-- Updates 2022 Outlook --
LONDON, Nov. 8, 2022
/PRNewswire/ -- Clarivate Plc - (NYSE: CLVT) (the "Company" or
"Clarivate"), a global leader in providing trusted information and
insights to accelerate the pace of innovation, today reported
results for the third quarter ended September 30, 2022.
Third Quarter 2022
Financial Highlights
- Revenues of $635.7 million
increased 43.8%, and 50.9% at constant currency driven primarily by
the acquisition of ProQuest
- Organic revenues(1) increased 1.2% as increases in
subscription revenues of 4.3% and re-occurring revenues of 2.4%
were partially offset by a decline in transactional revenues of
9.4%
- Net loss attributable to ordinary shares was $4,434.4 million compared to net income
attributable to ordinary shares of $6.0
million in the prior year quarter due to the $4,448.6 million non-cash impairment of goodwill;
Net loss per diluted share of $6.64
increased by $6.52 due to the
non-cash impairment of goodwill
- Adjusted Net Income(1) of $143.7 million increased 26.5%; Adjusted Income
per diluted share(1) of $0.20 increased 25.0% or $0.04
- Adjusted EBITDA(1) of $271.6
million increased 42.9% driven by earnings contributions
from acquisitions, organic growth and cost savings from integration
programs; Adjusted EBITDA Margin(1) of 42.7% decreased
30 basis points
Nine Months Ended September 30, 2022 Financial Highlights
- Revenues of $1,984.5 million
increased 50.8%, and 56.1% at constant currency driven primarily by
the acquisition of ProQuest
- Organic revenues(1) increased 3.4% as increases in
subscription revenues of 3.8% and re-occurring revenues of 6.1%
were partially offset by a decline in transactional revenues of
1.1%
- Net loss attributable to ordinary shares of $4,339.9 million increased $4,158.4 million due to the $4,448.6 million non-cash impairment of goodwill;
Net loss per diluted share of $6.66
increased by $6.19
- Adjusted Net Income(1) of $464.0 million increased 48.7%; Adjusted Income
per diluted share(1) of $0.63 increased 28.6% or $0.14
- Adjusted EBITDA(1) of $808.3
million increased 48.6% and Adjusted EBITDA
Margin(1) of 40.7% decreased 50 basis points
- Cash Flows from Operations increased $66.9 million to $372.4
million; Adjusted Free Cash Flow(1) increased
$99.1 million to $414.7 million
"Our third quarter results reflect improved performance across
many key financial metrics including organic subscription and
re-occurring revenue during a challenging economic period. However,
our transactional revenues, specifically across Life Sciences and
Healthcare, came in lighter than expected as a result of a few
deals not closing by quarter-end," said Jonathan Gear, Chief Executive Officer. "We
continue to make progress driving focused product improvements and
go-to-market strategies, which will help us navigate through the
recent quarterly transactional revenue fluctuations."
Selected Financial
Information
The results for the three and nine months ended September 30, 2022 include contributions from the
following 2021 acquisitions: 1) Bioinfogate, which was completed in
August 2021, 2) Patient Connect,
which was completed in December 2021,
and 3) ProQuest, which was completed in December 2021 for which there were no comparable
amounts in the nine months ended September
30, 2021.
|
Three Months
Ended
September 30,
|
|
Change
|
|
Nine Months
Ended
September 30,
|
|
Change
|
(in millions, except
percentages and per share data), (unaudited)
|
2022
|
|
2021
|
|
$
|
|
%
|
|
2022
|
|
2021
|
|
$
|
|
%
|
Revenues,
net
|
$ 635.7
|
|
$ 442.1
|
|
$ 193.6
|
|
43.8 %
|
|
$
1,984.5
|
|
$
1,316.2
|
|
$ 668.3
|
|
50.8 %
|
Annualized Contract
Value (ACV)
|
$
1,647.1
|
|
$ 936.7
|
|
$ 710.4
|
|
75.8 %
|
|
$
1,647.1
|
|
$ 936.7
|
|
$ 710.4
|
|
75.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to ordinary shares
|
$ (4,434.4)
|
|
$
6.0
|
|
$ (4,440.4)
|
|
N/M
|
|
$ (4,339.9)
|
|
$
(181.5)
|
|
$ (4,158.4)
|
|
N/M
|
Net income (loss) per
share, diluted
|
$ (6.64)
|
|
$ (0.12)
|
|
$ (6.52)
|
|
N/M
|
|
$ (6.66)
|
|
$ (0.47)
|
|
$ (6.19)
|
|
N/M
|
Weighted-average shares
outstanding (diluted)
|
675.2
|
|
643.9
|
|
—
|
|
4.9 %
|
|
680.6
|
|
626.2
|
|
—
|
|
8.7 %
|
Adjusted
EBITDA(1)
|
$ 271.6
|
|
$ 190.0
|
|
$
81.6
|
|
42.9 %
|
|
$ 808.3
|
|
$ 543.8
|
|
$ 264.5
|
|
48.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
(loss)(1)
|
$ 143.7
|
|
$ 113.6
|
|
$
30.1
|
|
26.5 %
|
|
$ 464.0
|
|
$ 312.0
|
|
$ 152.0
|
|
48.7 %
|
Adjusted diluted
EPS(1)
|
$
0.20
|
|
$ 0.16
|
|
$
0.04
|
|
25.0 %
|
|
$ 0.63
|
|
$ 0.49
|
|
$ 0.14
|
|
28.6 %
|
Weighted-average
ordinary shares (diluted)(2)
|
732.9
|
|
699.8
|
|
—
|
|
4.7 %
|
|
739.0
|
|
647.5
|
|
—
|
|
14.1 %
|
Net cash provided by
operating activities
|
$ 207.8
|
|
$ 43.8
|
|
$ 164.0
|
|
374.4 %
|
|
$ 372.4
|
|
$ 305.5
|
|
$ 66.9
|
|
21.9 %
|
Free cash
flow(1)
|
$ 140.4
|
|
$ 19.6
|
|
$ 120.8
|
|
616.3 %
|
|
$ 215.9
|
|
$ 219.3
|
|
$
(3.4)
|
|
(1.6) %
|
Adjusted free cash
flow(1)
|
$ 156.6
|
|
$ 57.1
|
|
$
99.5
|
|
174.3 %
|
|
$ 414.7
|
|
$ 315.6
|
|
$ 99.1
|
|
31.4 %
|
(Amounts in tables may
not sum due to rounding)
|
|
(1) 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.
|
(2)
Calculated assuming a net income position compared to a net loss
position on the statement of operations for calculating Adjusted
diluted EPS.
|
Third Quarter 2022
Operating Results
Revenues, net, for the third quarter increased $193.6 million, or 43.8%, to $635.7 million, and increased 50.9% on a constant
currency basis. The significant strengthening of the U.S. dollar
had a negative foreign exchange impact on revenue of 7.1% for the
third quarter of 2022. Organic revenues(1) increased
$5.2 million or 1.2%, which was
partially offset by our decision to cease commercial operations in
Russia in March.
