— Updates 2023 Outlook —
LONDON, Aug. 3, 2023
/PRNewswire/ -- Clarivate Plc - (NYSE: CLVT) (the "Company" or
"Clarivate"), a global leader in connecting people and
organizations to intelligence they can trust, today reported
results for the second quarter.
Second Quarter 2023 Financial Highlights
- Revenues of $668.8 million
decreased 2.6%, and 3.5% at constant currency(1), driven
primarily by the divestiture of MarkMonitor in October 2022, for which there were no comparable
amounts in the current year period
- Organic revenues(1) decreased 0.4% as an increase in
subscription revenues of 2.9% was offset by a decline in
re-occurring revenues of 1.6% and transactional and other revenues
of 7.5%
- Net loss attributable to ordinary shares of $141.7 million increased $185.4 million driven primarily by the impairment
charge in the current year period; Net loss per diluted share of
$0.21 decreased by $0.21
- Adjusted Net Income(1) of $152.2 million decreased 7.8%; Adjusted Income
per diluted share(1) of $0.21 decreased 4.5% or $0.01
- Adjusted EBITDA(1) of $284.9
million increased 3.8% driven by cost savings from
integration programs; Adjusted EBITDA Margin(1) of 42.6%
increased 270 basis points
- Net cash provided by operating activities increased
$65.2 million to $162.4 million; Free cash flow(1)
increased $55.3 million to
$104.8 million, allowing for
continued deleveraging through further debt reduction and share
repurchases
First Half of 2023 Financial Highlights
- Revenues of $1,297.9 million
decreased 3.8%, and 3.3% at constant currency(1), driven
primarily by the divestiture of MarkMonitor in October 2022, for which there were no comparable
amounts in the current year period
- Organic revenues(1) decreased 0.3% as an increase in
subscription revenues of 2.9% was offset by a decline in
re-occurring revenues of 1.7% and transactional and other revenues
of 7.9%
- Net loss attributable to ordinary shares of $117.0 million decreased $211.5 million driven primarily by the impairment
charge in the current year period and lower mark-to-market gain on
financial instruments; Net loss per diluted share of $0.17 decreased by $0.10
- Adjusted Net Income(1) of $283.1 million decreased 11.6%; Adjusted Income
per diluted share(1) of $0.39 decreased 9.3% or $0.04
- Adjusted EBITDA(1) of $537.6
million increased 0.2% driven by cost savings from
integration programs; Adjusted EBITDA Margin(1) of 41.4%
increased 160 basis points
- Net cash provided by operating activities increased
$225.3 million to $389.9 million; Free cash flow(1)
increased $197.5 million to
$273.0 million
"Clarivate continued to deliver on operational progress during
the quarter, reinforcing the value proposition of our mission
critical solutions across key sectors. The Academia &
Government segment delivered improved results following the
successful integration of ProQuest and recent product enhancements,
which are driving new business, increased usage and higher
retention rates," said Jonathan
Gear, Chief Executive Officer. "We are taking steps to
leverage the power of our portfolio, particularly in the
Intellectual Property and Life Sciences & Healthcare
segments, which fell short of expectations this quarter. With an
established, resilient business model, and a new organizational
structure and leadership well in place to enhance accountability,
we remain confident in our strategy to deliver accelerating organic
growth and margin expansion, as highlighted in our March Investor
Day. We remain focused on creating value for our customers,
colleagues, and shareholders."
Selected Financial Information
The prior year results include MarkMonitor, which was divested
on October 31, 2022, for which there
are no comparable amounts in the current year periods.
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended June 30,
|
|
Change
|
(in millions, except
percentages and per share data), (unaudited)
|
2023
|
|
2022
|
|
$
|
|
%
|
|
2023
|
|
2022
|
|
$
|
|
%
|
Revenues,
net
|
$ 668.8
|
|
$ 686.6
|
|
$ (17.8)
|
|
(2.6) %
|
|
$
1,297.9
|
|
$
1,348.8
|
|
$ (50.9)
|
|
(3.8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to ordinary shares
|
$
(141.7)
|
|
$ 43.7
|
|
$
(185.4)
|
|
(424.3) %
|
|
$
(117.0)
|
|
$ 94.5
|
|
$
(211.5)
|
|
(223.8) %
|
Net loss per share,
diluted
|
$ (0.21)
|
|
$
—
|
|
$ (0.21)
|
|
(100.0) %
|
|
$ (0.17)
|
|
$ (0.07)
|
|
$ (0.10)
|
|
(142.9) %
|
Weighted-average
ordinary shares (diluted)
|
675.9
|
|
678.4
|
|
—
|
|
(0.4) %
|
|
675.4
|
|
683.2
|
|
—
|
|
(1.1) %
|
Adjusted
EBITDA(1)
|
$ 284.9
|
|
$ 274.4
|
|
$
10.5
|
|
3.8 %
|
|
$ 537.6
|
|
$ 536.7
|
|
$
0.9
|
|
0.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income(1)
|
$ 152.2
|
|
$ 165.1
|
|
$ (12.9)
|
|
(7.8) %
|
|
$ 283.1
|
|
$ 320.2
|
|
$ (37.1)
|
|
(11.6) %
|
Adjusted diluted
EPS(1)
|
$
0.21
|
|
$ 0.22
|
|
$ (0.01)
|
|
(4.5) %
|
|
$ 0.39
|
|
$ 0.43
|
|
$ (0.04)
|
|
(9.3) %
|
Adjusted
weighted-average ordinary shares (diluted)(1)
|
734.9
|
|
736.6
|
|
—
|
|
(0.2) %
|
|
734.8
|
|
741.6
|
|
—
|
|
(0.9) %
|
Net cash provided by
operating activities
|
$ 162.4
|
|
$ 97.2
|
|
$
65.2
|
|
67.0 %
|
|
$ 389.9
|
|
$ 164.6
|
|
$ 225.3
|
|
136.9 %
|
Free cash
flow(1)
|
$ 104.8
|
|
$ 49.5
|
|
$
55.3
|
|
111.6 %
|
|
$ 273.0
|
|
$ 75.5
|
|
$ 197.5
|
|
261.5 %
|
(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.
