for sale, end of period (384)
Cash and cash equivalents, and restricted cash, end of period 76,139 25,584
End of period:
Cash and cash equivalents 76,130 25,575
Restricted cash 9 9
Total cash and cash equivalents, and restricted cash, end of period $
76,139 $
25,584
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $
101,164 $
121,916
Cash paid for income tax $
29,204 $
13,210
Capital expenditures included in accounts payable $
8,762 $
5,166
Assets received as reverse recapitalization capital $
1,877
$
Liabilities assumed as reduction of reverse recapitalization capital $
5,910
$
Reconciliation to Certain Non-GAAP Measures
(Amounts in tables may not sum due to rounding)
Adjusted Revenues, Adjusted Subscription Revenues and Adjusted Transactional Revenues
We present Adjusted Revenues, which excludes the impact of the deferred revenues purchase accounting adjustment (recorded in connection with the 2016 Transaction) and the revenues from the IPM Product Line prior to its divestiture. We also present Adjusted Subscription and Adjusted Transactional Revenues, which excludes the revenues from the IPM Product Line prior to its divestiture. We present these measures because we believe they are useful to readers' understanding of the underlying trends in our operations.
Our presentation of Adjusted Revenues, Adjusted Subscription Revenues and Adjusted Transactional Revenues is presented for informational purposes only and are not necessarily indicative of our future results. You should compensate for these limitations by relying primarily on our U.S. GAAP results and only using non-GAAP measures for supplementary analysis.
The following table presents our calculation of Adjusted Revenues for the three and twelve months ended December 31, 2019 and 2018 and a reconciliation of this measure to our Revenues, net for the same periods:
Three Months Ended December 31, Variance
(in millions, except percentages) 2019 2018
$ %
Revenues, net $
255.0 $
245.2 $
9.8 4.0
%
Deferred revenues purchase accounting adjustment 0.1 0.2 (0.1) (69.2)
%
Revenue attributable to IPM Product Line %
Adjusted revenues $
255.1 $
245.4 $
9.7 4.0
%
Twelve Months Ended December 31, Variance
(in millions, except percentages) 2019 2018
$ %
Revenues, net $
974.3 $
968.5 $
5.9 0.6
%
Deferred revenues purchase accounting adjustment 0.4 3.2 (2.8) (86.1)
%
Revenue attributable to IPM Product Line (20.5) 20.5 100.0
%
Adjusted revenues $
974.8 $
951.2 $
23.6 2.5
%
The following table presents our calculation of Adjusted Subscription Revenues and Adjusted Transactional Revenues for the three and twelve months ended December 31, 2019 and 2018 and a reconciliation of this measure to Note 15 - "Revenue Recognition" in our annual statements, net for the same periods:
Three Months Ended December 31, Variance
(in millions, except percentages) 2019 2018
$ %
Subscription revenues $
209.5 $
197.6 $
11.9 6.0
%
Revenue attributable to IPM Product Line %
Adjusted subscription revenues $
209.5 $
197.6 $
11.9 6.0
%
Three Months Ended December 31, Variance
(in millions, except percentages) 2019 2018
$ %
Transactional revenues $
45.6 $
47.8 $
(2.2) (4.6)
%
Revenue attributable to IPM Product Line %
Adjusted transactional revenues $
45.6 $
47.8 $
(2.2) (4.6)
%
Twelve Months Ended December 31, Variance
(in millions, except percentages) 2019 2018
$ %
Subscription revenues $
805.5 $
794.2 $
11.3 1.4
%
Revenue attributable to IPM Product Line (17.8) 17.8 100.0
%
Adjusted subscription revenues $
805.5 $
776.4 $
29.1 3.7
%
Twelve Months Ended December 31, Variance
(in millions, except percentages) 2019 2018
$ %
Transactional revenues $
169.3 $
177.5 $
(8.2) (4.7)
%
Revenue attributable to IPM Product Line (2.7) 2.7 100.0
%
Adjusted transactional revenues $
169.3 $
174.8 $
(5.5) (3.1)
%
Adjusted EBITDA
We believe Adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure the ability of companies to service their debt. Our definition of and method of calculating Adjusted EBITDA may vary from the definitions and methods used by other companies, which may limit their usefulness as comparative measures. We calculate Adjusted EBITDA by using net (loss) income before provision for income taxes, depreciation and amortization and interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from the IPM Product Line which was divested in October 2018), losses on extinguishment of debt, stock-based compensation, unrealized foreign currency gains/(losses), transition services agreement costs entered into with Thomson Reuters in 2016 ("Transition Services Agreement"), separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, non-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, and certain unusual items impacting results in a particular period.
Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that our projections and estimates will be realized in their entirety or at all. In addition, because of these limitations, Adjusted EBITDA should not be considered as a measure of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations. You should compensate for these limitations by relying primarily on our U.S. GAAP results and only use Adjusted EBITDA for supplementary analysis.
The following table presents our calculation of Adjusted EBITDA for the three and twelve months ended December 31, 2019 and 2018 and reconciles these measures to our Net loss for the same periods:
Three Months Ended December 31, Twelve Months Ended December 31,
(in millions) 2019 2018 2019 2018
Net loss $
(84.8) $
(43.5) $
(211.0) $
(242.2)
Provision for income
taxes 4.6 2.0 10.2 5.6
Depreciation and
amortization 55.4 57.4 200.5 237.2
Interest, net 63.8 35.0 157.7 130.8
Transition services
agreement costs(1) 7.6 10.5 55.8
Transition,
transformation and
integration
expense(2) (0.9) 13.6 24.4 69.2
Deferred revenues
adjustment(3) 0.1 0.2 0.4 3.2
Transaction related
costs(4) 4.1 1.8 46.2 2.5
Share-based
compensation
expense 4.7 3.0 51.4 13.7
Gain on sale of IPM
Product Line (36.1) (36.1)
Tax indemnity
asset(5) 33.8 33.8
IPM adjusted
operating margin(6) (5.9)
Restructuring(7) 15.7 15.7
Legal settlement (39.4)
Impairment on assets
held for sale 18.4 18.4
Other (8) 3.5 1.0 9.0 5.2
Adjusted EBITDA $
84.6 $
75.8 $
294.0 $
272.8
(1) Includes accruals for payments to
Thomson Reuters under the transition
services agreement. These costs have
decreased substantially in 2019, as
we are in the final stages of
implementing our standalone company
infrastructure.
(2) Includes costs incurred in connection
with and after our separation from
Thomson Reuters in 2016 relating to
the implementation of our standalone
company infrastructure and related
cost-savings initiatives. These
costs include mainly transition
consulting, technology
infrastructure, personnel and
severance expenses relating to our
standalone company infrastructure,
which are recorded in Transition,
integration, and other line-item of
our income statement, as well as
expenses related to the
restructuring and transformation of
our business following our
separation from Thomson Reuters in
2016 mainly related to the
integration of separate business
units into one functional
organization and enhancements in our
technology.
(3) Reflects deferred revenues fair value
accounting adjustment arising from
purchase price allocation in
connection with our separation from
Thomson Reuters in 2016 See
"-Factors Affecting the
Comparability of Our Results of
Operations -Separation and
Transition to Operations as a
Standalone Business -Purchase
Accounting Impact of our separation
from Thomson Reuters in 2016" within
the annual report.
(4) Includes consulting and accounting
costs associated with acquisitions
and the sale of the IPM Product Line
and sale of MarkMonitor business
(5) Reflects the write down of a tax
indemnity asset.
(6) Reflects the IPM Product Line's
operating margin, excluding
amortization and depreciation, prior
to its divestiture in October 2018.
(7) Reflects costs incurred in connection
with the initiative, following our
merger with Churchill Capital Corp
in 2019, to streamline our
operations by simplifying our
organization and focusing on two
product groups.