Subscription revenues for the third quarter increased
$161.8 million, or 65.6%, to
$408.3 million, and increased
72.6% on a constant currency basis, primarily driven by the
acquisition of ProQuest. Organic subscription
revenues(1) increased 4.3%, primarily due to price
increases and the benefit of net installations.
Re-occurring revenues for the third quarter decreased
$7.7 million, or 7.0% to
$102.7 million, and increased
2.4% on a constant currency basis. Organic re-occurring
revenues(1) increased 2.4%, primarily due to increases
in patent renewal volumes and improvements in yield per case.
Transactional and other revenues for the third quarter increased
$39.7 million, or 46.5%, to
$125.0 million, and increased
51.1% on a constant currency basis, primarily due to the
acquisition of ProQuest. Organic transactional and other
revenues(1) decreased 9.4%, due to lower custom data
sales and consulting services revenue.
Balance Sheet and Cash
Flow
As of September 30, 2022, cash and
cash equivalents of $446.0 million
increased $15.1 million compared to
December 31, 2021, driven by
growth in revenues and profits, partially offset by the repurchases
of ordinary shares, cash dividends on preferred shares and higher
capital expenditures. Restricted cash decreased $148.1 million to $8.6
million, compared to December 31,
2021 primarily due to 2022 first quarter employee payroll
payments related to the CPA Global Equity Plan. The payments were
funded by the December 2021 sale of
shares held in the Employee Benefit Trust established for the CPA
Global Equity Plan.
The Company's total debt outstanding as of September 30, 2022 was $5,544.3 million, a decrease of $22.9 million compared to December 31, 2021.
Net cash provided by operating activities of $372.4 million for the nine months ended
September 30, 2022 increased
$66.9 million compared to
$305.5 million for the prior year
period, primarily due to higher earnings excluding the non-cash
goodwill impairment charge, as well as working capital timing,
offset by payments in the first quarter of 2022 related to the CPA
Global Equity Plan. Adjusted free cash flow(1) for the
nine months ended September 30, 2022,
was $414.7 million, an increase of
$99.1 million compared to the prior
year period.
Updated Outlook for 2022
(forward-looking statement)
"Our updated outlook assumes further strengthening of the US
dollar, lower organic growth primarily across transactional
revenues, and includes the recent disposal of the MarkMonitor
business," said Jonathan Collins,
Executive Vice President and Chief Financial Officer. "With the
completion of the sale of MarkMonitor in October, we used the
proceeds to reduce our floating rate debt and lower our
leverage."
The full year outlook presented below assumes no further
acquisitions, divestitures, or unanticipated events.
|
Updated 2022
Outlook
|
Prior 2022
Outlook
|
Revenues
|
$2.60B
to $2.66B
|
$2.70B
to $2.76B
|
Adjusted
EBITDA
|
$1.05B
to $1.10B
|
$1.12B
to $1.16B
|
Adjusted EBITDA
margin
|
40.5%
to 41.5%
|
41.0%
to 42.0%
|
Adjusted Diluted
EPS(3)
|
$0.75
to $0.85
|
$0.80
to $0.90
|
Adjusted Free Cash
Flow
|
$500M
to $550M
|
$600M
to $650M
|
|
(3) Adjusted Diluted EPS for 2022 is
calculated based on approximately 740 million fully diluted
weighted average shares outstanding.
|
The outlook includes Non-GAAP measures. Please see
"Reconciliation to Certain Non-GAAP measures" presented below for
important disclosure and reconciliations of these financial
measures to the most directly comparable GAAP measures. These terms
are defined elsewhere in this earnings press release.
Conference Call and
Webcast
Clarivate will host a conference call and webcast today to
review the results for the third quarter at 9:00 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 (844) 200-6205 in the United
States, +1 (929) 526-1599 for international, and +1 (833)
950-0062 in Canada. The conference
ID number is 282898. An audio replay will be available
approximately two hours after the completion of the call at +1
(866) 813-9403 in the United
States, +44 204 525-0658 for international, and +1 (266)
828-7578 in Canada. The Replay
Conference ID number is 673414. The recording will be available for
replay through November 22, 2022. The
webcast can be accessed at
https://events.q4inc.com/attendee/188172240 and will be available
for replay.
Use of Non-GAAP Financial
Measures
Non-GAAP results are not presentations made in accordance with
U.S. generally accepted accounting principles ("GAAP") and are
presented only as a supplement to our financial statements based on
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.
They 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 measures in isolation from, or as a substitute
for, financial measures or results of operations calculated or
determined in accordance with GAAP.
We use non-GAAP measures in our operational and financial
decision-making. We believe that such measures allow us 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,
and we also believe that investors may find these non-GAAP
financial measures useful for the same reasons. Non-GAAP measures
are frequently used by securities analysts, investors, and other
interested parties in their evaluation of companies comparable to
us, 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
analytical tools and because not all companies use identical
calculations, our presentation of non-GAAP financial measures may
not be comparable to other similarly titled measures of other
companies.
Definitions and reconciliations of non-GAAP measures, such as
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow,
Standalone Adjusted EBITDA, organic revenue, organic subscription
revenue, organic re-occurring revenue and organic transactional and
other revenue to the most directly comparable GAAP measures are
provided within the schedules attached to this release. Our
presentation of non-GAAP measures should not be construed as an
inference that our future results will be unaffected by any of the
adjusted items, or that any projections and estimates will be
realized in their entirety or at all.
We calculate constant currency by converting the non-U.S. dollar
income statement balances for the most current year to U.S. dollars
by applying the average exchange rates of the preceding year.
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,"
"expect," "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 outlook and predictions
relating to expected operating results, such as revenue growth and
earnings; strategic actions such as acquisitions, joint ventures,
and dispositions, including 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 sufficient liquidity to
fund our ongoing business operations; expectations of the effect on
our financial condition of claims, litigation, environmental costs,
the impact of inflation, the impact of foreign currency
fluctuations, the COVID-19 pandemic and governmental responses
thereto, 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
include those factors 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 speak 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
Clarivate™ is a global leader in providing solutions to
accelerate the pace of innovation. Our bold mission is to help
customers solve some of the world's most complex problems by
providing actionable information and insights that reduce the time
from new ideas to life-changing inventions in the areas of Academia
& Government, Life Sciences & Healthcare, Professional
Services, and Consumer Goods, Manufacturing & Technology. We
help customers discover, protect and commercialize their inventions
using our trusted subscription and technology-based solutions
coupled with deep domain expertise. For more information, please
visit clarivate.com.