|
Second Quarter 2023 Commentary
Subscription revenues for the second quarter decreased
$1.4 million, or 0.3%, to
$406.0 million, and decreased 1.6% on
a constant currency basis(1), due to the divestiture of
MarkMonitor. Organic subscription revenues(1) increased
2.9%, primarily due to price increases and the benefit of net
installations.
Re-occurring revenues for the second quarter decreased
$1.0 million, or 0.9% to $111.0 million, and decreased 1.6% on a constant
currency basis(1). Organic re-occurring
revenues(1) decreased 1.6%, primarily driven by the
timing of accelerated patent renewals in the prior year period.
Transactional and other revenues for the second quarter
decreased $16.2 million, or 9.6%, to
$151.8 million, and decreased 9.8% on
a constant currency basis(1). Organic transactional and
other revenues(1) decreased 7.5%. primarily due to lower
transactional sales in Life Sciences & Healthcare and
Intellectual Property segments.
Balance Sheet and Cash Flow
As of June 30, 2023, cash and cash
equivalents of $436.1 million
increased $87.3 million compared to
December 31, 2022 due to working
capital improvements.
The Company's total debt outstanding as of June 30, 2023 was $4,920.8
million, a decrease of $150.5
million compared to December 31,
2022 due to $150.0 million
accelerated debt prepayments on our Term Loan.
Net cash provided by operating activities of $389.9 million for the six months ended
June 30, 2023 increased $225.3 million compared to $164.6 million for the prior year, primarily due
to the prior year employee payroll payments related to the CPA
Global Equity Plan and working capital improvements. Free cash
flow(1) for the six months ended June 30, 2023, was $273.0
million, an increase of $197.5
million compared to the prior year period.
Updated Outlook for 2023 (forward-looking statement)
"We revised our 2023 outlook due to lower than expected
transactional sales of Life Sciences and Healthcare products and
consulting services, and lower recurring sales of patent renewals,"
said Jonathan Collins, Executive
Vice President and Chief Financial Officer. "However, we reaffirmed
our Adjusted EBITDA Margin outlook, and still expect our revenues,
Adjusted EBITDA, Adjusted Diluted EPS and Free Cash Flow to be
within our original ranges. We continue to anticipate generating
strong cash flow, which we currently expect to allocate between
debt repayment to achieve our target of below four-times net
leverage by the end of the year and share repurchases."
The full year outlook presented below assumes no further
acquisitions, divestitures, or unanticipated
events.
|
Updated 2023 Outlook
|
Prior 2023 Outlook
|
Revenues
|
$2.60B to
$2.67B
|
$2.63B to
$2.73B
|
Organic Revenue
Growth
|
0.00% to
2.00%
|
2.75% to
3.75%
|
Adjusted
EBITDA
|
$1.09B to
$1.14B
|
$1.10B to
$1.16B
|
Adjusted EBITDA
Margin
|
No change
|
42.0% to
42.5%
|
Adjusted Diluted
EPS(2)
|
$0.77 to
$0.83
|
$0.75 to
$0.85
|
Free Cash
Flow
|
$450M to
$500M
|
$450M to
$550M
|
|
(2) Adjusted
Diluted EPS for 2023 is calculated based on approximately 738
million fully diluted weighted average ordinary 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 release.
Conference Call and Webcast
Clarivate will host a conference call and webcast today to
review the results for the second 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 +1 404-975-4839 or toll-free +1 833-470-1428 (in
North America) and 44 208 068 2558
or toll free 44 808 189 6484 (internationally). The conference ID
number is 677201. To join the webcast please visit
https://events.q4inc.com/attendee/182614049. A replay will also be
available on https://ir.clarivate.com.
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, 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, international hostilities, 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 leading global information services provider. We
connect people and organizations to intelligence they can trust to
transform their perspective, their work and our world. Our
subscription and technology-based solutions are coupled with deep
domain expertise and cover the areas of Academia & Government,
Intellectual Property and Life Sciences & Healthcare. For more
information, please visit clarivate.com.