(8) Includes primarily the net impact of
foreign exchange gains and losses
related to the re-measurement of
balances and other items that do not
reflect our ongoing operating
performance.
Adjusted Net Income and Adjusted Diluted EPS
We have begun to use Adjusted Net Income and Adjusted Diluted Earnings Per Share defined below in our analysis of the financial performance of the Company. We believe Adjusted Net Income and Adjusted Diluted EPS are meaningful measures of the performance of the Company because they adjust for items that do not directly affect our ongoing operating performance in the period. Our definition of and method of calculating Adjusted Net Income and Adjusted Diluted EPS may vary from the definitions and methods used by other companies, which may limit their usefulness as comparative measures. We calculate Adjusted Net Income by using net income (loss), adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income and expense from the divested business), amortization related to acquired intangible assets, losses on extinguishment of debt, stock-based compensation, unrealized foreign currency gains/(losses), Transition Services Agreement costs, separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, non-cash income (loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, certain unusual items impacting results in a particular period, and the income tax impact of any adjustments. We calculate Adjusted Diluted EPS by using Adjusted Net Income divided by diluted weighted average shares for the period.
Our presentation of Adjusted Net Income and Adjusted Diluted EPS should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that our projections and estimates will be realized in their entirety or at all. In addition, because of these limitations, Adjusted Net Income and Adjusted Diluted EPS should not be considered as measures of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations. You should compensate for these limitations by relying primarily on our U.S. GAAP results and only use Adjusted Net Income and Adjusted Diluted EPS for supplementary analysis.
The following table presents our calculation of Adjusted Diluted EPS for the three and twelve months ended December 31, 2019 and 2018 and reconciles these measures to our Net loss for the same periods:
Three Months Ended December 31,
Twelve Months Ended December 31,
2019 2018 2019 2018
(in millions, except per share amounts) Amount Per Amount Per Amount Per Amount Per
Share Share Share Share
Net loss $
(84.8) (0.28) $
(43.5) (0.20) $
(211.0) (0.77) $
(242.2) (1.11)
Dilutive impact of potential common shares 0.02 0.04
Net loss (84.8) (0.26) (43.5) (0.20) (211.0) (0.73) (242.2) (1.11)
Transition services agreement costs(1) 7.6 0.03 10.5 0.04 55.8 0.26
Transition, transformation and integration expense(2) (0.9) 13.6 0.06 24.4 0.08 69.2 0.32
Deferred revenues adjustment(3) 0.1 0.2 0.4 3.2 0.01
Transaction related costs(4) 4.1 0.01 1.8 0.01 46.2 0.16 2.5 0.01
Share-based compensation expense 4.7 0.01 3.0 0.01 51.4 0.18 13.7 0.06
Amortization related to acquired intangible assets 39.9 0.12 53.5 0.25 169.0 0.59 217.5 1.00
Restructuring(5) 15.7 0.05 15.7 0.05
Debt extinguishment costs and refinancing related costs(6) 42.2 0.13 51.3 0.18
Impairment on assets held for sale 18.4 0.06 18.4 0.06
Legal settlement (39.4) (0.14)
Gain on Sale of IPM Product Line (36.1) (0.16) (36.1) (0.17)
IPM adjusted operating margin(7) (5.9) (0.03)
Tax indemnity asset(8) 33.8 0.16 33.8 0.16
Other(9) 3.5 0.01 0.8 9.0 0.04 5.2 0.03
Income tax impact of related adjustments (1.0) (2.8) (0.01) 6.2 0.02 8.5 0.04
Adjusted Net income and Adjusted Diluted EPS $
41.9 0.13 $
31.9 0.15 $
152.1 0.53 $
125.2 0.58
Weighted average common shares 329,824,753 219,078,420 287,871,870 217,472,872
(Diluted)
(1) Includes accruals for payments to
Thomson Reuters under the transition
services agreement. These costs have
decreased substantially in 2019, as
we are in the final stages of
implementing our standalone company
infrastructure.