Condensed
Consolidated Balance Sheets
(In millions, except
share and per share data)
(unaudited)
|
|
|
September 30,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
446.0
|
|
$
430.9
|
Restricted
cash
|
8.6
|
|
156.7
|
Accounts receivable,
net
|
748.6
|
|
906.4
|
Prepaid
expenses
|
98.8
|
|
76.6
|
Other current
assets
|
71.5
|
|
66.6
|
Assets held for
sale
|
78.3
|
|
—
|
Total current
assets
|
1,451.8
|
|
1,637.2
|
Property and equipment,
net
|
56.9
|
|
83.8
|
Other intangible
assets, net
|
9,248.9
|
|
10,392.4
|
Goodwill
|
2,804.4
|
|
7,904.9
|
Other non-current
assets
|
100.5
|
|
50.8
|
Deferred income
taxes
|
23.7
|
|
27.9
|
Operating lease
right-of-use assets
|
62.4
|
|
86.0
|
Total
Assets
|
$
13,748.6
|
|
$
20,183.0
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
105.9
|
|
$
129.2
|
Accrued
compensation
|
107.5
|
|
150.6
|
Accrued expenses and
other current liabilities
|
416.7
|
|
529.0
|
Current portion of
deferred revenues
|
857.8
|
|
1,030.4
|
Current portion of
operating lease liability
|
28.9
|
|
32.2
|
Current portion of
long-term debt
|
57.4
|
|
30.6
|
Liabilities held for
sale
|
58.3
|
|
—
|
Total current
liabilities
|
1,632.5
|
|
1,902.0
|
Long-term
debt
|
5,417.1
|
|
5,456.3
|
Warrant
liabilities
|
25.1
|
|
227.8
|
Non-current portion of
deferred revenues
|
37.7
|
|
54.2
|
Other non-current
liabilities
|
136.1
|
|
142.7
|
Deferred income
taxes
|
350.5
|
|
380.1
|
Operating lease
liabilities
|
75.0
|
|
94.0
|
Total
liabilities
|
7,674.0
|
|
8,257.1
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred Shares, no
par value; 14,375,000 shares authorized; 5.25% Mandatory
Convertible Preferred Shares, Series A, 14,375,000 shares issued
and outstanding as of both September 30, 2022 and December 31,
2021
|
1,392.6
|
|
1,392.6
|
Ordinary Shares, no
par value; unlimited shares authorized at September 30, 2022 and
December 31, 2021; 674,166,494 and 683,139,210 shares issued, and
673,801,480 and 683,139,210 shares outstanding at September 30,
2022 and December 31, 2021, respectively
|
11,718.4
|
|
11,827.9
|
Treasury shares, at
cost; 365,014 and 547,136 shares as of September 30, 2022 and
December 31, 2021, respectively
|
(11.3)
|
|
(16.9)
|
Accumulated other
comprehensive (loss) income
|
(1,069.7)
|
|
326.7
|
Accumulated
deficit
|
(5,955.4)
|
|
(1,604.4)
|
Total shareholders'
equity
|
6,074.6
|
|
11,925.9
|
Total Liabilities
and Shareholders' Equity
|
$
13,748.6
|
|
$
20,183.0
|
Condensed
Consolidated Statement of Operations
|
(In millions, except
share and per share data)
|
(unaudited)
|
|
Three Months Ended
September 30,
|
|
2022
|
|
2021
|
Revenues,
net
|
$
635.7
|
|
$
442.1
|
Operating
expenses:
|
|
|
|
Cost of
revenues
|
223.7
|
|
140.7
|
Selling, general and
administrative costs
|
169.5
|
|
144.8
|
Depreciation and
amortization
|
169.7
|
|
130.7
|
Restructuring and
impairment
|
26.0
|
|
7.1
|
Goodwill
impairment
|
4,448.6
|
|
—
|
Other operating
(income) expense, net
|
(26.6)
|
|
4.4
|
Total operating
expenses
|
5,010.9
|
|
427.7
|
Income (loss) from
operations
|
(4,375.2)
|
|
14.4
|
Mark to market (gain)
loss on financial instruments
|
(53.3)
|
|
(83.0)
|
Interest expense and
amortization of debt discount, net
|
71.5
|
|
65.3
|
Income (loss) before
income taxes
|
(4,393.4)
|
|
32.1
|
Provision for income
taxes
|
22.1
|
|
3.7
|
Net income
(loss)
|
(4,415.5)
|
|
28.4
|
Dividends on preferred
shares
|
18.9
|
|
22.4
|
Net income (loss)
attributable to ordinary shares
|
$
(4,434.4)
|
|
$
6.0
|
|
|
|
|
Per share:
|
|
|
|
Basic
|
$
(6.58)
|
|
$
0.01
|
Diluted
|
$
(6.64)
|
|
$
(0.12)
|
|
|
|
|
Weighted average shares
used to compute earnings per share:
|
|
|
|
Basic
|
673,553,256
|
|
634,508,967
|
Diluted
|
675,179,693
|
|
643,902,777
|
(Amounts in tables may
not sum due to rounding)
|
Condensed
Consolidated Statement of Operations
(In millions, except
share and per share data)
(unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
Revenues,
net
|
$
1,984.5
|
|
$
1,316.2
|
Operating
expenses:
|
|
|
|
Cost of
revenues
|
717.0
|
|
438.3
|
Selling, general and
administrative costs
|
549.3
|
|
458.8
|
Depreciation and
amortization
|
521.7
|
|
392.6
|
Restructuring and
impairment
|
56.9
|
|
125.7
|
Goodwill
impairment
|
4,448.6
|
|
—
|
Other operating
(income) expense, net
|
(64.9)
|
|
19.7
|
Total operating
expenses
|
6,228.6
|
|
1,435.1
|
Income (loss) from
operations
|
(4,244.1)
|
|
(118.9)
|
Mark to market gain on
financial instruments
|
(202.7)
|
|
(113.2)
|
Interest expense and
amortization of debt discount, net
|
193.3
|
|
141.2
|
Income (loss) before
income taxes
|
(4,234.7)
|
|
(146.9)
|
Provision for income
taxes
|
48.9
|
|
12.2
|
Net income
(loss)
|
(4,283.6)
|
|
(159.1)
|
Dividends on preferred
shares
|
56.3
|
|
22.4
|
Net income (loss)
attributable to ordinary shares
|
$
(4,339.9)
|
|
$
(181.5)
|
|
|
|
|
Per share:
|
|
|
|
Basic
|
$
(6.41)
|
|
$
(0.29)
|
Diluted
|
$
(6.66)
|
|
$
(0.47)
|
|
|
|
|
Weighted average shares
used to compute earnings per share:
|
|
|
|
Basic
|
676,732,992
|
|
616,135,071
|
Diluted
|
680,617,434
|
|
626,180,258
|
Condensed