Condensed
Consolidated Balance Sheets
|
(In
millions)
|
(unaudited)
|
|
|
June 30, 2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
436.1
|
|
$
348.8
|
Restricted
cash
|
7.0
|
|
8.0
|
Accounts receivable,
net
|
769.7
|
|
872.1
|
Prepaid
expenses
|
101.9
|
|
89.4
|
Other current
assets
|
76.8
|
|
76.9
|
Assets held for
sale
|
26.1
|
|
0.0
|
Total current
assets
|
1,417.6
|
|
1,395.2
|
Property and equipment,
net
|
50.7
|
|
54.5
|
Other intangible
assets, net
|
9,186.4
|
|
9,437.7
|
Goodwill
|
2,895.5
|
|
2,876.5
|
Other non-current
assets
|
76.0
|
|
97.9
|
Deferred income
taxes
|
26.5
|
|
24.2
|
Operating lease
right-of-use assets
|
52.9
|
|
58.9
|
Total Assets
|
$
13,705.6
|
|
$
13,944.9
|
|
|
|
|
Liabilities and Shareholders'
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
108.2
|
|
$
101.4
|
Accrued
compensation
|
101.2
|
|
132.1
|
Accrued expenses and
other current liabilities
|
317.1
|
|
352.1
|
Current portion of
deferred revenues
|
939.6
|
|
947.5
|
Current portion of
operating lease liability
|
24.2
|
|
25.7
|
Current portion of
long-term debt
|
1.1
|
|
1.0
|
Liabilities held for
sale
|
6.5
|
|
0.0
|
Total current
liabilities
|
1,497.9
|
|
1,559.8
|
Long-term
debt
|
4,863.2
|
|
5,005.0
|
Non-current portion of
deferred revenues
|
37.9
|
|
38.5
|
Other non-current
liabilities
|
41.4
|
|
140.1
|
Deferred income
taxes
|
262.1
|
|
316.1
|
Operating lease
liabilities
|
64.8
|
|
72.9
|
Total liabilities
|
6,767.3
|
|
7,132.4
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred Shares, no
par value; 14.4 shares authorized; 5.25% Mandatory Convertible
Preferred Shares, Series A, 14.4 shares issued and outstanding as
of both June 30, 2023 and December 31, 2022
|
1,392.6
|
|
1,392.6
|
Ordinary Shares, no
par value; unlimited shares authorized as of June 30, 2023 and
December 31, 2022; 676.1 and 674.4 shares issued and outstanding as
of June 30, 2023 and December 31, 2022, respectively
|
11,809.2
|
|
11,744.7
|
Accumulated other
comprehensive loss
|
(487.6)
|
|
(665.9)
|
Accumulated
deficit
|
(5,775.9)
|
|
(5,658.9)
|
Total shareholders' equity
|
6,938.3
|
|
6,812.5
|
Total Liabilities and Shareholders'
Equity
|
$
13,705.6
|
|
$
13,944.9
|
Condensed Consolidated Statement of
Operations
|
(In millions)
|
(unaudited)
|
|
Three Months Ended June 30,
|
|
2023
|
|
2022
|
Revenues,
net
|
$
668.8
|
|
$
686.6
|
Operating
expenses:
|
|
|
|
Cost of
revenues
|
224.2
|
|
244.1
|
Selling, general and
administrative costs
|
192.9
|
|
186.1
|
Depreciation and
amortization
|
178.1
|
|
175.6
|
Restructuring and
lease impairments
|
12.2
|
|
19.2
|
Goodwill and
intangible asset impairments
|
135.2
|
|
—
|
Other operating
expense (income), net
|
14.5
|
|
(24.6)
|
Total operating
expenses
|
757.1
|
|
600.4
|
(Loss) income from
operations
|
(88.3)
|
|
86.2
|
Mark to market gain on
financial instruments
|
(2.9)
|
|
(49.0)
|
Interest expense and
amortization of debt discount, net
|
73.0
|
|
62.3
|
(Loss) income before
income taxes
|
(158.4)
|
|
72.9
|
(Benefit) provision
for income taxes
|
(35.3)
|
|
10.5
|
Net (loss)
income
|
(123.1)
|
|
62.4
|
Dividends on preferred
shares
|
18.6
|
|
18.7
|
Net (loss) income
attributable to ordinary shares
|
$
(141.7)
|
|
$
43.7
|
|
|
|
|
Per share:
|
|
|
|
Basic
|
$
(0.21)
|
|
$
0.06
|
Diluted
|
$
(0.21)
|
|
$
0.00
|
|
|
|
|
Weighted average shares
used to compute earnings per share:
|
|
|
|
Basic
|
675.9
|
|
674.3
|
Diluted
|
675.9
|
|
678.4
|
Condensed
Consolidated Statement of Operations
|
(In
millions)
|
(unaudited)
|
|
|
Six Months Ended June 30,
|
|
2023
|
|
2022
|
Revenues,
net
|
$
1,297.9
|
|
$
1,348.8
|
Operating
expenses:
|
|
|
|
Cost of
revenues
|
453.9
|
|
493.3
|
Selling, general and
administrative costs
|
387.7
|
|
379.8
|
Depreciation and
amortization
|
350.7
|
|
352.0
|
Restructuring and
lease impairments
|
21.6
|
|
30.9
|
Goodwill and
intangible asset impairments
|
135.2
|
|
—
|
Other operating
income, net
|
(17.5)
|
|
(38.3)
|
Total operating
expenses
|
1,331.6
|
|
1,217.7
|
(Loss) income from
operations
|
(33.7)
|
|
131.1
|
Mark to market gain on
financial instruments
|
(1.8)
|
|
(149.4)
|
Interest expense and
amortization of debt discount, net
|
146.6
|
|
121.8
|
(Loss) income before
income taxes
|
(178.5)
|
|
158.7
|
(Benefit) provision
for income taxes
|
(98.9)
|
|
26.8
|
Net (loss)
income
|
(79.6)
|
|
131.9
|
Dividends on preferred
shares
|
37.4
|
|
37.4
|
Net (loss) income
attributable to ordinary shares
|
$
(117.0)
|
|
$
94.5
|
|
|
|
|
Per share:
|
|
|
|
Basic
|
$
(0.17)
|
|
$
0.14
|
Diluted
|
$
(0.17)
|
|
$
(0.07)
|
|
|
|
|
Weighted average shares
used to compute earnings per share:
|
|
|
|
Basic
|
675.4
|
|
678.3
|
Diluted
|
675.4
|
|
683.2
|
Condensed
Consolidated Statements of Cash Flows
|
(In
millions)
|
(unaudited)
|
|
Six Months Ended June 30,
|
|
2023
|
|
2022
|
Cash Flows From
Operating Activities
|
|
|
|
Net (loss)
income
|
$
(79.6)
|
|
$
131.9
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
350.7
|
|
352.0
|
Share-based
compensation
|
71.6
|
|
47.2
|
Restructuring and
impairments
|
138.7
|
|
(1.0)
|
Mark to market gain on
financial instruments
|
(1.8)
|
|
(149.4)
|
Amortization of debt
issuance costs
|
9.1
|
|
7.6
|
Gain on legal
settlement
|
(49.4)
|
|
—
|
Deferred income
taxes
|
(47.8)
|
|
(0.9)
|
Other operating
activities
|
18.8
|
|
(33.6)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
121.7
|
|
53.8
|
Prepaid
expenses
|
(11.9)
|
|
(26.9)
|
Other
assets
|
38.6
|
|
(24.8)
|
Accounts
payable
|
6.2
|
|
(8.8)
|
Accrued expenses and
other current liabilities
|
(74.2)
|
|
(150.3)
|
Deferred
revenues
|
(18.4)
|
|
(29.5)
|
Operating leases,
net
|
(4.5)
|
|
3.4
|
Other
liabilities
|
(77.9)
|
|
(6.1)
|
Net cash provided by
operating activities
|
389.9
|
|
164.6
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
Capital
expenditures
|
(116.9)
|
|
(89.1)
|
Payments for
acquisitions and cost method investments, net of cash
acquired
|
(1.1)
|
|
(14.3)
|
Proceeds from
divestitures, net of cash and restricted cash
|
10.5
|
|
—
|
Net cash used in
investing activities
|
(107.5)
|
|
(103.4)
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
Principal payments on
term loan
|
(150.0)
|
|
(14.3)
|
Payment of debt
issuance costs and discounts
|
0.1
|
|
(2.1)
|
Proceeds from issuance
of treasury shares
|
—
|
|
0.9
|
Repurchases of
ordinary shares
|
—
|
|
(175.0)
|
Cash dividends on
preferred shares
|
(37.7)
|
|
(37.7)
|
Proceeds from stock
options exercised
|
—
|
|
0.5
|
Payments related to
finance lease
|
(0.5)
|
|
(1.0)
|
Payments related to tax
withholding for stock-based compensation
|
(9.7)
|
|
(10.7)
|
Net cash used in
financing activities
|
(197.8)
|
|
(239.4)
|
Effects of exchange
rates
|
1.7
|
|
(36.5)
|
|
|
|
|
|
|
|
|
Net increase (decrease)
in cash and cash equivalents
|
$
87.3
|
|
$
(71.2)
|
Net decrease in
restricted cash
|
(1.0)
|
|
(143.5)
|
Net increase (decrease)
in cash and cash equivalents, and restricted cash
|
86.3
|
|
(214.7)
|
|
|
|
|
Beginning of
period:
|
|
|
|
Cash and cash
equivalents
|
$
348.8
|
|
$
430.9
|
Restricted
cash
|
8.0
|
|
156.7
|
Total cash and cash
equivalents, and restricted cash, beginning of period
|
356.8
|
|
587.6
|
|
|
|
|
End of
period:
|
|
|
|
Cash and cash
equivalents
|
436.1
|
|
359.7
|
Restricted
cash
|
7.0
|
|
13.2
|
Total cash and cash
equivalents, and restricted cash, end of period
|
$
443.1
|
|
$
372.9
|
|
|
|
|
Supplemental Cash Flow
Information:
|
|
|
|
Cash paid for
interest
|
$
136.4
|
|
$
113.4
|
Cash paid for income
tax
|
$
22.5
|
|
$
23.7
|
Capital expenditures
included in accounts payable
|
$
10.3
|
|
$
23.8
|
|
|
|
|
Non-Cash Financing
Activities:
|
|
|
|
Retirement of treasury
shares
|
—
|
|
(175.0)
|
Dividends accrued on
our 5.25% Series A Mandatory Convertible Preferred
Shares
|
6.2
|
|
6.2
|
Total Non-Cash
Financing Activities
|
$
6.2
|
|
$
(168.8)
|
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 income (loss) before the
provision for income taxes, depreciation and amortization, and
interest expense adjusted to exclude acquisition and
disposal-related transaction costs, losses on extinguishment of
debt, share-based compensation, unrealized foreign currency
remeasurement, transformational and restructuring expenses,
acquisition-related adjustments to deferred revenues prior to the
adoption of FASB ASU No. 2021-08 in 2021, non-operating income or
expense, the impact of certain non-cash mark-to-market adjustments
on financial instruments, legal settlements, impairments, and other
items that are included in net income (loss) 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
and Adjusted EBITDA Margin for the three and six months ended
June 30, 2023 and 2022 and reconciles
these measures to our Net income (loss) for the same periods:
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(in millions, except percentages);
(unaudited)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net (loss) income attributable to ordinary
shares
|
$
(141.7)
|
|
$
43.7
|
|
$
(117.0)
|
|
$
94.5
|
Dividends on preferred
shares
|
18.6
|
|
18.7
|
|
37.4
|
|
37.4
|
Net (loss)
income
|
$
(123.1)
|
|
$
62.4
|
|
$
(79.6)
|
|
$
131.9
|
(Benefit) provision for
income taxes
|
(35.3)
|
|
10.5
|
|
(98.9)
|
|
26.8
|
Depreciation and
amortization
|
178.1
|
|
175.6
|
|
350.7
|
|
352.0
|
Interest expense and
amortization of debt discount, net
|
73.0
|
|
62.3
|
|
146.6
|
|
121.8
|
Deferred revenues
adjustment
|
—
|
|
0.8
|
|
—
|
|
0.6
|
Transaction related
costs(1)
|
0.7
|
|
5.1
|
|
2.4
|
|
11.8
|
Share-based
compensation expense
|
30.5
|
|
22.1
|
|
71.7
|
|
59.1
|
Restructuring and lease
impairments(2)
|
12.2
|
|
19.2
|
|
21.6
|
|
30.9
|
Goodwill and intangible
asset impairments(3)
|
135.2
|
|
—
|
|
135.2
|
|
—
|
Mark-to-market gain on
financial instruments(4)
|
(2.9)
|
|
(49.0)
|
|
(1.8)
|
|
(149.4)
|
Other(5)
|
16.5
|
|
(34.6)
|
|
(10.3)
|
|
(48.8)
|
Adjusted EBITDA
|
$
284.9
|
|
$
274.4
|
|
$
537.6
|
|
$
536.7
|
Adjusted EBITDA Margin
|
42.6 %
|
|
39.9 %
|
|
41.4 %
|
|
39.8 %
|
|
(1) Includes costs incurred to complete
business combination transactions, including acquisitions,
dispositions, and capital market activities and include advisory,
legal, and other professional and consulting costs.
|
(2) Primarily reflects severance and
related benefit costs related to approved restructuring
programs.
|
(3) Primarily includes the intangible
assets impairment recorded during the three months ended June 30,
2023 related to Assets Held for Sale and Divested
Operations.
|
(4) Reflects mark-to-market adjustments
on financial instruments under ASC 815, Derivatives and
Hedging.
|
(5) The current year periods primarily
include net losses on foreign exchange re-measurement and other
individually insignificant items that do not reflect our ongoing
operating performance. The current year-to-date period was offset
by a gain on legal settlement. The prior year periods include net
gains on foreign exchange re-measurement and other individually
insignificant 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 remeasurement,
transformational and restructuring expenses, acquisition-related
adjustments to deferred revenues prior to the adoption of FASB ASU
No. 2021-08 in 2021, the impact of certain non-cash mark-to-market
adjustments on financial instruments, legal settlements,
impairments, and other items that are included in net income (loss)
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 assumes that all
instruments in the calculation are dilutive.
The following table presents our calculation of Adjusted Net
Income and Adjusted Diluted EPS for the three and six months ended
June 30, 2023 and 2022 and reconciles
these measures to our Net income (loss) and EPS for the same
periods:
|
Three Months Ended June 30,
|
|
2023
|
|
2022
|
(in millions, except per share amounts);
(unaudited)
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
Net loss attributable to ordinary shares,
diluted
|
$
(141.7)
|
|
$
(0.21)
|
|
$
(3.1)
|
|
$
—
|
Change in fair value of
private placement warrants
|
—
|
|
—
|
|
46.8
|
|
0.07
|
Net (loss) income
attributable to ordinary shares
|
$
(141.7)
|
|
$
(0.21)
|
|
$
43.7
|
|
$
0.06
|
Dividends on preferred
shares
|
18.6
|
|
0.03
|
|
18.7
|
|
0.03
|
Net (loss)
income
|
$
(123.1)
|
|
$
(0.18)
|
|
$
62.4
|
|
$
0.09
|
Deferred revenues
adjustment
|
—
|
|
—
|
|
0.8
|
|
—
|
Transaction related
costs(1)
|
0.7
|
|
—
|
|
5.1
|
|
0.01
|
Share-based
compensation expense
|
30.5
|
|
0.05
|
|
22.1
|
|
0.03
|
Amortization related to
acquired intangible assets
|
143.5
|
|
0.21
|
|
146.1
|
|
0.22
|
Restructuring and lease
impairments(2)
|
12.2
|
|
0.02
|
|
19.2
|
|
0.03
|
Goodwill and intangible
asset impairments(3)
|
135.2
|
|
0.20
|
|
—
|
|
—
|
Mark-to-market gain on
financial instruments(4)
|
(2.9)
|
|
—
|
|
(49.0)
|
|
(0.07)
|
Other(5)
|
16.5
|
|
—
|
|
(34.6)
|
|
(0.08)
|
Income tax impact of
related adjustments
|
(60.4)
|
|
(0.09)
|
|
(7.0)
|
|
(0.01)
|
Adjusted net income and Adjusted diluted
EPS
|
$
152.2
|
|
$
0.21
|
|
$
165.1
|
|
$
0.22
|
Adjusted
weighted-average ordinary shares (Diluted)
|
734.9
|
|
736.6
|
|
(1-5) Refer to associated line item
descriptions provided for the Adjusted EBITDA reconciliation table
above.