(2) Includes costs incurred in connection
with and after our separation from
Thomson Reuters in 2016 relating to
the implementation of our standalone
company infrastructure and related
cost-savings initiatives. These
costs include mainly transition
consulting, technology
infrastructure, personnel and
severance expenses relating to our
standalone company infrastructure,
which are recorded in Transition,
integration, and other line-item of
our income statement, as well as
expenses related to the
restructuring and transformation of
our business following our
separation from Thomson Reuters in
2016 mainly related to the
integration of separate business
units into one functional
organization and enhancements in our
technology.
(3) Reflects the deferred revenues fair
value accounting adjustment arising
from the purchase price allocation
in connection with the 2016
Transaction.
(4) Includes consulting and accounting
costs associated with acquisitions
and the sale of the IPM Product Line
and sale of MarkMonitor business
(5) Reflects costs incurred in connection
with the initiative, following our
merger with Churchill Capital Corp
in 2019 , to streamline our
operations by simplifying our
organization and focusing on two
product groups.
(6) Reflects costs incurred for the early
extinguishment of debt and
refinancing costs related to new
debt. The twelve months ended
December 31, 2019 includes a charge
of $9.1 million recorded in the
second quarter of 2019 relating to
refinancing costs.
(7) Reflects the IPM Product Line's
operating margin, excluding
amortization and depreciation, prior
to its divestiture in October 2018.
(8) Reflects the write down of a tax
indemnity asset.
(9) Includes primarily the net impact of
foreign exchange gains and losses
related to the re-measurement of
balances and other items that do not
reflect our ongoing operating
performance.
Free Cash Flow
We use free cash flow in our operational and financial decision-making and believe free cash flow is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure the ability of companies to service their debt.
Our presentation of free cash flow should not be construed as a measure of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations. You should compensate for these limitations by relying primarily on our U.S. GAAP results.
We define free cash flow as net cash provided by operating activities less capital expenditures. The following table reconciles our non-GAAP free cash flow measure to net cash provided by operating activities:
Twelve Months Ended December 31,
(in millions) 2019 2018
Net cash
provided by
(used in)
operating
activities $
117.6 $
(26.1)
Capital
expenditures (69.8) (45.4)
Free cash flow 47.8 (71.5)
Cash paid for
transition
services
agreement(1) 12.0 72.7
Cash paid for
transition,
transformation
and
integration
expense(2) 40.9 73.6
Cash paid for
transaction
related
costs(3) 45.1 2.2
Cash received
for Legal
Settlement (45.3)
Adjusted free
cash flow $
100.5 $
77.0
(1) Includes cash payments to Thomson
Reuters under the Transition
Services Agreement. These costs
have decreased substantially in
2019, as we are in the final stages
of implementing our standalone
company infrastructure. In 2019, the
Transition Services Agreement cash
paid is offset by cash receipts from
the IPM Product Line divestiture.
(2) Includes cash payments in connection
with and after our separation from
Thomson Reuters in 2016 relating to
the implementation of our standalone
company infrastructure and related
cost-savings initiatives. These
cash payments include mainly
transition consulting, technology
infrastructure, personnel and
severance expenses relating to our
standalone company infrastructure,
which are recorded in Transition,
integration, and other line-item of
our income statement, as well as
cash payments related to the
restructuring and transformation of
our business following our
separation from Thomson Reuters in
2016 mainly related to the
integration of separate business
units into one functional
organization and enhancements in our
technology. This also includes cash
payments following our merger with
Churchill Capital Corp in 2019, to
streamline our operations by
simplifying our organization and
focusing on two product groups.
(3) Includes consulting and accounting
costs associated with acquisitions
and the sale of the IPM Product Line
and sale of MarkMonitor business.