Consolidated Statements of Cash Flows
(In
millions)
(unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
Cash Flows From
Operating Activities
|
|
|
|
Net income
(loss)
|
$
(4,283.6)
|
|
$
(159.1)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
521.7
|
|
392.6
|
Deferred income
taxes
|
(3.3)
|
|
(11.1)
|
Share-based
compensation
|
66.5
|
|
3.1
|
Restructuring and
impairment, including Goodwill
|
4,469.9
|
|
51.0
|
Loss (gain) on foreign
currency forward contracts
|
9.4
|
|
4.0
|
Mark to market
adjustment on contingent shares
|
—
|
|
(25.1)
|
Mark to market gain on
financial instruments
|
(202.7)
|
|
(113.2)
|
Amortization of debt
issuance costs
|
11.4
|
|
9.1
|
Other operating
activities
|
(58.3)
|
|
10.4
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
76.9
|
|
114.0
|
Prepaid
expenses
|
(29.4)
|
|
(0.9)
|
Other
assets
|
(57.5)
|
|
60.7
|
Accounts
payable
|
(15.8)
|
|
13.6
|
Accrued expenses and
other current liabilities
|
(54.0)
|
|
90.4
|
Deferred
revenues
|
(68.2)
|
|
(116.3)
|
Operating lease right
of use assets
|
10.1
|
|
16.8
|
Operating lease
liabilities
|
(15.3)
|
|
(37.4)
|
Other
liabilities
|
(5.4)
|
|
2.9
|
Net cash provided by
operating activities
|
372.4
|
|
305.5
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
Capital
expenditures
|
(156.5)
|
|
(86.2)
|
Acquisitions, net of
cash acquired
|
(9.3)
|
|
(14.3)
|
Acquisition of cost
method investment
|
(5.0)
|
|
—
|
Net cash used in
investing activities
|
(170.8)
|
|
(100.5)
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
Proceeds from issuance
of debt
|
—
|
|
2,000.0
|
Redemption of Notes
not exchanged
|
—
|
|
(157.4)
|
Principal payments on
term loan
|
(21.5)
|
|
(21.5)
|
Payment of debt
issuance costs and discounts
|
(2.1)
|
|
(7.5)
|
Proceeds from issuance
of preferred shares
|
—
|
|
1,392.7
|
Proceeds from issuance
of ordinary shares
|
—
|
|
728.1
|
Proceeds from issuance
of treasury shares
|
2.2
|
|
—
|
Repurchases of
ordinary shares
|
(175.0)
|
|
(65.2)
|
Cash dividends on
preferred shares
|
(56.6)
|
|
—
|
Proceeds from stock
options exercised
|
0.8
|
|
17.3
|
Payments related to
finance lease
|
(1.5)
|
|
—
|
Payments related to tax
withholding for stock-based compensation
|
(13.8)
|
|
(21.5)
|
Net cash (used in)
provided by financing activities
|
(267.5)
|
|
3,865.0
|
Effects of exchange
rates
|
(64.5)
|
|
(4.9)
|
|
|
|
|
|
|
|
|
Net (decrease) increase
in cash and cash equivalents(1)
|
$
17.7
|
|
$
2,222.2
|
Net (decrease) increase
in restricted cash
|
(148.1)
|
|
1,842.9
|
Net (decrease) increase
in cash and cash equivalents, and restricted cash
|
(130.4)
|
|
4,065.1
|
|
|
|
|
Beginning of
period:
|
|
|
|
Cash and cash
equivalents
|
$
430.9
|
|
$
257.7
|
Restricted
cash
|
156.7
|
|
14.7
|
Total cash and cash
equivalents, and restricted cash, beginning of period
|
587.6
|
|
272.4
|
|
|
|
|
End of
period:
|
|
|
|
Cash and cash
equivalents(1)
|
448.6
|
|
2,479.9
|
Restricted
cash
|
8.6
|
|
1,857.6
|
Total cash and cash
equivalents, and restricted cash, end of period
|
$
457.2
|
|
$
4,337.5
|
|
|
|
|
Supplemental Cash Flow
Information:
|
|
|
|
Cash paid for
interest
|
$
152.2
|
|
$
97.4
|
Cash paid for income
tax
|
$
44.2
|
|
$
22.4
|
Capital expenditures
included in accounts payable
|
$
4.8
|
|
$
6.6
|
|
|
|
|
Non-Cash Financing
Activities:
|
|
|
|
Shares issued to Capri
Acquisition Topco Limited
|
—
|
|
5,052.2
|
Retirement of treasury
shares
|
(175.0)
|
|
(5,117.4)
|
Shares issued as
contingent stock consideration associated with the DRG
acquisition
|
—
|
|
61.6
|
Shares issued as
contingent stock consideration associated with the CPA Global
acquisition
|
—
|
|
43.9
|
Shares issued as
dividends on our 5.25% Series A Mandatory Convertible Preferred
Shares
|
—
|
|
16.1
|
Dividends accrued on
our 5.25% Series A Mandatory Convertible Preferred
Shares
|
6.2
|
|
6.3
|
Treasury shares sold by
Trust
|
4.3
|
|
—
|
Total Non-Cash
Financing Activities
|
$
(164.5)
|
|
$
62.7
|
|
(1) Includes
$2.6 of cash and cash equivalents that was reclassified to current
assets held for sale in the Condensed Consolidated Balance Sheet as
of September 30, 2022.
|
Reconciliations to Certain
Non-GAAP Measures
(Amounts in tables may not sum due to rounding)
Adjusted EBITDA and Adjusted
EBITDA Margin
Adjusted EBITDA represents net loss before the provision for
income taxes, depreciation and amortization, interest income and
expense adjusted to exclude the 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 divestitures),
share-based compensation, mandatory convertible preferred share
dividend expense, unrealized foreign currency gains (losses),
transformational and restructuring expenses, acquisition-related
adjustments to deferred revenues, non-operating income or expense,
the impact of certain non-cash mark-to-market adjustments on
financial instruments, legal settlements, goodwill impairment 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. Adjusted EBITDA margin is calculated by dividing
Adjusted EBITDA by Revenues, net plus the impact of the deferred
revenue purchase accounting adjustments relating to acquisitions
prior to 2021.
