8-K
Clarivate PLC (CLVT)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
April 29, 2021
Date of Report (date of earliest event reported)
CLARIVATE PLC
(Exact name of registrant as specified in its charter)
Jersey, Channel Islands
(State or other jurisdiction of incorporation or organization)
001-38911
(Commission File Number)
N/A
(I.R.S. Employer Identification No.)
| Friars House <br>160 Blackfriars Road | |
|---|---|
| London | SE1 8EZ |
| United Kingdom | |
| (Address of Principal Executive Offices) |
(44) 207-433-4000
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Ordinary shares | CLVT | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02. Results of Operations and Financial Condition.
On April 29, 2021, Clarivate Plc (the “Company”) issued a press release announcing earnings for the first quarter ended March 31, 2021. In addition, the Company posted to its website supplemental information related to revenue, earnings and guidance. The press release and supplemental information have been furnished with this Form 8-K as exhibits and are posted on the investor relations section of the Company’s website (http://ir.clarivate.com/).
The information in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2 furnished herewith, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| No. | Description |
|---|---|
| 99.1 | Press release issued by Clarivate Plc dated April 29, 2021 |
| 99.2 | Supplemental Information dated April 29, 2021 |
| 104 | The cover page from the Company's Current Report on Form 8-K dated April 29, 2021, formatted in Inline XBRL |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CLARIVATE PLC | |
|---|---|
| Date: April 29, 2021 | By: /s/ Richard Hanks |
| Name: Richard Hanks | |
| Chief Financial Officer |
Document
Clarivate Reports First Quarter 2021 Results
— Updates 2021 Outlook —
London, UK -- April 29, 2021 - 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 first quarter ended March 31, 2021.
First Quarter 2021 Financial Highlights
•Revenues of $428.4 million and Adjusted Revenues(1) of $431.5 million, both increased 78%.
•Organic revenues(1), which exclude the impact of acquisitions and divestitures, increased 8% on a reported basis and 7% on an adjusted basis, at constant currency; organic subscription and transactional revenues(1) increased 6% and 10%, respectively, at constant currency.
•GAAP Loss from operations of $(34.2) million, an increase of $5.9 million.
•Adjusted EBITDA(1) of $164.8 million increased 111% and Adjusted EBITDA Margin(1) of 38% increased 600 basis points.
•Cash Flow from Operations of $174.0 million increased $127.9 million; Adjusted Free Cash Flow(1) of $163.2 million increased $85.3 million.
•Total cash and cash equivalents of $399.0 million increased $141.3 million.
“Our strong first quarter results reflect the benefits of continued operational improvements and recent acquisitions,” said Jerre Stead, Executive Chairman and CEO. “While the COVID pandemic impacted our business for most of 2020, we are very pleased to see a recovery in organic subscription and transactional revenue growth. With the solid start to the year, we have updated our 2021 financial outlook and continue to see a pathway to achieving 6% to 8% organic revenue growth exiting 2021.”
Selected Financial Information
(Amounts in tables may not sum due to rounding)
On April 29, 2021, the Company filed a Current Report on Form 8-K noting that following consideration of an April 12, 2021 announcement by the Securities and Exchange Commission that is broadly applicable to warrants issued by special purpose acquisition companies (“SPACs”), the Company concluded that certain of its warrants, originally issued by the SPAC that the Company merged with in 2019, should be classified as liabilities in the Company’s financial statements prepared according to generally accepted accounting principles (“GAAP”). As noted, we are in the process of restating previously issued financial statements, and we are finalizing our financial statements for the quarter ended March 31, 2021, to reflect this change. We anticipate that this change will require certain non-cash adjustments to our financial statements that, among other things, will increase the liabilities carried on our balance sheet by the fair value of these warrants and will require us to assess the fair value of these liabilities each period, with any resulting increase or decrease in fair value recognized in our earnings. We anticipate that this change will not affect GAAP revenues, loss from operations, long-term debt or cash flows from operating activities, or the non-GAAP measures Adjusted EBITDA, Free Cash Flow or Adjusted Free Cash Flow. As a result, in this earnings release we are providing these unaffected measures to illustrate our operational performance for the quarter ended March 31, 2021. We anticipate that this change will affect GAAP benefit (provision) for income taxes, net loss, earnings per share, current liabilities, total liabilities and shareholders’ equity. We do not expect the change to have any significant impact on
(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 press release.
operational performance or debt covenant compliance in future periods. The affected measures will be addressed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. Because we have not yet finalized GAAP net loss for the quarters ended March 31, 2021 or 2020, in this earnings release we provide a reconciliation of non-GAAP Adjusted EBITDA to GAAP loss from operations. Please see “Reconciliations of Certain Non-GAAP Measures.”