Required Reported Data
Standalone Adjusted EBITDA
We are required to report Standalone Adjusted EBITDA pursuant to the reporting covenants contained in the Credit Agreement and the Indenture. Standalone Adjusted EBITDA is substantially similar to Consolidated EBITDA and EBITDA as such terms are defined under the Credit Agreement and the Indenture, respectively. In addition, the Credit Agreement and the Indenture contain certain restrictive covenants that govern debt incurrence and the making of restricted payments, among other matters. These restrictive covenants utilize Standalone Adjusted EBITDA as a primary component of the compliance metric governing our ability to undertake certain actions otherwise proscribed by such covenants. Standalone Adjusted EBITDA reflects further adjustments to Adjusted EBITDA for cost savings already implemented and excess standalone costs.
Because Standalone Adjusted EBITDA is required pursuant to the terms of the reporting covenants under the Credit Agreement and the Indenture and because this metric is relevant to lenders and noteholders, management considers Standalone Adjusted EBITDA to be relevant to the operation of its business. It is also utilized by management and the compensation committee of the Board as an input for determining incentive payments to employees.
Excess standalone costs are the difference between our actual standalone company infrastructure costs, and our estimated steady state standalone infrastructure costs. We make an adjustment for the difference because we have had to incur costs under the Transition Services Agreement after we had implemented the infrastructure to replace the services provided pursuant to the Transition Services Agreement, after we had implemented the infrastructure to replace the services provided pursuant to the Transition Services Agreement, thereby incurring dual running costs. Furthermore, there has been a ramp up period for establishing and optimizing the necessary standalone infrastructure. Since our separation from Thomson Reuters, we have had to transition quickly to replace services provided under the Transition Services Agreement, with optimization of the relevant standalone functions typically following thereafter. Cost savings reflect the annualized "run rate" expected cost savings, net of actual cost savings realized, related to restructuring and other cost savings initiatives undertaken during the relevant period.
Standalone Adjusted EBITDA is calculated under the Credit Agreement and the Indenture by using our Net Income for the trailing twelve month period (defined in the Credit Agreement and the Indenture as our GAAP net income adjusted for certain items specified in the Credit Agreement and the Indenture) adjusted for items including: taxes, interest expense, depreciation and amortization, non-cash charges, expenses related to capital markets transactions, acquisitions and dispositions, restructuring and business optimization charges and expenses, consulting and advisory fees, run-rate cost savings to be realized as a result of actions taken or to be taken in connection with an acquisition, disposition, restructuring or cost savings or similar initiatives, "run rate" expected cost savings, operating expense reductions, restructuring charges and expenses and synergies related to the transition following the separation of the Company's business from Thomson Reuters (the "2016 Transaction") projected by us, costs related to any management or equity stock plan, other adjustments that were presented in the offering memorandum used in connection with the issuance of the Notes and earnout obligations incurred in connection with an acquisition or investment.
The following table bridges Adjusted EBITDA to Standalone Adjusted EBITDA, as Adjusted EBITDA reflects all but three of the adjustments that comprise Standalone Adjusted EBITDA for the periods presented:
Twelve Months Ended December 31,
2019 2018
(in millions)
Net loss $
(211.0) $
(242.2)
(Benefit) provision for income taxes 10.2 5.6
Depreciation and amortization 200.5 237.2
Interest, net 157.7 130.8
Transition Services Agreement costs(1) 10.5 55.8
Transition, transformation and integration expense(2) 24.4 69.2
Deferred revenues adjustment(3) 0.4 3.2
Transaction related costs(4) 46.2 2.5
Gain on sale of IPM Product Line (36.1)
Share-based compensation expense 51.4 13.7
Tax indemnity asset (5) 33.8
IPM adjusted operating margin (6) (5.9)
Restructuring(7) 15.7
Legal settlement (39.4)
Impairment on assets held for sale 18.4
Other(8) 9.0 5.2
Adjusted EBITDA 294.0 272.8
Realized foreign exchange gain (3.5)
Cost savings(9) 15.5 12.7
Excess standalone costs(10) 30.0 25.4
Standalone Adjusted EBITDA 336.0 310.9
(1) Includes accruals for payments to
Thomson Reuters under the Transition
Services Agreement. These costs are
expected to decrease substantially
in 2019, as we are in the final
stages of implementing our
standalone company infrastructure.