The following table presents our calculation of Adjusted EBITDA
for the three months ended September 30,
2022 and 2021 and reconciles these measures to our Net loss
for the same periods:
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September
30,
|
(in millions);
(unaudited)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net income (loss)
attributable to ordinary shares
|
$ (4,434.4)
|
|
$
6.0
|
|
$ (4,339.9)
|
|
$
(181.5)
|
Dividends on preferred
shares
|
18.9
|
|
22.4
|
|
56.3
|
|
22.4
|
Net income
(loss)
|
(4,415.5)
|
|
28.4
|
|
(4,283.6)
|
|
(159.1)
|
Provision for income
taxes
|
22.1
|
|
3.7
|
|
48.9
|
|
12.2
|
Depreciation and
amortization
|
169.7
|
|
130.7
|
|
521.7
|
|
392.6
|
Interest expense and
amortization of debt discount, net
|
71.5
|
|
65.3
|
|
193.3
|
|
141.2
|
Deferred revenues
adjustment(1)
|
0.3
|
|
0.1
|
|
0.9
|
|
4.5
|
Transaction related
costs(2)
|
(3.7)
|
|
16.4
|
|
8.1
|
|
7.4
|
Share-based
compensation expense
|
20.8
|
|
10.6
|
|
79.9
|
|
107.7
|
Restructuring and
impairment(3)
|
26.0
|
|
7.1
|
|
56.9
|
|
125.7
|
Goodwill
impairment
|
4,448.6
|
|
—
|
|
4,448.6
|
|
—
|
Mark-to-market (gain)
loss on financial instruments(4)
|
(53.3)
|
|
(83.0)
|
|
(202.7)
|
|
(113.2)
|
Other(5)
|
(14.9)
|
|
10.7
|
|
(63.7)
|
|
24.8
|
Adjusted
EBITDA
|
$
271.6
|
|
$
190.0
|
|
$
808.3
|
|
$
543.8
|
Adjusted EBITDA
Margin
|
42.7 %
|
|
43.0 %
|
|
40.7 %
|
|
41.2 %
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606, Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
(2) Includes
costs incurred to complete business combination transactions, which
were comprised of acquisitions, dispositions and capital market
activities, as well as advisory, legal, and other professional and
consulting costs.
|
(3)
Primarily reflects costs related to restructuring and impairment
associated with One Clarivate, ProQuest and CPA Global Programs.
The costs associated with the CPA Global program were substantially
complete as of June 30, 2022.
|
(4) Reflects
mark-to-market adjustments on financial instruments under ASC 815,
Derivatives and Hedging. Warrant instruments that do not
meet the criteria to be considered indexed to an entity's own stock
shall be initially classified as a liability at their estimated
fair values, regardless of the likelihood that such instruments
will ever be settled in cash. In periods subsequent to issuance,
changes in the estimated fair value of the liabilities are reported
through earnings.
|
(5) 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
Adjusted Net Income is calculated using net income (loss),
adjusted to exclude acquisition or disposal-related transaction
costs (such costs include net income from continuing operations
before the provision for income taxes, depreciation and
amortization and interest income and expense from the divested
business), amortization related to acquired intangible assets,
share-based compensation, mandatory convertible preferred share
dividend expense, unrealized foreign currency gains/(losses),
transformational and restructuring expenses, acquisition-related
adjustments to deferred revenues, the impact of certain non-cash
mark-to-market adjustments on financial instruments, interest on
debt held in escrow, goodwill impairment 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, and
the income tax impact of any adjustments. We calculate Adjusted
Diluted EPS by using Adjusted Net Income divided by adjusted
diluted weighted average shares for the period. The adjusted
diluted weighted average shares assumed that all instruments in the
calculation are dilutive.
The following tables presents our calculation of Adjusted Net
Income and Adjusted Diluted EPS for the three and nine months ended
September 30, 2022 and 2021 and
reconciles these measures to our Net income (loss) and EPS for the
same periods:
|
Three Months
Ended
September 30,
|
|
Three Months
Ended
September 30,
|
|
2022
|
|
2021
|
(in millions, except
shares and per share amounts); (unaudited)
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
Net loss
attributable to ordinary shares, diluted
|
$
(4,483.4)
|
|
$
(6.64)
|
|
$
(77.0)
|
|
$
(0.12)
|
Change in fair value of
private placement warrants
|
49.0
|
|
0.07
|
|
83.0
|
|
0.13
|
Net income (loss)
attributable to ordinary shares
|
(4,434.4)
|
|
(6.58)
|
|
6.0
|
|
0.01
|
Dividends on preferred
shares
|
18.9
|
|
0.03
|
|
22.4
|
|
0.03
|
Net income (loss) and
EPS
|
(4,415.5)
|
|
(6.54)
|
|
28.4
|
|
0.04
|
Deferred revenues
adjustment(1)
|
0.3
|
|
—
|
|
0.1
|
|
—
|
Transaction related
costs(2)
|
(3.7)
|
|
(0.01)
|
|
16.4
|
|
0.02
|
Share-based
compensation expense
|
20.8
|
|
0.03
|
|
10.5
|
|
0.02
|
Amortization related to
acquired intangible assets
|
141.2
|
|
0.21
|
|
110.9
|
|
0.16
|
Restructuring and
impairment(3)
|
26.0
|
|
0.04
|
|
7.1
|
|
0.01
|
Goodwill
impairment
|
4,448.6
|
|
6.59
|
|
—
|
|
—
|
Mark-to-market loss
(gain) on financial instruments(4)
|
(53.3)
|
|
(0.08)
|
|
(83.0)
|
|
(0.12)
|
Interest on new debt
held in escrow(6)
|
—
|
|
—
|
|
27.7
|
|
0.04
|
Other(5)
|
(14.9)
|
|
(0.03)
|
|
10.8
|
|
0.02
|
Income tax impact of
related adjustments
|
(5.8)
|
|
(0.01)
|
|
(15.3)
|
|
(0.02)
|
Adjusted net income
and Adjusted diluted EPS
|
$
143.7
|
|
$
0.20
|
|
$
113.6
|
|
$
0.16
|
Adjusted
weighted-average ordinary shares (Diluted)
|
732,929,896
|
|
699,822,054
|
|
|
|
|
|
|
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606, Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
(2) Includes
costs incurred to complete business combination transactions, which
was comprised of acquisitions, dispositions and capital market
activities, as well as advisory, legal, and other professional and
consulting costs.
|
(3)
Primarily reflects costs related to restructuring and impairment
associated with One Clarivate, ProQuest and CPA Global Programs.