The results for the three months ended March 31, 2021 include contributions from CPA Global, which was completed in October 2020, for which there were no comparable amounts in the three months ended March 31, 2020. Additionally, the first quarter ended March 31, 2020 includes only one month of Decision Resources Group (“DRG”) compared to the full quarter ended March 31, 2021, as the acquisition was completed at the end of February 2020. The results for the three months ended March 31, 2021 exclude the results of Techstreet, which was divested in November 2020.
| Three Months | |||||
|---|---|---|---|---|---|
| Ended March 31, | Change | ||||
| (in millions, except percentages and per share data) | 2021 | 2020 | $ | % | |
| Revenues, net | 428.4 | 240.6 | 187.8 | 78 | % |
| Adjusted revenues, net(1) | 431.5 | 242.5 | 189.0 | 78 | % |
| Annualized Contract Value (ACV) | 909.4 | 820.3 | 89.1 | 11 | % |
| Loss from operations | (34.2) | (28.3) | 5.9 | 21 | % |
| Adjusted EBITDA(1) | 164.8 | 78.2 | 86.6 | 111 | % |
| Net cash provided by operating activities | 174.0 | 46.1 | 127.9 | N/M | |
| Free cash flow(1) | 141.0 | 26.7 | 114.3 | N/M | |
| Adjusted free cash flow(1) | 163.2 | 77.9 | 85.3 | N/M |
(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 press release.
First Quarter 2021 Operating Results
Revenues, net, for the first quarter of 2021 increased $187.8 million, or 78%, to $428.4 million, compared to the prior-year period. Adjusted revenues, net, which excludes the impact of deferred revenues resulting from purchase accounting adjustments related to acquisitions, increased $189.0 million or 78%, to $431.5 million, compared to the first quarter of 2020. Excluding the impact of acquisitions and divestitures, adjusted organic revenues increased 7% on a constant currency basis, due to higher subscription and transactional revenues.
Subscription revenues for the first quarter of 2021 increased $41.9 million, or 22%, to $235.1 million, compared to the prior-year period, primarily driven by the acquisitions of CPA Global and DRG, partially offset by the Techstreet divestiture. Excluding the impact of acquisitions and divestitures, organic subscription revenues increased $18.5 million, up 6% on a constant currency basis, due to the benefit of net installations in prior-year, timing benefits due to more disciplined operating procedures and price increases.
Re-occurring revenues for the first quarter of 2021 were $112.2 million, an increase of 100%, all driven by acquired revenue primarily from the CPA Global patent renewals business.
Transactional revenues for the first quarter of 2021 increased $34.9 million, or 71%, to $84.2 million, compared to the prior-year period, primarily driven by acquisitions. Excluding the impact of acquisitions and divestitures, organic transactional revenues increased $6.3 million, up 10% on a constant currency basis, compared to the
first quarter of 2020. The growth in organic revenues is due to strength in our professional services business lines and an increase in trademark and patent search volumes.
Loss from operations for the first quarter 2021 was $34.2 million, an increase of $5.9 million compared to the prior-year period. Adjusted EBITDA for the first quarter 2021 was $164.8 million, an increase of $86.6 million or 111%, compared to the prior-year period, driven by the earnings contribution from acquisitions and organic growth.
Cash Flow
At March 31, 2021 cash and cash equivalents of $399.0 million increased $141.3 million, compared to December 31, 2020, driven by strong operating results.
The Company's total debt outstanding at March 31, 2021 was $3,540.3 million, a decrease of $7.2 million compared to December 31, 2020.
Net cash provided by operating activities was $174.0 million for the three months ended March 31, 2021 compared to net cash provided by operating activities of $46.1 million for the prior-year period, driven by strong operating results and tighter working capital management. Adjusted free cash flow for the three months ended March 31, 2021 was $163.2 million, an increase of $85.3 million, compared to the prior-year period, as a result of growth in revenues and operational efficiencies.
Updated Outlook for 2021 (forward-looking statement)
The full year 2021 updated outlook presented below assumes no further currency movements, acquisitions, divestitures, or unanticipated events. We will provide our Adjusted earnings per share guidance after finalizing the financial statement impacts discussed above and expect to file our Form 10-Q by May 10, 2021.
The below 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 measure. These terms are defined elsewhere in this earnings press release.
| Updated Outlook | Previous Outlook | |
|---|---|---|
| Adjusted revenues | $1.79B to $1.84B | $1.78B to $1.84B |
| Adjusted EBITDA | $790M to $825M | $785M to $825M |
| Adjusted EBITDA margin | Unchanged | 44% to 45% |
| Adjusted free cash flow | Unchanged | $450M to $500M |
Conference Call and Webcast
Clarivate will host a conference call and webcast today to review the results for the first quarter at 8:00 a.m. Eastern Time. The conference call will be simultaneously webcast on the Investor Relations section of the company’s website.
Interested parties may access the live audio broadcast by dialing 1-888-317-6003 in the United States, 1-412-317-6061 for international, and 1-866-284-3684 in Canada. The conference ID number is 1743322. An audio replay will be available approximately two hours after the completion of the call at 1-877-344-7529 in the United States, 1-412-317-0088 for international, and 1-855-669-9658 in Canada. The Replay Conference ID number is 10153161. The recording will be available for replay through May 13, 2021. The webcast can be accessed at https://services.choruscall.com/links/clvt210429.html and will be available for replay.
Use of Non-GAAP Financial Measures
Non-GAAP results are not presentations made in accordance with U.S. generally accepted accounting principles ("GAAP") and are presented only as a supplement to our financial statements based on GAAP. Non-GAAP financial information is provided to enhance the reader’s understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP. They are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such measures in isolation from, or as a substitute for, financial measures or results of operations calculated or determined in accordance with GAAP.