(2) Includes costs incurred in connection
with and after the 2016 Transaction
relating to the implementation of
our standalone company
infrastructure and related cost-
savings initiatives. These costs
include mainly transition
consulting, technology
infrastructure, personnel and
severance expenses relating to our
standalone company infrastructure,
which are recorded in Transition,
integration, and other line-item of
our income statement, as well as
expenses related to the
restructuring and transformation of
our business following the 2016
Transaction, mainly related to the
integration of separate business
units into one functional
organization and enhancements in our
technology. Amounts incurred for the
twelve months ended December 31,
2019 also relate to the Company's
transition expenses incurred
following the Transactions.
(3) Reflects deferred revenues fair value
accounting adjustment arising from
purchase price allocation in
connection with the 2016
Transaction.
(4) Includes consulting and accounting
costs associated with the
Transactions in 2019, the sale of
the IPM Product Line and tuck-in
acquisitions.
(5) Reflects the write down of a tax
indemnity asset.
(6) Reflects the IPM Product Line's
operating margin, excluding
amortization and depreciation, prior
to its divestiture in October 2018.
(7) Reflects costs incurred in connection
with the initiative, following our
merger with Churchill Capital Corp
in 2019, to streamline our
operations by simplifying our
organization and focusing on two
product groups.
(8) Includes primarily the net impact of
foreign exchange gains and losses
related to the re-measurement of
balances and other one-time
adjustments.
(9) Reflects the estimated annualized
run-rate cost savings, net of
actual cost savings realized,
related to restructuring and other
cost savings initiatives undertaken
during the period (exclusive of any
cost reductions in our estimated
standalone operating costs).
(10) Reflects the difference between our
actual standalone company
infrastructure costs, and our
estimated steady state standalone
operating costs, which were as
follows:
Twelve Months Ended December
31,
(in millions) 2019 2018
Actual standalone company infrastructure costs 162.0 153.6
Steady state standalone cost estimate (132.0) (128.2)
Excess standalone costs 30.0 25.4
The foregoing adjustments (9) and (10) are estimates and are not intended to represent pro forma adjustments presented within the guidance of Article 11 of Regulation S-X. Although we believe these estimates are reasonable, actual results may differ from these estimates, and any difference may be material. See "Cautionary Note Regarding Forward-Looking Statements" in the annual report.
The following tables present the amounts of our subscription and transactional revenues, including as a percentage of our total revenues, for the periods indicated, as well the drivers of the variances between periods.
Variance Percentage of Factors
Increase/(Decrease) Increase/(Decrease)
Three Months Total Total Divested FX Impact Ongoing
Ended December 31, Variance Variance IPM Business
(Dollars) (Percentage) Product
Line
(in millions,
except
percentages) 2019 2018
Subscription $
209.5 $
197.6 $
11.9 6.0
% (0.1)
revenues % %
% 6.1
Transactional 45.6 47.8 (2.2) (4.6)
% (0.2) (4.4)
revenues %
% %
Deferred revenues (0.1) (0.2) 0.1 (69.2)
adjustment(1) %
%
%
%
Revenues, net $
255.0 $
245.2 $
9.8 4.0
% (0.2)
% %
% 4.2
(1) Reflects the deferred revenues
adjustment made as a result of
purchase accounting related to
the 2016 Transaction.
Variance Percentage of Factors
Increase/(Decrease) Increase/(Decrease)
Twelve Months Total Total Divested FX Impact Ongoing
Ended December 31, Variance Variance IPM Business
(Dollars) (Percentage) Product
Line
(in millions, except percentages) 2019 2018
Subscription revenues $
805.5 $
794.2 $
11.3 1.4 (2.2)
% % %
% (0.6) 4.2
Transactional revenues 169.3 177.5 (8.2) (4.7) (1.6) (0.8) (2.3)
% %
% %
Deferred revenues adjustment(1) (0.4) (3.2) 2.8 (86.1)
%
%
%
%
Revenues, net $
974.3 $
968.5 $
5.9 0.6 (2.1)
% % %
% (0.6) 3.1
(1) Reflects the deferred revenues
adjustment made as a result of
purchase accounting related to
the 2016 Transaction.