The costs associated with the CPA Global program were substantially
complete as of June 30, 2022.
|
(4) Reflects
mark-to-market adjustments on financial instruments under ASC 815,
Derivatives and Hedging. Warrant instruments that do not
meet the criteria to be considered indexed to an entity's own stock
shall be initially classified as a liability at their estimated
fair values, regardless of the likelihood that such instruments
will ever be settled in cash. In periods subsequent to issuance,
changes in the estimated fair value of the liabilities are reported
through earnings.
|
(5) 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.
|
(6) Reflects
interest expense incurred on the principal related to the 2021 debt
offering, that was held in escrow until the completion of the
acquisition of ProQuest on December 1, 2021. Clarivate used the net
proceeds to finance a portion of the purchase price and therefore,
considered as part of the transaction costs associated with the
acquisition.
|
|
Nine Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2022
|
|
2021
|
(in millions, except
shares and per share amounts); (unaudited)
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
Net loss
attributable to ordinary shares, diluted
|
$
(4,530.6)
|
|
$
(6.66)
|
|
$
(294.7)
|
|
$
(0.47)
|
Change in fair value
of private placement warrants
|
190.7
|
|
0.28
|
|
113.2
|
|
0.18
|
Net loss attributable
to ordinary shares
|
(4,339.9)
|
|
(6.38)
|
|
(181.5)
|
|
(0.29)
|
Dividends on preferred
shares
|
56.3
|
|
0.08
|
|
22.4
|
|
0.04
|
Net income
(loss)
|
(4,283.6)
|
|
(6.29)
|
|
(159.1)
|
|
(0.25)
|
Deferred revenues
adjustment(1)
|
0.9
|
|
—
|
|
4.5
|
|
0.01
|
Transaction related
costs(2)
|
8.1
|
|
0.01
|
|
7.4
|
|
0.01
|
Share-based
compensation expense
|
79.9
|
|
0.12
|
|
107.7
|
|
0.17
|
Amortization related
to acquired intangible assets
|
437.1
|
|
0.64
|
|
333.1
|
|
0.51
|
Restructuring and
impairment(3)
|
56.9
|
|
0.08
|
|
125.7
|
|
0.19
|
Goodwill
impairment
|
4,448.6
|
|
6.54
|
|
—
|
|
—
|
Mark-to-market
adjustment on financial instruments(4)
|
(202.7)
|
|
(0.30)
|
|
(113.2)
|
|
(0.17)
|
Interest on debt held
in escrow(6)
|
—
|
|
—
|
|
29.1
|
|
0.04
|
Other(5)
|
(63.7)
|
|
(0.14)
|
|
24.8
|
|
0.04
|
Income tax impact of
related adjustments
|
(17.5)
|
|
(0.03)
|
|
(48.1)
|
|
(0.07)
|
Adjusted net income
and Adjusted Diluted EPS
|
$
464.0
|
|
$
0.63
|
|
$
312.0
|
|
$
0.49
|
Adjusted
weighted-average ordinary shares (Diluted)
|
739,041,988
|
|
647,508,021
|
|
|
|
|
|
|
|
|
(1-6) Refer
to associated line item descriptions provided for the
quarter-to-date table above.
|
|
|
|
|
|
|
|
|
Free Cash Flow and Adjusted
Free Cash Flow
Free cash flow is calculated using net cash provided by
operating activities less capital expenditures. Adjusted free cash
flow is calculated as free cash flow, less cash paid for
restructuring and lease-exit activities, payments related to the
CPA Global Equity Plan, transaction related costs, interest on debt
held in escrow, debt issuance costs, and other one-time payments
that the Company does not consider indicative of its ongoing
operating performance.
The following table reconciles our non-GAAP Free cash flow and
Adjusted free cash flow measure to Net cash provided by operating
activities:
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in millions);
(unaudited)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$
207.8
|
|
$
43.8
|
|
$
372.4
|
|
$
305.5
|
Capital
expenditures
|
(67.4)
|
|
(24.2)
|
|
(156.5)
|
|
(86.2)
|
Free cash
flow
|
140.4
|
|
19.6
|
|
215.9
|
|
219.3
|
Cash paid for CPA
Global Equity Plan(1)
|
—
|
|
—
|
|
150.7
|
|
—
|
Cash paid for
restructuring costs(2)
|
11.7
|
|
17.1
|
|
33.4
|
|
65.8
|
Cash paid for
transaction related costs(3)
|
4.0
|
|
12.4
|
|
11.9
|
|
21.2
|
Cash paid for other
costs(4)
|
0.5
|
|
0.2
|
|
2.8
|
|
1.5
|
Cash paid for debt
issuance costs
|
—
|
|
7.8
|
|
—
|
|
7.8
|
Adjusted free cash
flow
|
$
156.6
|
|
$
57.1
|
|
$
414.7
|
|
$
315.6
|
|
(1) Includes
cash funded by a trust related to CPA Global Equity Plan payout
upon vesting.
|
(2) Reflects
cash payments for costs primarily related to restructuring and
lease-exit activities associated with the One Clarivate, ProQuest
and CPA Global Programs. The costs associated with the CPA Global
program were substantially complete as of June 30, 2022.
|
(3) Includes
cash paid for costs incurred to complete business combination
transactions, which are comprised of acquisitions, dispositions and
capital market activities, as well as advisory, legal, and other
professional and consulting costs.
|
(4) Includes
cash paid for other costs that do not reflect our ongoing operating
performance.
|
Required Reported Data
Standalone Adjusted
EBITDA
We are required to report Standalone Adjusted EBITDA, which is
identical to Consolidated EBITDA and EBITDA as such terms are
defined under our credit facilities, dated as of October 31, 2019, and the indentures governing
our secured notes due 2026 issued by Camelot Finance S.A. and
guaranteed by certain of our subsidiaries, and the indentures
governing the secured and unsecured notes issued by Clarivate
Science Holdings Corporation in August
2021, respectively. In addition, the credit facilities and
the indentures 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.
Because Standalone Adjusted EBITDA is required pursuant to the
terms of the reporting covenants under the credit facilities and
the indentures 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 of Directors
as an input for determining incentive payments to employees.
Standalone Adjusted EBITDA is calculated under the credit
facilities and the indentures by using our Consolidated Net Loss
for the trailing 12-month period (defined in the credit facilities
and the indentures as our U.S. GAAP net income adjusted for certain
items specified in the credit facilities and the indentures)
adjusted for items including: taxes, interest expense, depreciation
and amortization, non-cash charges, including goodwill impairment,
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 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 secured notes due in 2026 and earnout obligations
incurred in connection with an acquisition or investment.
The following table bridges Net loss to Adjusted EBITDA to
Standalone Adjusted EBITDA, as Adjusted EBITDA reflects a
substantial portion of the adjustments that comprise Standalone
Adjusted EBITDA for the period presented:
|
Twelve Months
Ended September 30,
|
(in millions);
(unaudited)
|
2022
|
Net loss
attributable to ordinary shares
|
$
(4,470.3)
|
Dividends on preferred
shares
|
75.4
|
Net loss
|
(4,394.9)
|
Provision for income
taxes
|
49.0
|
Depreciation and
amortization
|
667.0
|
Interest expense and
amortization of debt discount, net
|
304.6
|
Deferred revenues
adjustment(1)
|
0.4
|
Transaction related
costs(2)
|
46.8
|
Share-based
compensation expense
|
111.7
|
Restructuring and
impairment(3)
|
60.7
|
Goodwill
impairment
|
4,448.6
|
Mark-to-market (gain)
loss on financial instruments(4)
|
(170.8)
|
Other(5)
|
(58.2)
|
Adjusted
EBITDA
|
$
1,064.9
|
Realized foreign
exchange loss
|
6.0
|
ProQuest Adjusted
EBITDA impact(6)
|
49.0
|
Patient Connect
Adjusted EBITDA impact(6)
|
(0.1)
|
Cost
savings(7)
|
62.6
|
Standalone Adjusted
EBITDA
|
$
1,182.4
|
|
|
(1-5) Refer
to associated line item descriptions provided for the Adjusted
EBITDA table for the three and nine months ended September 30, 2022
and 2021 above.
|
(6) Represents the acquisition
Adjusted EBITDA for the period beginning October 1, 2021 through
the respective acquisition date of each acquired business to
reflect the company's Standalone EBITDA as though material
acquisitions occurred at the beginning of the presented
period.
|
(7) 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), including
synergies related to acquisitions.
|
The foregoing adjustments (6) and (7) 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
Statement Regarding Forward-Looking Statements.
The following tables present the amounts of our subscription,
re-occurring and transactional and other revenues, including as a
percentage of our total revenues, for the periods indicated, as
well the drivers of the variances between periods.
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of
Factors
Increase/(Decrease)
|
|
Three Months
Ended
September 30,
|
|
Total
Variance
(Dollars)
|
Total
Variance
(Percentage)
|
Acquisitions
|
FX
Impact
|
Organic
|
(in millions, except
percentages);
(unaudited)
|
2022
|
|
2021
|
|
|
|
|
|
|
Subscription
revenues
|
$ 408.3
|
|
$ 246.5
|
|
$ 161.8
|
65.6 %
|
68.4 %
|
(7.0) %
|
4.3 %
|
Re-occurring
revenues
|
102.7
|
|
110.4
|
|
(7.7)
|
(7.0) %
|
— %
|
(9.4) %
|
2.4 %
|
Transactional and other
revenues
|
125.0
|
|
85.3
|
|
39.7
|
46.5 %
|
60.5 %
|
(4.6) %
|
(9.4) %
|
Deferred revenues
adjustment(1)
|
(0.3)
|
|
(0.1)
|
|
(0.2)
|
(200.0) %
|
(200.0) %
|
— %
|
— %
|
Revenues,
net
|
$ 635.7
|
|
$ 442.1
|
|
$ 193.6
|
43.8 %
|
49.7 %
|
(7.1) %
|
1.2 %
|
|
|
|
|
|
|
|
|
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606, Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of
Factors
Increase/(Decrease)
|
|
Nine Months
Ended
September 30,
|
|
Total
Variance
(Dollars)
|
Total
Variance
(Percentage)
|
Acquisitions
|
FX
Impact
|
Organic
|
(in millions, except
percentages);
(unaudited)
|
2022
|
|
2021(1)
|
|
|
|
|
|
|
Subscription
revenues
|
$
1,220.7
|
|
$ 728.9
|
|
$ 491.8
|
67.5 %
|
68.7 %
|
(5.0) %
|
3.8 %
|
Re-occurring
revenues
|
329.2
|
|
333.6
|
|
(4.4)
|
(1.3) %
|
— %
|
(7.5) %
|
6.1 %
|
Transactional and other
revenues
|
435.5
|
|
258.2
|
|
177.3
|
68.7 %
|
73.4 %
|
(3.6) %
|
(1.1) %
|
Deferred revenues
adjustment(2)
|
(0.9)
|
|
(4.5)
|
|
3.6
|
80.0 %
|
80.0 %
|
— %
|
— %
|
Revenues,
net
|
$
1,984.5
|
|
$
1,316.2
|
|
$ 668.3
|
50.8 %
|
52.7 %
|
(5.4) %
|
3.4 %
|
|
|
|
|
|
|
|
|
|
|
(1) Certain prior period reported
amounts have been reclassified to conform to current period
presentation.
|
(2) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606, Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
The following tables and the discussion that follows presents
our revenues by Segment for the periods indicated, as well as the
drivers of the variances between periods, including as a percentage
of such revenues.
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of
Factors
Increase/(Decrease)
|
|
Three Months
Ended
September 30,
|
|
Total
Variance
(Dollars)
|
Total
Variance
(Percentage)
|
Acquisitions
|
FX
Impact
|
Organic
|
(in millions, except
percentages);
(unaudited)
|
2022
|
|
2021
|
|
|
|
|
|
|
Academia and
Government
|
$ 307.1
|
|
$ 102.3
|
|
$ 204.8
|
200.2 %
|
206.0 %
|
(8.1) %
|
2.3 %
|
Life Sciences and
Healthcare
|
103.6
|
|
98.5
|
|
5.1
|
5.2 %
|
9.5 %
|
(4.6) %
|
0.2 %
|
Intellectual
Property
|
225.3
|
|
241.4
|
|
(16.1)
|
(6.7) %
|
— %
|
(7.7) %
|
1.1 %
|
Deferred revenues
adjustment(1)
|
(0.3)
|
|
(0.1)
|
|
(0.2)
|
(200.0) %
|
(200.0) %
|
— %
|
— %
|
Revenues,
net
|
$ 635.7
|
|
$ 442.1
|
|
$ 193.6
|
43.8 %
|
49.7 %
|
(7.1) %
|
1.2 %
|
|
|
|
|
|
|
|
|
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606 Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of
Factors
Increase/(Decrease)
|
|
Nine Months
Ended September 30,
|
|
Total
Variance
(Dollars)
|
Total
Variance
(Percentage)
|
Acquisitions
|
FX
Impact
|
Organic
|
(in millions, except
percentages);
(unaudited)
|
2022
|
|
2021
|
|
|
|
|
|
|
Academia and
Government
|
$ 951.6
|
|
$ 303.3
|
|
$ 648.3
|
213.7 %
|
217.9 %
|
(5.6) %
|
1.4 %
|
Life Sciences and
Healthcare
|
327.7
|
|
291.1
|
|
36.6
|
12.6 %
|
9.9 %
|
(3.5) %
|
6.1 %
|
Intellectual
Property
|
706.1
|
|
726.3
|
|
(20.2)
|
(2.8) %
|
— %
|
(6.0) %
|
3.2 %
|
Deferred revenues
adjustment(1)
|
(0.9)
|
|
(4.5)
|
|
3.6
|
80.0 %
|
80.0 %
|
— %
|
— %
|
Revenues,
net
|
$
1,984.5
|
|
$
1,316.2
|
|
$ 668.3
|
50.8 %
|
52.7 %
|
(5.4) %
|
3.4 %
|
|
|
|
|
|
|
|
|
|
|
(1) Reflects
the deferred revenues adjustment made as a result of purchase
accounting prior to the adoption of ASU No. 2021-08, Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers. In the fourth quarter of 2021, Clarivate adopted ASU
No. 2021-08 which allows an acquirer to account for the related
revenue contracts in accordance with ASC 606 Revenue from
Contracts with Customers, as if it had originated the
contracts. This guidance was applied retrospectively to all
business combinations for which the acquisition date occurs during
or subsequent to 2021.