We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations and we also believe that investors may find these non-GAAP financial measures useful for the same reasons. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as analytical tools and because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.
Definitions and reconciliations of non-GAAP measures, such as Adjusted Revenues, EBITDA, Adjusted EBITDA, Free Cash Flow, and Adjusted Free Cash Flow 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.
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 sufficiently liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, 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 most recent annual report on Form 10-K, along with our other filings with the U.S. Securities and Exchange Commission (“SEC”). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements are based only on information currently available to our management and speak only as of the date of this communication. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.
About Clarivate
Clarivate™ is a global leader in providing solutions to accelerate the lifecycle 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 science and intellectual property. 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.
Reconciliation to Certain Non-GAAP Measures
(Amounts in tables may not sum due to rounding)
Adjusted Revenues
Adjusted Revenues excludes the impact of the deferred revenues purchase accounting adjustment (primarily recorded in connection with recent acquisitions).
The following table presents our calculation of Adjusted Revenues for the three and twelve months ended December 31, 2020 and 2019 and a reconciliation of this measure to our Revenues, net for the same periods:
| Three Months Ended March 31, | Variance | ||||||
|---|---|---|---|---|---|---|---|
| (in millions, except percentages) | 2021 | 2020 | % | ||||
| Revenues, net | $ | 428.4 | $ | 240.6 | 78 | % | |
| Deferred revenues adjustment(1) | 3.0 | 1.9 | 1.1 | 61 | % | ||
| Adjusted revenues, net | $ | 431.5 | $ | 242.5 | 78 | % |
All values are in US Dollars.
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting.
Adjusted EBITDA
Adjusted EBITDA is calculated using Loss from operations before provision for income taxes, depreciation and amortization and interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income), share-based compensation, unrealized foreign currency gains/(losses), transition services agreement costs entered into with Thomson Reuters in 2016 (“Transition Services Agreement”), separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, non-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, and certain unusual items impacting results in a particular period.
The following table presents our calculation of Adjusted EBITDA for the three months ended March 31, 2021 and 2020 and reconciles these measures to our Loss from operations for the same periods:
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2021 | 2020 | ||||
| Loss from operations | $ | (34.2) | $ | (28.3) | ||
| Depreciation and amortization | 131.7 | 51.4 | ||||
| Transition services agreement costs(1) | — | 1.6 | ||||
| Transition, transformation and integration expense(2) | — | 2.2 | ||||
| Deferred revenues adjustment(3) | 3.0 | 1.9 | ||||
| Transaction related costs(4) | (26.6) | 26.7 | ||||
| Share-based compensation expense | 10.7 | 17.5 | ||||
| Restructuring and impairment(5) | 64.7 | 7.8 | ||||
| Other(6) | 15.6 | (2.5) | ||||
| Adjusted EBITDA | $ | 164.8 | $ | 78.2 | ||
| Adjusted EBITDA Margin | 38 | % | 32 | % |
(1)In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets.
(2)Includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016, mainly related to the integration of separate business units into one functional organization and enhancements in our technology.
(3)Reflects the deferred revenues adjustment as a result of purchase accounting.
(4)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. During the three months ended March 31, 2021, the Company recognized mark to market adjustment gains of $27.7 million, primarily related to DRG contingent shares that were settled in March 2021.
(5)Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG and CPA Global in 2020.
(6)Includes primarily the net impact of foreign exchange gains and losses related to the re-measurement of balances and other items that do not reflect our ongoing operating performance.
Free Cash Flow and Adjusted Free Cash Flow
Free cash flow is calculated using net cash provided by operating activities less capital expenditures. Adjusted free cash flow is calculated as free cash flow, less cash paid for transition services agreement, transition, transformation and integration expenses, transaction related costs and debt issuance costs offset by cash received for hedge accounting transactions. 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 March 31, | ||||
|---|---|---|---|---|
| (in millions) | 2021 | 2020 | ||
| Net cash provided by operating activities | $ | 174.0 | $ | 46.1 |
| Capital expenditures | (33.0) | (19.4) | ||
| Free Cash Flow | $ | 141.0 | $ | 26.7 |
| Cash paid for restructuring, transition, transformation and integration expense(1) | $ | 17.0 | $ | 20.6 |
| Cash paid for transaction related costs(2) | 5.2 | 24.1 | ||
| Cash paid for debt issuance costs | — | 7.7 | ||
| Cash received for hedge accounting transactions | — | (1.2) | ||
| Adjusted free cash flow | $ | 163.2 | $ | 77.9 |
(1)Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related payments following the acquisition of DRG and CPA Global in 2020.
(2)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.
Organic Revenue
Growth in organic revenue, a non-GAAP measure, illustrates growth in businesses owned by the Company as of January 1, 2020, the beginning of the earliest period presented. We believe investors may find it useful to distinguish between revenue growth attributable to acquisitions and growth attributable to the ongoing business.