The tables below reflect the impact of the revenue generated by the IPM Product Line, including as a percentage of our total revenues, for the periods indicated, as well the drivers of the variances between periods. We sold the IPM Product Line in October 2018.
Variance Percentage of Factors
Increase/(Decrease) Increase/(Decrease)
Three Months Total Total FX Impact Ongoing
Ended December 31, Variance Variance Business
(Dollars) (Percentage)
(in millions, except percentages) 2019 2018
Adjusted subscription revenues $
209.5 $
197.6 $
11.9 6.0 (0.1)
% %
% 6.1
Adjusted transactional revenues 45.6 47.8 (2.2) (4.6) (0.2) (4.4)
%
% %
Deferred revenues adjustment (1) (0.1) (0.2) $
0.1 (69.2) 0.0 0.0
% % %
IPM Product Line (2) 0.0 0.0 0.0 0.0
% % %
Revenues, net $
255.0 $
245.2 $
9.8 4.0 (0.2)
% %
% 4.2
(1) Reflects the deferred revenues
adjustment made as a result of
purchase accounting related to
the 2016 Transaction.
Reflects the revenue generated
by the IPM Product Line for the
year ended December 31, 2018.
We sold the IPM Product Line in
(2) October 2018.
Variance Percentage of Factors
Increase/(Decrease) Increase/(Decrease)
Twelve Months Total Total FX Impact Ongoing
Ended December 31, Variance Variance Business
(Dollars) (Percentage)
(in millions, except percentages) 2019 2018
Adjusted subscription revenues $
805.5 $
776.4 $
29.1 3.7 (0.6)
% %
% 4.3
Adjusted transactional revenues 169.3 174.8 (5.5) (3.1) (0.8) (2.3)
%
% %
Deferred revenues adjustment (1) (0.4) (3.2) 2.8 (86.1) 0.0
% %
% 0.0
IPM Product Line (2) 20.5 (20.5) (100.0) 0.0
% %
% 0.0
Revenues, net $
974.3 $
968.5 $
5.9 0.6 (0.6)
% %
% 3.1
(1) Reflects the deferred revenues
adjustment made as a result of
purchase accounting related to
the 2016 Transaction.
Reflects the revenue generated
by the IPM Product Line for the
year ended December 31, 2018.
We sold the IPM Product Line in
(2) October 2018.
The following tables, and the discussion that follows, presents our revenues by Group for the periods indicated, as well the drivers of the variances between periods, including as a percentage of such revenues.
Variance Percentage of Factors
Increase/(Decrease) Increase/(Decrease)
Revenues by Product Group Three Months Total Total FX Impact Ongoing
Ended December 31, Variance Variance Business
(Dollars) (Percentage)
(in millions, except percentages) 2019 2018
Science Product Group $
146.5 $
137.7 $
8.8 6.4 (0.1) 6.5
%
% %
IP Product Group 108.6 107.7 0.9 0.7 (0.2) 0.9
%
% %
Deferred revenues adjustment (1) (0.1) (0.2) 0.1 (69.2)
% %
%
IPM Product Line (2) 0.0 0.0 0.0
% %
%
Revenues, net $
255.0 $
245.2 $
9.8 4.0 (0.2) 4.2
%
% %
(1) Reflects the deferred revenues
adjustment made as a result of
purchase accounting related to
the 2016 Transaction.
Reflects the revenue generated
by the IPM Product Line for the
year ended December 31, 2018.
We sold the IPM Product Line in
(2) October 2018.