|
The following table presents our calculation of Revenues, net
for the 2022 outlook:
|
|
|
|
|
Variance Increase
/
(Decrease)
|
Percentage of
Factors Increase / (Decrease)
|
|
Year Ending December
31,
|
|
Total
Variance
(Dollars)
|
Total
Variance
(Percentage)
|
Acquisitions
|
Disposals
|
FX
Impact
|
Organic
|
(in
millions)
|
2022
Outlook
mid-point
|
|
2021
|
|
|
|
|
|
|
|
Revenues,
net
|
$
2,630.0
|
|
$
1,876.9
|
|
$ 753.1
|
40.1 %
|
44.8 %
|
(0.7) %
|
(6.4) %
|
2.5 %
|
The following table presents our calculation of Adjusted EBITDA
for the 2022 outlook and reconciles this measure to our Net income
(loss) for the same period:
|
Year Ending December
31, 2022
(Forecasted)
|
(in
millions)
|
Low
|
|
High
|
Net loss
attributable to ordinary shares
|
$
(4,416.5)
|
|
$
(4,366.5)
|
Dividends on preferred
shares(1)
|
75.5
|
|
75.5
|
Net loss
|
(4,341.1)
|
|
(4,291.1)
|
Provision for income
taxes
|
70.8
|
|
70.8
|
Depreciation and
amortization
|
694.8
|
|
694.8
|
Interest expense and
amortization of debt discount, net
|
272.0
|
|
272.0
|
Deferred revenue
adjustment(2)
|
0.9
|
|
0.9
|
Restructuring and
impairment(3)
|
63.9
|
|
63.9
|
Transaction related
costs
|
29.7
|
|
29.7
|
Goodwill
impairment
|
4,408.9
|
|
4,408.9
|
Mark to market
adjustment on financial instruments
|
(202.7)
|
|
(202.7)
|
Share-based
compensation expense(4)
|
116.4
|
|
116.4
|
Other
|
(63.6)
|
|
(63.6)
|
Adjusted
EBITDA
|
$
1,050.0
|
|
$
1,100.0
|
Adjusted EBITDA
margin
|
40.5 %
|
|
41.5 %
|
|
|
|
|
(1) Dividends on our mandatory
convertible preferred shares ("MCPS") are payable quarterly at an
annual rate of 5.25% of the liquidation preference of $100 per
share. For the purposes of calculating net loss attributable to
Clarivate, we have excluded the accrued and anticipated MCPS stock
dividends.
|
(2) Reflects
the deferred revenues adjustment made as a result of acquisition
accounting associated with businesses that were acquired prior to
January 1, 2021.
|
(3) Reflects
restructuring costs primarily associated with the ProQuest
acquisition which will be incurred in 2022.
|
(4) Includes
CPA Global Equity Plan compensation expense.
|
The following table presents our calculation of Adjusted Diluted
EPS for the 2022 outlook and reconciles these measures to our Net
income (loss) per share for the same period:
|
Year Ending December
31, 2022
(Forecasted)
|
|
Low
|
|
High
|
|
Per
Share
|
|
Per
Share
|
Net loss
attributable to ordinary shares
|
$
(5.97)
|
|
$
(5.90)
|
Dividends on preferred
shares(1)
|
0.10
|
|
0.10
|
Net loss
|
(5.87)
|
|
(5.80)
|
Restructuring and
impairment(2)
|
0.09
|
|
0.09
|
Transaction related
costs
|
0.04
|
|
0.04
|
Share-based
compensation expense(3)
|
0.16
|
|
0.16
|
Amortization related to
acquired intangible assets
|
0.78
|
|
0.78
|
Mark to market
adjustment on financial instruments
|
(0.27)
|
|
(0.27)
|
Goodwill
impairment
|
5.96
|
|
5.96
|
Other
|
(0.10)
|
|
(0.06)
|
Income tax impact of
related adjustments
|
(0.04)
|
|
(0.04)
|
Adjusted Diluted
EPS
|
$
0.75
|
|
$
0.85
|
Adjusted
weighted-average ordinary shares (Diluted)(4)
|
740 million
|
|
|
|
|
(1)
Dividends on our mandatory convertible preferred shares ("MCPS")
are payable quarterly at an annual rate of 5.25% of the liquidation
preference of $100 per share. For the purposes of calculating net
loss attributable to Clarivate, we have excluded the accrued and
anticipated MCPS stock dividends.
|
(2) Reflects
restructuring costs primarily associated with the ProQuest
acquisition which will be incurred in 2022.
|
(3) Includes
CPA Global Equity Plan compensation expense.
|
(4) For the
purposes of calculating adjusted earnings per share, the Company
has excluded the accrued and anticipated MCPS stock dividends and
assumed the "if-converted" method of share dilution.
|
The following table presents our calculation of Free Cash Flow
and Adjusted Free Cash Flow for the 2022 outlook and reconciles
these measures to our Net cash provided by operating activities for
the same period:
|
Year Ending December
31, 2022
(Forecasted)
|
(in
millions)
|
Low
|
|
High
|
Net cash provided by
operating activities
|
$
460.0
|
|
$
510.0
|
Capital
expenditures
|
(205.0)
|
|
(205.0)
|
Free cash
flow
|
255.0
|
|
305.0
|
Cash paid for
restructuring costs(1)
|
55.0
|
|
55.0
|
Cash paid for CPA
Global Equity Plan(2)
|
156.0
|
|
156.0
|
Cash paid for
transaction and other related costs
|
34.0
|
|
34.0
|
Adjusted Free Cash
Flow
|
$
500.0
|
|
$
550.0
|
|
|
|
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(1) Reflects
cash payments for costs primarily related to restructuring
associated with the ProQuest acquisition in 2022.
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(2) Includes
cash funded by a trust related to the CPA Global Equity Plan payout
upon vesting.
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multimedia:https://www.prnewswire.com/news-releases/clarivate-reports-third-quarter-2022-results-301671123.html
SOURCE Clarivate Plc