The following table presents the amounts of subscription. re-occurring and transactional revenues, as well as the drivers of variances between periods, including as a percentage of such revenues.
| Variance Increase/(Decrease) | Percentage of Factors Increase/(Decrease) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, | Total Variance<br>(Dollars) | Total Variance<br>(Percentage) | Acquisitive | Disposal | FX Impact | Organic | ||||||||||
| (in millions, except percentages) | 2021 | 2020 | ||||||||||||||
| Subscription revenues | $ | 235.1 | $ | 193.2 | $ | 41.9 | 22 | % | 17 | % | (4) | % | 3 | % | 6 | % |
| Re-occurring revenues | 112.2 | — | 112.2 | 100 | % | 100 | % | — | % | — | % | — | % | |||
| Transactional revenues | 84.2 | 49.2 | 34.9 | 71 | % | 70 | % | (12) | % | 3 | % | 10 | % | |||
| Deferred revenues adjustment(1) | (3.0) | (1.9) | (1.1) | (61) | % | NM | — | % | — | % | 99 | % | ||||
| Revenues, net | $ | 428.4 | $ | 240.6 | $ | 187.8 | 78 | % | 73 | % | (6) | % | 3 | % | 8 | % |
| Deferred revenues adjustment(1) | 3.0 | 1.9 | 1.1 | 61 | % | NM | — | % | — | % | (99) | % | ||||
| Adjusted revenues, net | $ | 431.5 | $ | 242.5 | $ | 189.0 | 78 | % | 74 | % | (6) | % | 3 | % | 7 | % |
(1)Reflects the deferred revenues adjustment made as a result of purchase accounting.
The following table presents our revenues by product segment for the periods indicated, as well as the drivers of variances between periods, including as a percentage of such revenues.
| Variance Increase/(Decrease) | Percentage of Factors Increase/(Decrease) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues by Product Segment | Three Months Ended March 31, | Total Variance (Dollars) | Total Variance (Percentage) | Acquisitive | Disposal | FX Impact | Organic | |||||||||
| (in millions, except percentages) | 2021 | 2020 | ||||||||||||||
| Science product segment | $ | 191.3 | $ | 147.3 | $ | 44.0 | 30 | % | 16 | % | 0 | % | 4 | % | 10 | % |
| IP product segment | 240.1 | 95.2 | 144.9 | 152 | % | 163 | % | (15) | % | 2 | % | 2 | % | |||
| Deferred revenues adjustment (1) | (3.0) | (1.9) | (1.1) | 61 | % | NM | 0 | % | 0 | % | 99 | % | ||||
| Revenues, net | $ | 428.4 | $ | 240.6 | $ | 187.8 | 78 | % | 73 | % | (6) | % | 3 | % | 8 | % |
| Deferred revenues adjustment (1) | 3.0 | 1.9 | 1.1 | 61 | % | NM | 0 | % | 0 | % | (99) | % | ||||
| Adjusted revenues, net | $ | 431.5 | $ | 242.5 | $ | 189.0 | 78 | % | 74 | % | (6) | % | 3 | % | 7 | % |
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting.
2021 Outlook
The following table presents our calculation of Adjusted Revenues for the Outlook for 2021 and reconciles this measure to our Revenues, net for the same period:
| Year Ending December 31, 2021 (Forecasted) | ||||
|---|---|---|---|---|
| (in millions) | Low | High | ||
| Revenues, net | $ | 1,786.4 | $ | 1,836.4 |
| Deferred revenues adjustment(1) | 3.6 | 3.6 | ||
| Adjusted revenues, net | $ | 1,790.0 | $ | 1,840.0 |
(1) Reflects the deferred revenues adjustment made as a result of purchase accounting.
The following table presents our calculation of Adjusted EBITDA for the Outlook for 2021 and reconciles this measure to our Loss from operations for the same period:
| Year Ending December 31, 2021 (Forecasted) | ||||||
|---|---|---|---|---|---|---|
| (in millions) | Low | High | ||||
| Income from operations | $ | 178.2 | $ | 213.2 | ||
| Depreciation and amortization | 545.8 | 545.8 | ||||
| Transition, transition services agreement, and integration expense(1) | 40.3 | 40.3 | ||||
| Share-based compensation expense | 26.0 | 26.0 | ||||
| Other | (0.3) | (0.3) | ||||
| Adjusted EBITDA | $ | 790.0 | $ | 825.0 | ||
| Adjusted EBITDA Margin | 44 | % | 45 | % |
(1) Includes restructuring costs, other cost optimization activities, and payments and receipts under transition service agreements.
The following table presents our calculation of Free Cash Flow and Adjusted Free Cash Flow for the Outlook for 2021 and reconciles this measure to our Net cash provided by operating activities for the same period:
| Year Ending December 31, 2021 (Forecasted) | ||||
|---|---|---|---|---|
| (in millions) | Low | High | ||
| Net cash provided by operating activities | $ | 559.7 | $ | 609.7 |
| Capital expenditures | (151.7) | (151.7) | ||
| Free Cash Flow | 408.0 | 458.0 | ||
| Transition, transition services agreement, and integration expense(1) | 42.0 | 42.0 | ||
| Adjusted free cash flow | $ | 450.0 | $ | 500.0 |
(1) Includes cash payments related to restructuring and other cost optimization activities.