Variance Percentage of Factors
Increase/(Decrease) Increase/(Decrease)
Revenues by Product Group Twelve Months Total Total FX Impact Ongoing
Ended December 31, Variance Variance Business
(Dollars) (Percentage)
(in millions, except percentages) 2019 2018
Science Product Group $
547.5 $
527.9 19.6 3.7 (0.4) 4.1
%
% %
IP Product Group 427.2 423.3 4.0 0.9 (0.9) 1.8
%
% %
Deferred revenues adjustment (1) (0.4) (3.2) (2.8) (86.1)
% %
%
IPM Product Line (2) 20.5 (20.5) (100.0)
% %
%
Revenues, net $
974.3 $
968.5 $
5.9 0.6 (0.6) 3.1
%
% %
(1) Reflects the deferred revenues
adjustment made as a result of
purchase accounting related to
the 2016 Transaction.
Reflects the revenue generated
by the IPM Product Line for the
year ended December 31, 2018.
We sold the IPM Product Line in
(2) October 2018.
The following table presents our calculation of Adjusted Revenues for the Outlook for 2020 and a reconciliation of this measure to our Revenues, net for the same period:
Year Ending December 31, 2020
(Forecasted)
Low High
(in millions)
Revenues, net $
1,160.0 $
1,190.0
Adjusted revenues, net(1) $
1,160.0 $
1,190.0
(1) The Company is evaluating the
purchase accounting impact,
including the deferred revenue
adjustment, related to the
DRG acquisition.
The following table presents our calculation of Adjusted EBITDA for the Outlook for 2020 and reconciles these measures to our Net loss for the same period:
Year Ending December 31, 2020
(Forecasted)
Low High
(in
millions)
Net loss $
(70.6) $
(45.6)
Provision
for
income
taxes 7.8 7.8
Depreciation
and
amortization 236.9 236.9
Interest,
net 93.0 93.0
Transition,
transition
services
agreement,
and
integration
expense(1) 46.4 46.4
Transaction
related
costs(2) 50.0 50.0
Share-
based
compensation
expense 30.6 30.6
Other 0.9 0.9
Adjusted
EBITDA 395.0 420.0
Adjusted
EBITDA % %
margin 34 35
Includes restructuring costs,
cost associated with the
integration of DRG, and
payments and receipts under
(1) transition service agreements.
(2) Includes the costs associated
with the DRG acquisition and
other merger and acquisition
related activities.
The following table presents our calculation of Adjusted Diluted EPS for the Outlook for 2020 and reconciles these measures to our Net loss for the same period:
Year Ending December 31, 2020
(Forecasted)
Low High
(in millions, except per share amounts) Per Share Per Share
Net loss $
(0.18) $
(0.12)
Transition, transition services agreement, and integration expense(1) 0.12 0.12
Transaction related costs(2) 0.13 0.13
Share-based compensation expense 0.08 0.08
Amortization related to acquired intangible assets 0.41 0.41
Other(3)
Income tax impact of related adjustments (0.03) (0.03)
Adjusted Diluted EPS $
0.53 $
0.59
Weighted average common shares (Diluted) 381,921,495
Includes restructuring costs,
cost associated with the
integration of DRG, and
payments and receipts under
(1) transition service agreements.
(2) Includes the costs associated
with the DRG acquisition and
other merger and acquisition
related activities.
The following table presents our calculation of Adjusted Free Cash Flow for the Outlook for 2020 and reconciles these measures to our Net loss for the same period:
Year Ending December 31, 2020
(Forecasted)
Low High
(in millions)
Net cash provided by operating activities $
201.8 $
217.4
Capital expenditures (68.8) (72.4)
Free Cash Flow 133.0 145.0
Transition, transition services agreement, and integration expense(1) 38.0 45.0
Transaction related costs(2) 49.0 50.0
Adjusted Free Cash Flow $
220.0 $
240.0
Includes restructuring costs,
cost associated with the
integration of DRG, and
payments and receipts under
(1) transition service agreements.
(2) Includes the costs associated
with the DRG acquisition and
other merger and acquisition
related activities.
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