David Calhoun CEO, Nielsen
Transcript of David Calhoun CEO, Nielsen
David Calhoun
CEO, Nielsen
Wells Fargo Securities
TMT Conference
November 7, 2012
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 2
Forward Looking Statements
The following discussion may contain forward-looking statements, including those about Nielsen’s
outlook and prospects, in the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are those which are not historical facts. These and other statements that
relate to future results and events are based on Nielsen’s current expectations as of October 22, 2012.
Our actual results in future periods may differ materially from those currently expected because of a
number of risks and uncertainties. The risks and uncertainties that we believe are material are outlined
in our disclosure filings and materials, which you can find on http://ir.nielsen.com. Please consult these
documents for a more complete understanding of these risks and uncertainties. We disclaim any
intention or obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required by law.
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 3
Nielsen: Who we are
To provide clients with the most complete understanding of their consumers and markets worldwide
Open Simple Integrated Our values
Quality Integrity Neutrality Our brand
Our mission
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 4
Nielsen fundamentals
Comprehensive understanding of what consumers buy and watch
“Mission critical” measurement and analytics embedded in client workflows
Favorable market trends provide organic growth opportunities
Proven track record of growth and economic resilience
Accelerated earnings growth through deleveraging
Global leader in our segments with market presence in ~100 countries
Syndicated, scalable products and services
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Nielsen enables growth of consumer industries
What Consumers Buy What Consumers Watch
Retail sales measurement
of consumer goods in stores
Measurement of TV viewing,
online and mobile phone activity
Nielsen helps…
Consumer packaged goods
manufacturers and retailers
Media companies, content
distributors, online publishers,
technology players
Client examples
> Multi-year contract
> 70+ year relationship
> 80 markets worldwide
> 50+ year relationship
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Resilient financial performance
Revenue Adjusted EBITDA
Note: Revenue and EBITDA growth rates derived on a constant currency basis; figures are as reported
2008 2009 2010 2011 2008 2009 2010 2011
6.1% 4.0% 6.1%
Constant currency growth
25.1% 27.3% 27.5%
Adjusted EBITDA Margin
27.9% 5.6%
$4,806 $5,126
$1,205
$1,411 $1,312
($ millions) ($ millions) CAGR = 5.2% CAGR = 8.7%
$4,808
$5,532 $1,546
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 7
Global footprint
Past: West East
Future: West East
Client Trends
We continue to increase coverage to fulfill client needs
and support their growth and expansion
Nielsen presence
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 8
Trends shaping What Consumers Buy
> Shift in focus to developing markets
(a) The Emerging Middle Class in Developing Countries, Organization for Economic Cooperation and Development 2010.
Projected increase in global middle class
population and spending(a)
Growth of middle class Demographic shifts
> Major changes in global population
1.9B 3.3B
5B
$22B
$35B
$55B
2009 2020E 2030E
Spending
by middle
class
Population
of middle
class
Clients need to understand new consumers in developing markets,
who represent the greatest future growth opportunity
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 9
Consumers more connected More choices and platforms
1950s
RISE OF CABLE TV
MORE ADVERTISER-SUPPORTED NETWORKS
FIRST SATELLITE BROADCAST
DIGITAL AND INTERNET REVOLUTION
DVR PENETRATION
BLACK & WHITE TELEVISION
1960s
1970s
1980s
1990s
2000-2005
2006-2011
OVER-THE-TOP DISTRIBUTION
(a) Nielsen Cross-Platform Report: Based on Total US Population, Persons 2+ for TV and Online, (Home and Work) 13+ for Mobile, 1st Qtr 2012
Video penetration by platform, Q1 2012(a)
(Percent of US population)
Monthly time spent among video users (hh:mm)
5:24 5:01 155:46
12%
55%
95%
Trends shaping What Consumers Watch
Cross-platform measurement facilitates broader reach of consumers
and better marketing ROI
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 10
Leadership position
Retail sales measurement
TV audience measurement
Digital (online, mobile, social)
Analytical insights
Advertising effectiveness
Nielsen enables trade between advertisers and media platforms, and
provides insights to enhance the transaction value for both sides
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 11
How Advertiser/Buy clients use Nielsen
Product/category share
Competitive intelligence
Pricing & promotions
Packaging & assortment
Product placement/distribution
Executives
Setting performance
targets
Reporting results
Providing industry
context
Brand & Marketing management
Marketing mix models
Advertising effectiveness
& optimization
Customer segments
& insights
Product innovation
Tracking market share
gains &losses
Resourcing growth
Identifying new
opportunities
Sales management
Client
Business
Processes
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 12
How Media/Watch clients use Nielsen
Client
Business
Processes
Guarantee ratings
Align customer segments
with audiences
Identify audience behaviors
Support ad sales &
performance
Executives
Setting performance targets
Reporting business results
Agencies & Advertisers
Plan media budgets
Place advertising
effectively
Value media reach within &
across platforms
Competitor comparisons
Competitive performance
& strategic direction
Media Sales & Marketing
Content developers
Programming
decisions &
investments
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 13
Reaction
What audience did I reach?
Cost efficiently deliver ad impressions
to desired consumers
How effective was my advertising?
Develop creative that breaks through the clutter and communicates its message
How did it change behavior?
Drive incremental volume & Marketing ROI
Resonance
Reach
Advertising buyers and sellers must know
Audience and Impact
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Reach: Audience Measurement Standard
Measuring audience for live, time-
shifted and on-demand advertising-
supported content
TV
Ratings across Digital + TV campaigns,
by demographic
Online
TV Ratings Cross-Platform Campaign Ratings
Measuring audience for video and
display advertising campaigns
Online Campaign Ratings
Measurement = Monetization
Mobile
• Demos (Age + Gender)
• Ad verification
• Demos (Age + Gender)
• Ad verification & viewability
• Unduplicated reach by Age + Gender
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Reaction: Media Client Example
Nielsen Buyer Insights
Highlights purchasing power of an audience
for improved ROI
TV & Online
Viewing
Segment
Consumer
Purchase
Data
Buyer
Ratings + =
Resonance: Advertiser Client Example
Advertising effectiveness
Optimizes efficiency of marketing spend
for TV, Online, Social
Ad
Performance
Ad recall Likeability
Brand
recall
Brand
linkage + =
Resonance and Reaction = Buy + Watch
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 16
Nielsen’s objectives
Deploy cross-platform solutions globally to reach and measure
audiences across screens and platforms
Enable more precise advertising placement and campaigns that
effectively synchronize paid and earned media
Invest in expansion of coverage to measure and understand
emerging consumers across the developing world
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Appendix
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Certain non-GAAP measures
Overview of Non-GAAP Presentations
We consistently use the below non-GAAP financial measures to evaluate the results of our operations. We believe that the presentation of these non-GAAP measures provides useful information to investors regarding financial and business trends related to our results of operations and that when this non-GAAP financial information is viewed with our GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. None of the non-GAAP measures presented should be considered as an alternative to net income or loss, operating income or loss, cash flows from operating activities or any other performance measures of operating performance or liquidity derived in accordance with GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP.
Constant Currency Presentation
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period exchange rates and comparing these adjusted amounts to our current period reported results.
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Adjusted net income reconciliation: Q3
(a) (b) See footnotes on next page
Quarter ended September 30 (Unaudited)
2012 2011
Net income/(loss) $ 106 $ 103
Interest expense, net 105 112
Provision for income taxes 69 44
Depreciation and amortization 130 125
EBITDA 410 384
Equity in net income of affiliates 1 2
Other non-operating (income)/expense, net -- 4
Restructuring charges 3 9
Stock-based compensation expense 10 8
Other items (a) -- 1
Adjusted EBITDA 424 408
Interest expense, net (105) (112)
Depreciation and amortization (130) (125)
Depreciation and amortization of acquisition-related tangible and intangible assets 41 41
Cash paid for income taxes (26) (29)
Stock-based compensation expense (10) (8)
Interest expense attributable to mandatory convertible bonds 6 6
Adjusted net income $ 200 $ 181
Adjusted net income per share of common stock, diluted (b) $0.53 $0.48
($ in millions except per share amounts)
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(a) Other items primarily consist of costs related to our initial public offering in 2011 and other
transaction-related fees.