Media Contact:
Tabita Seagrave, Head of Global Corporate Communications
tabita.seagrave@clarivate.com
Investor Relations Contact:
Mark Donohue, Head of Global Investor Relations
mark.donohue@clarivate.com
215-243-2202
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q12021supplementaldeck
Q1 2021 Earnings Supplemental Materials April 29, 2021
2 Forward-Looking Statements These materials contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. 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, outlook, anticipated cost savings, 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 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 2020 annual report on Form 10-K and 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. Forward- looking statements are based only on information currently available to our management and speak only as of the date of this press release. 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. Non-GAAP Financial Measures This presentation contains financial measures which have not been calculated in accordance with United States generally accepted accounting principles (“GAAP”), including Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, and Adjusted Free Cash Flow because they are a basis upon which our management assesses our performance and we believe they reflect the underlying trends and indicators of our business. Although we believe these measures may be useful for investors for the same reasons, these financial measures should not be considered as an alternative to GAAP financial measures as a measure of the Company’s financial condition, profitability and performance or liquidity. In addition, these financial measures may not be comparable to similar measures used by other companies. At the Appendix to this presentation, we provide further descriptions of these non-GAAP measures and reconciliations of these non-GAAP measures to the corresponding most closely related GAAP measures. Organic revenue illustrates growth in businesses owned by the Company as of January 1, 2020. Results excluding divestitures in this presentation exclude the previously announced November 6, 2020 divestiture of Techstreet.
3 Q1 Highlights “One Clarivate”Operational Highlights (1) Revenue at constant currency. (2) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (3) Adjusted EBITDA Margin equals Adjusted EBITDA divided by Adjusted Revenue. Transforming from being a collection of distinct market-leading products and services to becoming a key partner to our customers by delivering the critical data, insights and workflow solutions coupled with deep domain expertise that they need to drive their innovations and their businesses with confidence Strategy to become outside-in; changing from a product-centric organization to a customer- centric organization Industry-focused rather than product-focused Customer-facing activities in 5 industries: 1. Healthcare & Life Sciences 2. Professional Services 3. Academic & Government 4. Manufacturing 5. Technology & Consumer Products Financial Highlights(1) +75% $428M +75% $432M +7% +$17M 38% +600bps Revenue Adjusted Revenue(2) Adjusted organic revenue growth Adjusted EBITDA Margin(2) (3) +277% $174M Net Cash Operating Activities +110% $163M Adjusted Free Cash Flow(2) 21% $34M Loss from operations +111% $165M Adjusted EBITDA(1) Improving overdue renewal discipline $31M / 85% decline compared to 1Q’20 Driving growth in professional services 11% growth compared to 1Q’20 Migrating majority of customer accounts to new inside sales / Global Business Centers On target to complete by end of 2Q’21 CPA Global integration 4 mths ahead of schedule On target to achieve $75M of cost synergies “Easier to do business with”; simplifying processes and approvals to be even more efficient and quick to respond to customer needs Connected Workforce initiative; closed / downsized 35% of our global real estate footprint out of our total target of 60% reduction
4 Published First Ever Annual Sustainability Report We’re committed to maintaining the highest level of integrity and ethics, protecting our planet, empowering our colleagues to thrive and building collaborative global communities Our goals are aligned to the United Nations (UN) Sustainable Development Goals (SDGs) – an important connection to a larger global mission Aiming to be listed on the Dow Jones Sustainability Index and FTSE 4 GOOD Index based on 2023 performance and be carbon neutral by 2024 Our 2021 sustainability goals are aligned with the UN SDGs – our universal blueprint for collective actions we can take to address the most pressing issues we face as a global community Our report includes 2020 progress across our four sustainability pillars - Government, Environment, Colleagues and Community - and our 2021 scorecard goals: https://ebooks.clarivate.com/story/2020-clarivate-sustainability-report/
5 $241 $428 Q1'20 Q1'21 $78 $165 Q1'20 Q1'21 Q1 Results ($ in millions, actual f/x) Adjusted Revenue(3) $112 $49 $84$193 $235 Q1'20 Q1'21 +78% actual f/x +75% constant f/x $243 $432 Subscription +22% Transactional +71% Adjusted EBITDA(3) Adjusted EBITDA Margin(4) 38% up 600 basis points +111% Growth was driven by the acquisitions of DRG and CPA Global and a recovery in adjusted organic revenue of 7%(1) (1) Adjusted organic revenue at constant currency (2) 1Q’21 includes $3M and 1Q’20 includes $2M of deferred revenue adjustment, a result of purchase accounting primarily related to acquisitions. (3) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (4) Adjusted EBITDA Margin equals Adjusted EBITDA divided by Adjusted Revenue. See the Appendix for a reconciliation of GAAP to Non-GAAP measures. Re-occurring +100% Revenue(2) +78% actual f/x +75% constant f/x Organic Revenue Growth (at constant f/x) Adjusted subscription 6% Adjusted transactional 10% Adjusted re-occurring --- Adjusted Revenue 7%
