Nielsen Reports 1st Quarter 2016 Results and Increases Quarterly Dividend 11%
OREANDA-NEWS. Nielsen Holdings plc (NYSE:NLSN) today announced first quarter 2016 results and that its Board of Directors approved an increase in the company’s quarterly cash dividend of 11% to $0.31 per share.
Revenues were $1,487 million for the first quarter of 2016, up 2.0%, or 5.2% on a constant currency basis, compared to the first quarter of 2015, due to the solid performance of both its Buy and Watch businesses.
Adjusted Net Income for the first quarter of 2016 of $187 million was up 8.1%, or 9.4% on a constant currency basis, as compared to the first quarter of 2015. Adjusted Net Income per share on a diluted basis grew 10.9% to $0.51 for the first quarter of 2016 compared to $0.46 in the first quarter of 2015.
“Nielsen’s strong first quarter results were underpinned by our steady and resilient business model, which drove 5.2% constant currency revenue growth, continued margin expansion and strong earnings growth. Fueled by 10.0% growth in emerging markets and growing momentum with retailers globally, our Buy segment grew 4.3% on a constant currency basis. Our Watch segment grew 6.3% on a constant currency basis due to meaningful progress with our Total Audience Measurement framework and notable growth with our precision targeting and analytical solutions within Marketing Effectiveness. In addition, we are pleased to announce an 11% increase to our quarterly dividend as we continue to deliver on our ongoing commitment to create shareholder value through our balanced capital allocation approach,” said Mitch Barns, Chief Executive Officer at Nielsen.
Barns continued, “As we look to the year ahead, our business will be driven by three key factors. One, we are leading industry discussions on the adoption of a new currency metric fueled by our Total Audience Measurement framework. Two, the value of audience segmentation and precision marketing is increasing and our unique set of analytic capabilities, bolstered by our recent launch of the Nielsen Marketing Cloud, position us well to provide clients with metrics to help improve performance. And three, we continue to make progress on our plans for a platform-based system that aligns and connects our wide array of measurement and analytics data for our fast-moving consumer goods clients.”
Net income for the first quarter of 2016 increased 60.3% to $101 million, or 62.9% on a constant currency basis, compared to the first quarter of 2015 due to strong revenue growth, ongoing productivity initiatives and the operating leverage of the business. Net income for the first quarter of 2015 was negatively impacted by $26 million in net foreign currency exchange transaction losses, compared with similar losses of $1 million in the first quarter of 2016. Net income per share, on a diluted basis, was $0.27 for the first quarter of 2016 compared to $0.17 in the first quarter of 2015.
Adjusted EBITDA for the first quarter of 2016 increased 5.8% to $402 million, or 7.2% on a constant currency basis compared to the first quarter of 2015. As a percentage of revenues, Adjusted EBITDA grew 97 basis points to 27.0%, and grew 49 basis points on a constant currency basis, due to the benefit of our ongoing productivity initiatives and the operating leverage of the business. Buy Adjusted EBITDA margins increased 60 basis points or 43 basis points on a constant currency basis, to 14.4%. Watch Adjusted EBITDA margins grew 68 basis points or 38 basis points on a constant currency basis, to 42.8%.
Revenues within the Buy segment decreased 0.6% to $793 million due to the impact of foreign exchange, but increased 4.3% on a constant currency basis. Buy revenues in developed markets grew 2.0% on a constant currency basis due to modest strength in Europe and continued traction with retailer clients. Buy emerging markets revenues grew 10.0% on a constant currency basis as Nielsen’s unparalleled global footprint remains a core competitive advantage for both local and multinational clients.
Revenues within the Watch segment increased 5.2%, or 6.3% on a constant currency basis, to $694 million. Audience Measurement of Video and Text revenues increased 7.5% on a constant currency basis due to the continued client adoption of the company’s Total Audience Measurement framework, and continued investments. Audio revenues grew 0.8% on a constant currency basis, on par with expectations. Marketing Effectiveness had another strong quarter, growing revenues by 28.8% on a constant currency basis due to clients’ growing demand for our marketing ROI and precision targeting tools and investments. Other Watch revenues decreased 18.6% on a constant currency basis due to the sale of the National Research Group, Inc. which was completed in the fourth quarter of 2015. Excluding Other Watch, our Watch segment grew 8.0% on a constant currency basis.
Financial Position
As of March 31, 2016, Nielsen’s cash balances were $432 million and gross debt was $7,660 million. Net debt (gross debt less cash and cash equivalents) was $7,228 million and our net debt leverage ratio was 3.84x at the end of the quarter. Net capital expenditures were $109 million for the first quarter of 2016 as compared to $102 million in the first quarter of 2015.
Cash flow from operations decreased to $87 million for the first quarter of 2016 from $101 million in the first quarter of 2015 due to a $36 million contribution to the Nielsen Foundation. Free cash flow for the first quarter 2016 increased to $14 million from a use of $1 million in the first quarter of 2015.
In March 2016, Nielsen entered into an amendment to its credit agreement which provides for additional Class A Term Loans in an aggregate principal amount of $500 million, maturing in full in April 2019.
Capital Allocation
The Board of Directors approved an increase in the company’s quarterly cash dividend of 11% to $0.31 per common share, commencing with the payment on June 16, 2016 to shareholders of record on June 2, 2016.
The company repurchased $83 million of shares of its common stock during the first quarter of 2016. The company has a total of $772 million remaining for repurchase under the existing share repurchase program, which it anticipates largely utilizing by the end of 2017.
About Nielsen
Nielsen Holdings plc (NYSE:NLSN) is a global performance management company that provides a comprehensive understanding of what consumers watch and buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90 percent of the world’s population.
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