|
|
Six Months Ended June 30,
|
|
2023
|
|
2022
|
(in millions, except per share amounts);
(unaudited)
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
Net loss attributable to ordinary shares,
diluted
|
$
(117.0)
|
|
$
(0.17)
|
|
$
(47.2)
|
|
$
(0.07)
|
Change in fair value of
private placement warrants
|
—
|
|
—
|
|
141.7
|
|
0.21
|
Net (loss) income
attributable to ordinary shares
|
$
(117.0)
|
|
$
(0.17)
|
|
$
94.5
|
|
$
0.14
|
Dividends on preferred
shares
|
37.4
|
|
0.06
|
|
37.4
|
|
0.05
|
Net (loss)
income
|
$
(79.6)
|
|
$
(0.12)
|
|
$
131.9
|
|
$
0.19
|
Deferred revenues
adjustment
|
—
|
|
—
|
|
0.6
|
|
—
|
Transaction related
costs(1)
|
2.4
|
|
—
|
|
11.8
|
|
0.02
|
Share-based
compensation expense
|
71.7
|
|
0.11
|
|
59.1
|
|
0.09
|
Amortization related to
acquired intangible assets
|
287.9
|
|
0.43
|
|
295.8
|
|
0.43
|
Restructuring and lease
impairments(2)
|
21.6
|
|
0.03
|
|
30.9
|
|
0.05
|
Goodwill and intangible
asset impairments(3)
|
135.2
|
|
0.20
|
|
—
|
|
—
|
Mark-to-market gain on
financial instruments(4)
|
(1.8)
|
|
—
|
|
(149.4)
|
|
(0.22)
|
Other(5)
|
(10.3)
|
|
(0.05)
|
|
(48.8)
|
|
(0.11)
|
Income tax impact of
related adjustments
|
(144.0)
|
|
(0.21)
|
|
(11.7)
|
|
(0.02)
|
Adjusted net income and Adjusted diluted
EPS
|
$
283.1
|
|
$
0.39
|
|
$
320.2
|
|
$
0.43
|
Adjusted
weighted-average ordinary shares (Diluted)
|
734.8
|
|
741.6
|
|
(1-5) Refer to associated line item
descriptions provided for the Adjusted EBITDA reconciliation table
above.
|
Free Cash Flow
Free cash flow is calculated using 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:
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
(in millions); (unaudited)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by operating
activities
|
$
162.4
|
|
$
97.2
|
|
$
389.9
|
|
$
164.6
|
Capital
expenditures
|
(57.6)
|
|
(47.7)
|
|
(116.9)
|
|
(89.1)
|
Free cash flow
|
$
104.8
|
|
$
49.5
|
|
$
273.0
|
|
$
75.5
|
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.
Standalone Adjusted EBITDA is calculated under the credit
facilities and the indentures by using our Consolidated Net income
(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
impairments, 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:
(in millions); (unaudited)
|
Twelve months
ended June 30, 2023
|
Net loss attributable to ordinary
shares
|
$
(4,247.1)
|
Dividends on preferred
shares
|
75.4
|
Net loss
|
$
(4,171.7)
|
(Benefit) provision for
income taxes
|
(154.6)
|
Depreciation and
amortization
|
709.2
|
Interest expense and
amortization of debt discount, net
|
295.1
|
Deferred revenues
adjustment
|
0.4
|
Transaction related
costs
|
4.8
|
Share-based
compensation expense
|
114.8
|
Gain on sale from
divestitures(1)
|
(278.5)
|
Restructuring and lease
impairments(2)
|
57.4
|
Goodwill and intangible
asset impairments(3)
|
4,584.3
|
Mark-to-market gain on
financial instruments(4)
|
(59.2)
|
Other
|
11.6
|
Adjusted EBITDA
|
$
1,113.6
|
Realized foreign
exchange gain
|
(23.1)
|
Cost
savings(5)
|
13.2
|
Standalone Adjusted EBITDA
|
$
1,103.7
|
|
(1) Represents the net gain from
the sale of the MarkMonitor Domain Management business during the
three months ended December 31, 2022.
|
(2) Primarily reflects severance and
related benefit costs related to approved restructuring
programs.
|
(3) Primarily includes the intangible
assets impairment recorded during the three months ended June 30,
2023 related to Assets Held for Sale and Divested
Operations.
|
(4) Reflects mark-to-market adjustments
on financial instruments under ASC 815, Derivatives and
Hedging.
|
(5) 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 adjustment (5) is an estimate and is not intended
to represent a pro forma adjustment presented within the guidance
of Article 11 of Regulation S-X. Although we believe the estimate
is reasonable, actual results may differ from the estimate, and any
difference may be material. See "Forward-Looking
Statements."
Annualized Contract Value ("ACV") represents the annualized
value for the next 12 months of subscription-based client
license agreements, assuming that all expiring license agreements
during that period are renewed at their current price level. We
calculate ACV on a constant currency basis to exclude the effect of
foreign currency fluctuations. The following table presents our
Annualized Contract Value ("ACV") as of the periods indicated.
|
June 30,
|
|
Change
|
(in millions, except percentages);
(unaudited)
|
2023
|
|
2022
|
|
2023 vs.
2022(1)
|
Annualized Contract
Value
|
$
1,567.2
|
|
$
1,625.9
|
|
$
(58.7)
|
|
(3.6) %
|
|
(1) The
change in ACV is primarily due to the divestiture of MarkMonitor in
October 2022 and changes in foreign exchange rates, supplemented by
organic ACV growth of 2.8% largely attributed to the impact of
price increases.
|
The following table presents 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 as the drivers of the variances between periods.
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of Factors
Increase/(Decrease)
|
|
Three Months Ended
June 30,
|
|
Total Variance (Dollars)
|
Total Variance (Percentage)
|
Acquisitions
|
Disposals(1)
|
FX Impact
|
Organic
|
(in millions, except percentages);
(unaudited)
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Subscription
revenues
|
$ 406.0
|
|
$ 407.4
|
|
$
(1.4)
|
(0.3) %
|
— %
|
(4.4) %
|
1.2 %
|
2.9 %
|
Re-occurring
revenues
|
111.0
|
|
112.0
|
|
(1.0)
|
(0.9) %
|
— %
|
— %
|
0.7 %
|
(1.6) %
|
Transactional and other
revenues
|
151.8
|
|
168.0
|
|
(16.2)
|
(9.6) %
|
— %
|
(2.3) %
|
0.2 %
|
(7.5) %
|
Deferred revenues
adjustment
|
—
|
|
(0.8)
|
|
0.8
|
100.0 %
|
100.0 %
|
— %
|
— %
|
— %
|
Revenues,
net
|
$ 668.8
|
|
$ 686.6
|
|
$ (17.8)
|
(2.6) %
|
0.1 %
|
(3.2) %
|
0.9 %
|
(0.4) %
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents revenues from the
MarkMonitor divestiture completed in October 2022 and from the
assets held-for-sale disposal group.
|
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of Factors
Increase/(Decrease)
|
|
Six Months Ended
June 30,
|
|
Total Variance
(Dollars)
|
Total Variance
(Percentage)
|
Acquisitions
|
Disposals(1)
|
FX Impact
|
Organic
|
(in millions, except percentages);
(unaudited)
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Subscription
revenues
|
$ 799.2
|
|
$
811.2
|
|
$ (12.0)
|
(1.5) %
|
— %
|
(4.4) %
|
— %
|
2.9 %
|
Re-occurring
revenues
|
218.7
|
|
226.5
|
|
(7.8)
|
(3.4) %
|
— %
|
— %
|
(1.8) %
|
(1.7) %
|
Transactional and other
revenues
|
280.0
|
|
311.7
|
|
(31.7)
|
(10.2) %
|
— %
|
(1.5) %
|
(0.8) %
|
(7.9) %
|
Deferred revenues
adjustment
|
—
|
|
(0.6)
|
|
0.6
|
100.0 %
|
100.0 %
|
— %
|
— %
|
— %
|
Revenues,
net
|
$
1,297.9
|
|
$ 1,348.8
|
|
$ (50.9)
|
(3.8) %
|
— %
|
(3.0) %
|
(0.5) %
|
(0.3) %
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents revenues from the
MarkMonitor divestiture completed in October 2022 and from the
assets held-for-sale disposal group.
|
The following table 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
June 30,
|
|
Total Variance (Dollars)
|
Total Variance (Percentage)
|
Acquisitions
|
Disposals(1)
|
FX Impact
|
Organic
|
(in millions, except percentages);
(unaudited)
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Academia &
Government
|
$ 342.0
|
|
$ 332.7
|
|
$
9.3
|
2.8 %
|
— %
|
— %
|
1.0 %
|
1.8 %
|
Intellectual
Property
|
216.3
|
|
239.2
|
|
(22.9)
|
(9.6) %
|
— %
|
(9.1) %
|
0.6 %
|
(1.1) %
|
Life Sciences &
Healthcare
|
110.5
|
|
115.5
|
|
(5.0)
|
(4.3) %
|
— %
|
— %
|
1.0 %
|
(5.4) %
|
Deferred revenues
adjustment
|
—
|
|
(0.8)
|
|
0.8
|
100.0 %
|
100.0 %
|
— %
|
— %
|
— %
|
Revenues,
net
|
$ 668.8
|
|
$ 686.6
|
|
$ (17.8)
|
(2.6) %
|
0.1 %
|
(3.2) %
|
0.9 %
|
(0.4) %
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents revenues from the
MarkMonitor divestiture completed in October 2022 and from the
assets held-for-sale disposal group.
|
|
|
|
|
|
Variance
Increase/(Decrease)
|
Percentage of Factors
Increase/(Decrease)
|
|
Six Months Ended
June 30,
|
|
Total Variance (Dollars)
|
Total Variance (Percentage)
|
Acquisitions
|
Disposals(1)
|
FX Impact
|
Organic
|
(in millions, except percentages);
(unaudited)
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Academia &
Government
|
$ 656.7
|
|
$
644.5
|
|
$
12.2
|
1.9 %
|
— %
|
— %
|
— %
|
1.9 %
|
Intellectual
Property
|
425.4
|
|
480.8
|
|
(55.4)
|
(11.5) %
|
— %
|
(8.4) %
|
(1.4) %
|
(1.7) %
|
Life Sciences &
Healthcare
|
215.8
|
|
224.1
|
|
(8.3)
|
(3.7) %
|
— %
|
— %
|
— %
|
(3.7) %
|
Deferred revenues
adjustment
|
—
|
|
(0.6)
|
|
0.6
|
100.0 %
|
100.0 %
|
— %
|
— %
|
— %
|
Revenues,
net
|
$
1,297.9
|
|
$ 1,348.8
|
|
$ (50.9)
|
(3.8) %
|
— %
|
(3.0) %
|
(0.5) %
|
(0.3) %
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents revenues from the
MarkMonitor divestiture completed in October 2022 and from the
assets held-for-sale disposal group.
|
The following table presents our calculation of Revenues, net
for the 2023 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, except
percentages)
|
2023 Outlook mid-point
|
|
2022
|
|
|
|
|
|
|
|
Revenues,
net
|
$
2,635
|
|
$
2,660
|
|
$
(25)
|
(0.9) %
|
— %
|
(2.6) %
|
0.7 %
|
1.0 %
|
The following table presents our calculation of Adjusted EBITDA
and Adjusted EBITDA Margin for the 2023 outlook and reconciles
these measures to our Net loss for the same period:
|
Year Ending December 31, 2023
(Forecasted)
|
(in millions, except
percentages)
|
Low
|
|
High
|
Net loss attributable to ordinary
shares
|
$
(217)
|
|
$
(167)
|
Dividends on preferred
shares(1)
|
75
|
|
75
|
Net loss
|
$
(142)
|
|
$
(92)
|
(Benefit) provision for
income taxes
|
(55)
|
|
(55)
|
Depreciation and
amortization
|
709
|
|
709
|
Interest expense and
amortization of debt discount, net
|
288
|
|
288
|
Restructuring and lease
impairments(2)
|
33
|
|
33
|
Goodwill and intangible
asset impairments(3)
|
135
|
|
135
|
Transaction related
costs
|
2
|
|
2
|
Mark to market
adjustment on financial instruments
|
(2)
|
|
(2)
|
Share-based
compensation expense
|
131
|
|
131
|
Other(4)
|
(10)
|
|
(10)
|
Adjusted EBITDA
|
$
1,090
|
|
$
1,140
|
Adjusted EBITDA margin
|
42.0 %
|
|
42.5 %
|
|
(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
dividends.
|
(2) Reflects restructuring costs
expected to be incurred in 2023 associated with the ProQuest
acquisition and Segment Optimization restructuring
programs.
|
(3) Primarily includes the intangible
assets impairment recorded during the three months ended June 30,
2023 related to Assets Held for Sale and Divested
Operations
|
(4) Primarily includes the gain on legal
settlement partially offset by a net loss on foreign exchange
re-measurement.
|
The following table presents our calculation of Adjusted Diluted
EPS for the 2023 outlook and reconciles this measure to our Net
loss per share for the same period:
|
Year Ending December 31, 2023
(Forecasted)
|
|
Low
|
|
High
|
(in millions)
|
Per Share
|
|
Per Share
|
Net loss attributable to ordinary
shares
|
$
(0.29)
|
|
$
(0.23)
|
Dividends on preferred
shares(1)
|
0.10
|
|
0.10
|
Net loss
|
$
(0.19)
|
|
$
(0.13)
|
Restructuring and lease
impairments(2)
|
0.04
|
|
0.04
|
Goodwill and intangible
asset impairments(3)
|
0.18
|
|
0.18
|
Share-based
compensation expense
|
0.18
|
|
0.18
|
Amortization related to
acquired intangible assets
|
0.78
|
|
0.78
|
Other(4)
|
(0.01)
|
|
(0.01)
|
Income tax impact of
related adjustments
|
(0.21)
|
|
(0.21)
|
Adjusted Diluted EPS
|
$
0.77
|
|
$
0.83
|
Adjusted
weighted-average ordinary shares (Diluted)(5)
|
738
million
|
|
(1-4) Refer to associated line item
descriptions provided for the Adjusted EBITDA outlook
reconciliation table above.
|
(5) For the purposes of calculating
adjusted earnings per share, the Company has excluded the accrued
and anticipated MCPS dividends and assumed the "if-converted"
method of share dilution.
|
The following table presents our calculation of Free cash flow
for the 2023 outlook and reconciles this measure to our Net cash
provided by operating activities for the same period:
|
Year Ending December 31, 2023
(Forecasted)
|
(in millions)
|
Low
|
|
High
|
Net cash provided by operating
activities
|
$
695
|
|
$
745
|
Capital
expenditures
|
(245)
|
|
(245)
|
Free cash flow
|
$
450
|
|
$
500
|
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SOURCE Clarivate Plc