6 Q1 Financial Highlights ($ in millions except per share data) 2021 2020 Change Excluding Divestitures(2) Organic(2) Commentary Subscription revenue(1) $235 $193 22% 23% 6% Acquisitions, timing benefits due to tighter operating procedures and price increases, partially offset by divested products Transactional revenue(1) 84 49 71% 80% 10% Acquisitions and an increase in consulting services and patent and trademark search volumes, partially offset by divested products Re-occurring revenue(1) 112 --- 100% --- --- A component of revenue from the acquisition of CPA Global Adjusted total revenues, net(1) 432 243 78% 81% 7% Annual Contract Value (“ACV”) 909 820 11% 6% Acquisitions, organic growth and annual price increases Adjusted EBITDA(1) 165 78 111% Revenue growth with strong flow-through and benefit of cost savings/synergies Adjusted EBITDA margin(1) 38% 32% 600 bps Combination of acquisitions and underlying growth and efficiencies within the core business Other operating income (expense) (16) 6 (367%) Impact of the remeasurement of the assets and liabilities that are denominated in currencies other that each relevant entity’s functional currency Interest expense (37) (31) (19%) A result of additional borrowings related to acquisitions Cash taxes 3 5 (40%) The decrease in cash taxes is primarily driven by reduced U.S. Federal payments made in Q1 2021 compared to Q1 2020, as well as refunds associated with CPA Global in Q1 2021 that did not exist during Q1 2020. (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures. (2) At constant currency Three Months Ended March 31,
7 Selected Balance Sheet and Cash Flow Information ($ in millions) March 31, 2021 December 31, 2020 $ Change Commentary on Change Cash and cash equivalents $399 $258 $143 Increase a result of significant growth in cash flow from operations Total debt outstanding $3,540 $3,547 ($7) N/A Net debt(1) $3,141 $3,289 ($148) Lower due to increase in cash and cash equivalents March 31, 2021 March 31, 2020 Capital expenditures $33 $19 $14 Addition of DRG and CPA Global Cash flow from operations $174 $46 $128 Driven by increased revenues, EBITDA and improved working capital management Free cash flow(1) $141 $27 $114 Higher operating cash flow partially offset by increased capital expenditures Adjusted free cash flow(1) $163 $78 $85 Adds back cash paid for transition, transformation and integration expenses, restructuring and transaction related costs (1) See the Appendix for a reconciliation of GAAP to Non-GAAP measures.
8 $712 $720 $727 $786 $817 $823 $907 $909 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1'21 Annualized Contract Value (ACV)(1) ($ in millions) (1) Annualized Contract Value refers to the annualized value for a 12-month period following a given date of all subscription-based client license agreements, assuming that all license agreements that come up for renewal during that period are renewed at their current prices. Quarters include acquisitions as of the period acquired and excludes divestitures from all periods $820 $909 Q1 '20 Q1 '21 As Reported Adjusted to Include Acquisitions and Exclude Divestitures +11% Organic ACV Growth of 6% as of 1Q’21
9 Updated 2021 Outlook* ($ in millions) Current Outlook Previous Outlook Low High Low High Adjusted Revenue $1,790 $1,840 $1,780 $1,840 Adjusted EBITDA $790 $825 $785 $825 Adjusted EBITDA margin % No change No change 44% 45% Adjusted Free Cash Flow No change No change $450 $500 *See Appendix for reconciliation of GAAP to Non-GAAP measures. Note: We will provide our Adjusted earnings per share guidance after finalizing the financial statement changes as a result of the Accounting and Reporting Consideration for Warrants Issued by Special Purpose Acquisition Companies and file our Form 10-Q on May 10, 2021.
10 Efficiently Managing Cost Structure and Freeing up Resources Total Savings Permanent Savings Completed Through 2020 Timing 2019 cost savings program $75 million $75 million $73 million Completed $75 million run-rate COVID related $30 million At least $5 million $5 million Q1-Q4 2020 DRG synergies $30 million $30 million $20 million $30 million run-rate exiting 2021 CPA Global Savings $75 million $75 million $20 million $75 million run-rate exiting 2021 Total Cost Savings $210 million $185 million $118 million Approximately $185 million in permanent cost reductions
APPENDIX
12 Presentation of Certain Non-GAAP Financial Measures This presentation contains financial measures which have not been calculated in accordance with GAAP, including Adjusted Revenues and Adjusted EBITDA, because they are a basis upon which our management assesses our performance and we believe they reflect the underlining trends and indicators of our business. Adjusted Revenues Adjusted Revenues excludes the impact of the deferred revenues purchase accounting adjustment (primarily recorded in connection with recent acquisitions). Our presentation of Adjusted Revenues is presented for informational purposes only and is not necessarily indicative of our future results. You should compensate for these limitations by relying primarily on our GAAP results and only using Adjusted Revenues for supplementary analysis. Adjusted EBITDA Adjusted EBITDA is calculated using Loss from Operations before provision for income taxes, depreciation and amortization and interest income and expense adjusted to exclude acquisition or disposal-related transaction costs (such costs include net income from continuing operations before provision for income taxes, depreciation and amortization and interest income), stock-based compensation, unrealized foreign currency gains/(losses), transition services agreement costs entered into with Thomson Reuters in 2016 ("Transition Services Agreement"), separation and integration costs, transformational and restructuring expenses, acquisition-related adjustments to deferred revenues, non-cash income/(loss) on equity and cost method investments, non-operating income or expense, the impact of certain non-cash and other items that are included in net income for the period that the Company does not consider indicative of its ongoing operating performance, and certain unusual items impacting results in a particular period. Certain of the adjustments included to arrive at Adjusted EBITDA are related to the Company’s transition to an independent company. In evaluating Adjusted EBITDA you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the included adjustments. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company’s future results will be unaffected by any of the adjusted items, or that the Company’s projections and estimates will be realized in their entirety or at all.