(b) Adjusted Net Income per share of common stock presented on a diluted basis includes potential
common shares associated with stock-based compensation plans that may have been
considered anti-dilutive in accordance with GAAP. The amount also includes the weighted-
average amount of shares of common stock convertible associated with the mandatory
convertible bonds based upon the average price of our common stock during the period.
Adjusted net income reconciliation: Q3
cont’d
Weighted-average shares of common stock outstanding as of quarter ended
June 30, 2012, basic 362,016,373
Dilutive shares of common stock from stock compensation plans 4,205,147
Shares of common stock convertible associated with the mandatory
convertible bonds 10,416,700
Weighted-average shares of common stock outstanding, diluted 376,638,220
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 22
Adjusted net income reconciliation: YTD
Nine months ended September 30 (Unaudited)
2012 2011
Net income/(loss) $ 234 $ (9)
Loss from discontinued operations, net -- 1
Interest expense, net 316 363
Provision / (Benefit) for income taxes 114 (51)
Depreciation and amortization 388 396
EBITDA 1,052 700
Equity in net income of affiliates (1) 1
Other non-operating expense, net 9 229
Restructuring charges 56 55
Stock-based compensation expense 24 18
Other items (a) 5 111
Adjusted EBITDA 1,145 1,114
Interest expense, net (316) (363)
Depreciation and amortization (388) (396)
Depreciation and amortization of acquisition-related tangible and intangible assets 123 140
Cash paid for income taxes (88) (92)
Stock-based compensation expense (24) (18)
Interest expense attributable to mandatory convertible bonds 18 15
Adjusted net income $ 470 $ 400
Adjusted net income per share of common stock, diluted (b) $1.25 $1.10
($ in millions except per share amounts)
(a) (b) See footnotes on next page
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 23
(a) Non-operating expense for nine months ended September 30 reflects debt extinguishment/pre-
payment charges of $6 million in 2012 and $231 million in 2011.
(a) Other items primarily consist of Sponsor Advisory Fees (including termination payments of $102
million for the nine months ended September 30, 2011), costs related to public offering and other
transaction-related fees.
(b) Adjusted Net Income per share of common stock presented on a diluted basis includes potential
common shares associated with stock-based compensation plans that may have been
considered anti-dilutive in accordance with GAAP. The amount also includes the weighted-
average amount of shares of common stock convertible associated with the mandatory
convertible bonds based upon the average price of our common stock during the period.
Adjusted net income reconciliation: YTD
cont’d
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 24
Selected cash flow & balance sheet items
Cash Flow –
3Q 12
Free Cash Flow $258
Capex $73
Cash Taxes $26
Restructuring $16
Balance Sheet –
9/30/12
Gross Debt (a) $6,392
Cash $325
Net Debt (a) $6,067
Net Debt Ratio (b) 3.8xx
(a) Does not include $288 million of mandatory convertible subordinated bonds; weighted avg. interest rate calculated based on amount outstanding at end of quarter
(b) Reflects Net Debt divided by Adjusted EBITDA calculated on last twelve months basis. See Appendix for detail
Capital Table
6/30/12 9/30/12 Change
Loan Debt (secured) $ 4,835 $4,668 ($167)
11.625% Sr. Notes 206 208 2
11.5% Sr. Notes 308 309 1
7.75% Sr. Notes 1,084 1,084 --
Capital lease/misc. debt 122 123 1
Total Debt (a) $ 6,555 $6,392 (163)
Less Cash 283 325 42
Net Debt $ 6,272 $6,067 (205)
Net Debt Ratio (b) 4.0x 3.8x (0.2)
Weighted avg. interest rate (a) 5.61% 5.66% 5 bps
($ in millions)
Copyright © 2012 Nielsen Holdings N.V. NLSN Wells Fargo TMT Conference November 2012 25
Free cash flow reconciliation
Quarter Ended
September 30
Nine Months Ended
September 30
2012 2011 2012 2011
Net cash provided by
operating activities $331 $269 $444 $339
Capital expenditures (73) (71) (225) (213)
Free Cash Flow $258 $198 $219 $126
Sponsor termination fees --- --- --- 102
Normalized
Free Cash Flow $258 $198 $219 $228
($ in millions)