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08.11.2022 12:00:00
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Clarivate Reports Third Quarter 2022 Results
-- 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.
- 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
- 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 InformationThe 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 | Change | Nine Months Ended | 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. | |||||||||||||||
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 FlowAs 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 WebcastClarivate 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 MeasuresNon-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 StatementsThis 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 ClarivateClarivate™ 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, | December 31, | ||
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 MarginAdjusted 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 | Nine Months Ended September | ||||||
(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 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 | Three Months Ended | ||||||
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 | Nine Months Ended | ||||||
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 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 DataStandalone 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 | |
(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 | Percentage of Factors | ||||||||
Three Months Ended | Total (Dollars) | Total (Percentage) | Acquisitions | FX | Organic | ||||
(in millions, except percentages); | 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 | Percentage of Factors | ||||||||
Nine Months Ended | Total (Dollars) | Total (Percentage) | Acquisitions | FX | Organic | ||||
(in millions, except percentages); | 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 | Percentage of Factors | ||||||||
Three Months Ended | Total | Total | Acquisitions | FX | Organic | ||||
(in millions, except percentages); | 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 | Percentage of Factors | ||||||||
Nine Months | Total | Total | Acquisitions | FX | Organic | ||||
(in millions, except percentages); | 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 / | Percentage of Factors Increase / (Decrease) | |||||||||
Year Ending December 31, | Total | Total | Acquisitions | Disposals | FX | Organic | ||||
(in millions) | 2022 | 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 | |
(1) Reflects cash payments for costs primarily related to restructuring associated with the ProQuest acquisition in 2022. | |||
(2) Includes cash funded by a trust related to the CPA Global Equity Plan payout upon vesting. |
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SOURCE Clarivate Plc
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