13 Presentation of Certain Non-GAAP Financial Measures The use of Adjusted EBITDA instead of GAAP measures has limitations as an analytical tool, and you should not consider Adjusted EBITDA in isolation, or as a substitute for analysis of the Company’s results of operations and operating cash flows as reported under GAAP. For example, Adjusted EBITDA does not reflect: – the Company’s cash expenditures or future requirements for capital expenditures – changes in, or cash requirements for, the Company’s working capital needs – interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debt – any cash income taxes that the Company may be required to pay – any cash requirements for replacements of assets that are depreciated or amortized over their estimated useful lives and may have to be replaced in the future – all non-cash income or expense items that are reflected in the Company’s statements of cash flows The Company’s definition of and method of calculating Adjusted EBITDA may vary from the definitions and methods used by other companies when calculating adjusted EBITDA, which may limit their usefulness as comparative measures. The Company prepared the information included in this presentation based upon available information and assumptions and estimates that it believes are reasonable. The Company cannot assure you that its estimates and assumptions will prove to be accurate. Because the Company incurred transaction, transition, integration, transformation, restructuring, and Transition Services Agreement costs in connection with the 2016 Transaction and the transition, borrowed money in order to finance its operations, and used capital and intangible assets in its business, and because the payment of income taxes is necessary if the Company generates taxable income after the utilization of its net operating loss carryforwards, any measure that excludes these items has material limitations. As a result of these limitations, these measures should not be considered as a measure of discretionary cash available to the Company to invest in the growth of its business or as a measure of its liquidity. Adjusted EBITDA Margin Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Adjusted Revenues.
14 Presentation of Certain Non-GAAP Financial Measures Free Cash Flow and Adjusted Free Cash Flow We use free cash flow and adjusted free cash flow in our operational and financial decision-making and believe free cash flow and adjusted free cash is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure the ability of companies to service their debt. 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 transition services agreement, transition, transformation and integration expenses, transaction related costs and debt issuance costs offset by cash received for hedge accounting transactions.
15 Quarterly Financial Summary 1. Adjusted Revenue adds back the deferred revenue purchase accounting adjustment. 2. See the Appendix for a reconciliation of GAAP to non-GAAP financial measures. ($ in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Revenues, net $234.0 $242.3 $243.0 $255.0 $240.6 $273.5 $284.4 $455.6 $428.4 Deferred revenue adjustment $0.2 $0.1 $0.1 $0.1 $1.9 $3.4 $2.1 $15.7 $3.0 Adjusted Revenue(1)(2) $234.2 $242.4 $243.1 $255.1 $242.5 $276.9 $286.5 $471.3 $431.5 Adj. Subscription Revenue(1)(2) $192.5 $202.7 $200.8 $209.5 $193.2 $216.5 $222.1 $235.9 $235.1 Adj. Transactional Revenue(1)(2) $41.7 $39.7 $42.3 $45.6 $49.2 $60.4 $64.4 $120.9 $84.2 Adj. Re-occurring Revenue(1)(2) --- --- --- --- --- --- --- $114.5 $112.2 Income (loss) from operations ($25.9) ($36.6) $35.8 ($16.4) ($28.3) $14.2 ($12.7) $29.5 ($34.2) Adjusted EBITDA(2) $59.2 $73.2 $77.0 $84.6 $78.2 $100.1 $108.2 $200.1 $164.8 Adjusted EBITDA margin %(2) 25% 30% 32% 33% 32% 36% 38% 42% 38%
16 Reconciliation of Non-GAAP Financial Measures Growth in organic revenue illustrates growth in businesses owned by the Company as of January 1, 2020, the beginning of the earliest period presented. The following tables present the amounts of our subscription and transactional revenues, including as a percentage of our total revenues, for the periods indicated, as well the drivers of the variances between periods. (1) Reflects the deferred revenues adjustment made as a result of purchase accounting. 1 1 Variance Increase/(Decrease) Percentage of Factors Increase/(Decrease) Three Months Ended March 31, Total Variance (Dollars) Total Variance (Percentage) Acquisitive Disposal FX Impact Organic (in millions, except percentages) 2021 2020 Subscription revenues $ 235.1 $ 193.2 $ 41.9 22 % 17% (4)% 3% 6% Re-occurring revenues 112.2 — 112.2 100% 100% — % —% —% Transactional revenues 84.2 49.2 34.9 71% 70% (12) % 3 % 10% Deferred revenues adjustment (3.0) (1.9) (1.1) (61)% NM — % — % 99% Revenues, net $ 428.4 $ 240.6 $ 187.8 78% 73% (6)% 3% 8% Deferred revenues adjustment 3.0 1.9 1.1 61% NM — % — % (99)% Adjusted revenues, net $ 431.5 $ 242.5 $ 189.0 78% 74% (6)% 3% 7%
17 Reconciliation of Non-GAAP Financial Measures Descriptions Adjusted EBITDA adjustments 1. In 2020, this is related to a new transition services agreement and offset by the reverse transition services agreement from the sale of MarkMonitor assets. 2. Includes costs incurred in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These costs include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as expenses related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016, mainly related to the integration of separate business units into one functional organization and enhancements in our technology. 3. Reflects the deferred revenues adjustment as a result of purchase accounting. 4. 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. 5. Reflects costs incurred in connection with the initiative, following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related costs following the acquisition of DRG and CPA Global in 2020. 6. 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. 1 2 3 4 6 5 Three Months Ended March 31, (in millions) 2021 2020 Loss from Operations $ (34.2) $ (28.3) Depreciation and amortization 131.7 51.4 Transition services agreement costs — 1.6 Transition, transformation and integration expense — 2.2 Deferred revenues adjustment 3.0 1.9 Transaction related costs (26.6) 26.7 Share-based compensation expense 10.7 17.5 Restructuring and impairment 64.7 7.8 Other 15.6 (2.5) Adjusted EBITDA $ 164.8 $ 78.2 Adjusted EBITDA Margin 38 % 32 %
18 Descriptions Free Cash Flow and Adjusted Free Cash Flow Adjustments 1. Includes cash payments in connection with and after our separation from Thomson Reuters in 2016 relating to the implementation of our standalone company infrastructure and related cost-savings initiatives. These cash payments include mainly transition consulting, technology infrastructure, personnel and severance expenses relating to our standalone company infrastructure, which are recorded in Transition, integration, and other related expenses line-item of our income statement, as well as cash payments related to the restructuring and transformation of our business following our separation from Thomson Reuters in 2016 mainly related to the integration of separate business units into one functional organization and enhancements in our technology. This also includes cash payments following our merger with Churchill Capital Corp in 2019, to streamline our operations by simplifying our organization and focusing on two product groups. This also includes restructuring related payments following the acquisition of DRG and CPA Global in 2020. 2. 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. 1 2 Three Months Ended March 31, (in millions) 2021 2020 Net cash provided by operating activities $ 174.0 $ 46.1 Capital expenditures (33.0) (19.4) Free cash flow 141.0 26.7 Cash paid for transition, transformation and integration expense 17.0 20.6 Cash paid for transaction related costs 5.2 24.1 Cash paid for debt issuance costs — 7.7 Cash received for hedge accounting transactions — (1.2) Adjusted free cash flow $ 163.2 $ 77.9 March 31, 2021 December 31, 2020(in millions) Total debt outstanding $ 3,540.3 $ 3,547.4 Cash and cash equivalents 399.0 257.7 Total net debt outstanding $ 3,141.3 $ 3,289.7 Reconciliation of Non-GAAP Financial Measures Debt to Net debt Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow
19 Revenues, Net to Adjusted Revenues Year Ending December 31, 2021 (Forecasted) Low High ($ in millions) Income from operations $178.2 $213.2 Depreciation and amortization 545.8 545.8 Transition, TSA and integration expenses 40.3 40.3 Share-based compensation expense 26.0 26.0 Other (0.3) (0.3) Adjusted EBITDA $790.0 $825.0 Adjusted EBITDA Year Ending December 31, 2021 (Forecasted) ($ in millions) Low High Revenues, net $1,790.0 $1,840.0 Adjusted EBITDA $790.0 $825.0 Adjusted EBITDA Margin 44% 45% Adjusted EBITDA Margin Descriptions 1. Reflects the deferred revenues adjustment made as a result of purchase accounting. 2. Includes restructuring costs, other cost optimization activities, and payments and receipts under transition service agreements. 2 Year Ending December 31, 2021 (Forecasted) (in millions) Low High Revenues, net $ 1,786.4 $ 1,836.4 Deferred revenues adjustment 3,6 3.6 Adjusted revenues, net $ 1,790.0 $ 1,840.0 Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted Revenues for the Outlook for 2021 and reconciles this measure to Revenues for the same period: 1 The following table presents our calculation of Adjusted EBITDA for the Outlook for 2021 and reconciles this measure to our Loss from operations for the same period:
20 Year Ending December 31, 2021 (Forecasted) Low High (in millions) Net cash provided by operating activities $ 559.7 $ 609.7 Capital expenditures (151.7) (151.7) Free Cash Flow 408.0 458.0 Transition, transformation and integration expense 42.0 42.0 Adjusted Free Cash Flow $ 450.0 $ 500.0 Descriptions Adjusted Free Cash Flow Adjustments 1. Includes cash payments related to restructuring and other cost optimization activities. Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow 1 Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Free Cash Flow and Adjusted Free Cash Flow for the Outlook for 2021 and reconciles this measure to our Net cash provided by operating activities for the same period: