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Cision Reports Third Quarter 2018 Financial Results; Provides Updated Full Year 2018 Outlook

2018-11-22 17:29

CHICAGO, Nov. 8, 2018 /PRNewswire/ -- Cision Ltd. (NYSE: CISN), a leading global provider of software and services to public relations and marketing communications professionals, today reported financial results for the quarter ended September 30, 2018.

All data presented below is compared to the third quarter of 2017, unless otherwise noted.

Third Quarter 2018 Financial Highlights

  • Revenue increased 11.0% to $177.2 million
  • Revenue, excluding the impact from purchase accounting, increased 10.7% to $177.5 million
  • Operating income increased 2.4% to $14.2 million
  • Net loss decreased 87.0% to $6.0 million
  • Adjusted EBITDA increased 9.9% to $62.7 million
  • Adjusted net income increased 47.0% to $26.6 million
  • Adjusted net income per share increased 33.3% to $0.20

"We are pleased to have delivered another solid quarter of financial results," said Kevin Akeroyd, Cision's Chief Executive Officer. "We continue to focus our efforts on delivering best-in-class products and services to our customers, executing our strategic and operational plans, and driving toward our long-term financial goals. This focus resulted in third quarter pro forma organic revenue growth of 2.1% after adjusting for non-core revenues and the impact of currency, an approximate 160 basis-point increase from the prior year's third fiscal quarter."

Third Quarter Business Statistics and Operational Highlights

  • Americas revenues increased 8.8% to $122.6 million
  • EMEA revenues increased 15.6% to $46.6 million
  • APAC revenues increased 19.8% to $8.1 million
  • Non-core revenues declined 41.2% to $1.0 million
  • Average pro forma subscription customers increased 2.8% to approximately 41,700 
  • Average annualized pro forma revenue per subscription customer, excluding the impact of currency, increased 1.2% to approximately $11,200
  • Customers that purchased services from us on a transaction basis decreased 6.6% to approximately 38,200
  • Average pro forma revenue per customer per quarter that purchased services from us on a transaction basis, excluding the impact of currency, increased 5.4% to approximately $1,400
  • Cross-sell bookings of software, distribution and insights in the United States increased 130.3% to $2.2 million
  • Cision Communication Cloud ® platform customers at September 30, 2018 were approximately 9,400

Long-Term Debt

As of September 30, 2018, we had approximately $974.7 million of outstanding dollar-denominated term loans and approximately €247.5 million of outstanding Euro-denominated term loans. In addition to the $3.3 million in quarterly amortization payments during the third quarter, we further reduced our outstanding dollar-denominated term loan by $10.0 million through a voluntary prepayment pursuant to the terms of our 2017 First Lien Credit Facility.

On October 22, 2018, we  completed a repricing of our First Lien Credit Facility. The repricing reduced the interest rate on revolving borrowings and USD borrowings from LIBOR plus 3.25% to LIBOR plus 2.75%, and reduced the interest rate on EUR borrowings from EURIBOR plus 3.50% to EURIBOR plus 3.00%. We estimate that the 50 basis point reduction on USD and EUR borrowings will reduce our annual cash interest costs by approximately $6.3 million. "We are pleased to have concluded this repricing transaction on such beneficial terms," said Jack Pearlstein, Cision's Chief Financial Officer. "The repricing will provide us with incremental annual cash interest savings and represents another step in our ongoing effort to reduce interest expense, drive increased cash flow and, by extension, drive incremental value for our shareholders."

Subscription and Transaction Customer Trends

Our average pro forma subscription customers, average annualized pro forma revenue per subscription customer, pro forma number of customers that purchased services from us on a transaction basis, and average pro forma revenue per customer that purchased services from us on a transaction basis appear below for the most recent five fiscal quarters. All of the figures below have been adjusted to exclude the impact of currency.

 

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q3 2018
compared to 
Q3 2017

             

Average pro forma subscription customers

40,532

40,628

40,252

41,249

41,661

2.8%

             

Average annualized pro forma revenue per subscription customer

$11,101

$11,227

$11,153

$11,186

$11,237

1.2%

             

Pro forma transaction customers

40,829

41,670

40,216

41,172

38,152

(6.6%)

             

Average pro forma revenue per transaction customer

$1,286

$1,405

$1,382

$1,454

$1,356

5.4%

Updated Full Year 2018 Outlook

Our updated outlook for the full year ending December 31, 2018 appears below (all figures in millions, except per share amounts). These estimates are based on a number of assumptions that management believes to be reasonable and reflect the Company's expectations as of the date of this release. Actual results may differ materially from these estimates as a result of various factors, and the Company refers you to the cautionary language regarding "Forward Looking Statements" included in this press release when considering this information.

 

Previous

 

Updated 

Revenue

$722 - $730

 

$724 - $728

Revenue, excluding the impact from purchase accounting

$724 - $732

 

$725 - $729

Net income

($6) - $6

 

($12.0) - ($8.0)

Adjusted EBITDA

$249 - $253

 

$250 - $253

Adjusted net income

$106 - $109

 

$106 - $109

Adjusted net income per diluted share

$0.83 - $0.85

 

$0.83 - $0.85

Pro-forma fully diluted weighted average shares outstanding

128.3

 

128.8

Additionally, for the full year ending December 31, 2018, we expect (all figures in millions):

 

Previous

 

Updated 

Depreciation expense

$30 - $32

 

$30 - $32

Amortization expense

$105 - $107

 

$104 - $106

Amortization expense included in cost of revenue

$23 - $24

 

$23 - $24

Interest expense

$78 - $80

 

$77 - $79

Debt extinguishment costs

$4 - $5

 

$4 - $5

Interest expense, net of debt extinguishment costs

$74 - $76

 

$73 - $75

Cash interest expense

$64 - $66

 

$64 - $66

Stock-based compensation

$4 - $5

 

$4 - $5

Capital expenditures, inclusive of capitalized software development

$34 - $36

 

$33 - $35

The updated outlook above assumes three-month LIBOR of approximately 2.5% and three-month EURIBOR of approximately 0.0%. The above outlook also incorporates a change from the prior quarter with respect to our exchange rate assumptions for the fourth quarter of 2018. This change in our exchange rate assumption for the British Pound, the Euro and the Canadian Dollar reduced our revenue outlook for the fourth quarter of 2018 by approximately $1.0 million, reduced our Adjusted EBITDA outlook for the fourth quarter of 2018 by approximately $0.4 million, and reduced our Adjusted net income per diluted share outlook for the fourth quarter of 2018 by $0.01. On September 13, 2018, we issued 2,000,000 earn-out shares to Canyon Holdings (Cayman), L.P. ("Cision Owner") as consideration for our merger with Capitol Acquisition Corp. III. This issuance increased our weighted average shares outstanding during the third quarter of 2018 by approximately 390,000 shares and will increase our weighted average shares outstanding for the fourth quarter of 2018 by 2,000,000 shares. This share issuance does not reduce our Adjusted net income per diluted share for the third quarter of 2018 and reduces our Adjusted net income per diluted share outlook for the full year 2018 by approximately $0.01. Excluding the impact of the change in our exchange rate assumptions and our issuance of 2,000,000 earn-out shares to Cision Owner, our updated revenue outlook, including the impact from purchase accounting would have been $726 million to $730 million, our updated Adjusted EBITDA outlook would have been $251 millionto $253 million, and our updated Adjusted net income per diluted share outlook would have been $0.84 to $0.86. Our previous and updated assumptions for the British Pound, the Euro and the Canadian Dollar appear below:

 

Previous

 

Updated 

GBP to USD

1.30

 

1.28

EUR to USD

1.16

 

1.14

CAD to USD

0.77

 

0.76

We plan to adopt Accounting Standards Codification Topic 606 ("ASC 606") on a modified retrospective basis, effective December 31, 2018. We are in the process of determining the potential impact of adopting this new standard, which could have a significant impact on our fourth quarter and full year 2018 financial results. Additionally, our outlook for 2018 excludes the impact of any future acquisitions, divestitures, voluntary prepayments of our 2017 First Lien Credit Facility, future refinancings or repricings of our 2017 First Lien Credit Facility, the adoption of ASC 606 or other unanticipated events. See discussion of non-GAAP financial measures below in this release.

Third Quarter 2018 Conference Call Details

As previously announced, we will hold a conference call to review our third quarter 2018 financial results on Wednesday, November 7th at 5:00 pm EST. To hear the live event, visit the Cision investor website at http://investors.cision.com, or dial 1-877-443-4809 (participant dial in toll free) or 1-412-317-5235 (participant dial in International). The conference call will be simultaneously webcast on the Investor Relations section of our website: http://investors.cision.com

Forward-Looking Statements

This communication contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "anticipate," "intend," "plan," "goal," "seek," "aim," "strive," "believe," "see," "project," "predict," "estimate," "expect," "continue," "strategy," "future," "likely," "may," "might," "should," "will," "would," "target," similar expressions, and variations or negatives of these words. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our 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 subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Accordingly, you should not place undue reliance on these statements, as actual results may vary materially. A detailed discussion of some of the risks and uncertainties that could cause our actual results and financial condition to differ materially from the forward-looking statements is described under the caption "Risk Factors" in our most recent annual report on Form 10-K filed on March 13, 2018, along with our other filings with the U.S. Securities and Exchange Commission. Any forward-looking statement made by us in this communication is based only on information currently available to us and speaks only as of the date of this 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 at www.sec.gov or www.cision.com.

About Cision
Cision Ltd. (NYSE: CISN) is a leading global provider of earned media software and services to public relations and marketing communications professionals. Cision's software allows users to identify key influencers, craft and distribute strategic content, and measure meaningful impact. Cision has over 4,000 employees with offices in 19 countries throughout the Americas, EMEA, and APAC. For more information about its award-winning products and services, including the Cision Communications Cloud®, visit www.cision.com and follow Cision on Twitter @Cision.

Cision Ltd. and its Subsidiaries

Condensed Consolidated Balance Sheets

As of September 30, 2018 and December 31, 2017

 (in thousands, except per share and share amounts)

(Unaudited)

 
                 
           

2018

 

2017

Assets

           

Current assets:

       
 

Cash and cash equivalents

$            84,192

 

$         148,654

 

Accounts receivable, net

113,821

 

113,008

 

Prepaid expenses and other current assets

21,426

 

19,896

         

Total current assets

219,439

 

281,558

Property and equipment, net

54,032

 

53,578

Other intangible assets, net

406,515

 

456,291

Goodwill

   

1,179,597

 

1,136,403

Other assets

 

6,429

 

7,528

         

Total assets

$       1,866,012

 

$      1,935,358

Liabilities and Stockholders' Equity

     

Current liabilities:

     
 

Current portion of long-term debt

$            13,251

 

$           13,349

 

Accounts payable

12,560

 

13,327

 

Accrued compensation and benefits

25,718

 

25,873

 

Other accrued expenses

75,128

 

73,483

 

Current portion of deferred revenue

140,493

 

140,351

         

Total current liabilities

267,150

 

266,383

Long-term debt, net of current portion

1,206,313

 

1,266,121

Deferred revenue, net of current portion

1,258

 

1,412

Deferred tax liability

65,068

 

62,617

Other liabilities

20,778

 

22,456

         

Total liabilities

1,560,567

 

1,618,989

Stockholders' equity:

     
 

Preferred stock, $0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding at September 30, 2018 and December 31, 2017

 

-

 

 

-

 

Common stock, $0.0001 par value, 480,000,000 shares authorized; 132,713,555 and 122,634,922 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively

 

13

 

 

12

 

Additional paid-in capital

795,668

 

771,813

 

Accumulated other comprehensive loss

(55,907)

 

(35,111)

 

Accumulated deficit

(434,329)

 

(420,345)

         

Total stockholders' equity

305,445

 

316,369

         

 Total liabilities and stockholders' equity

$       1,866,012

 

$      1,935,358

 

Cision Ltd. and its Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

 (in thousands, except per share and share amounts)

(Unaudited)

 
     

Three months ended September 30, 

 

Nine months ended September 30, 

     

2018

 

2017

 

2018

 

2017

Revenue

$         177,236

 

$                   159,729

 

$         544,004

 

$      462,678

Cost of revenue

69,177

 

53,287

 

200,212

 

147,571

   

Gross profit

108,059

 

106,442

 

343,792

 

315,107

                   

Operating costs and expenses:

             
 

Sales and marketing

27,367

 

27,931

 

85,345

 

83,231

 

Research and development

7,292

 

5,661

 

22,282

 

16,679

 

General and administrative

39,002

 

36,127

 

126,762

 

117,819

 

Amortization of intangible assets

20,167

 

22,829

 

60,681

 

66,306

   

Total operating costs and expenses

93,828

 

92,548

 

295,070

 

284,035

   

Operating income

14,231

 

13,894

 

48,722

 

31,072

                   

Non operating income (expense):

             
 

Foreign exchange gains (losses)

2,196

 

802

 

10,277

 

(1,832)

 

Interest and other income, net

380

 

177

 

472

 

2,450

 

Interest expense

(19,785)

 

(23,063)

 

(59,947)

 

(96,306)

 

Loss on extinguishment of debt

-

 

(51,872)

 

(2,432)

 

(51,872)

   

Total non operating loss

(17,209)

 

(73,956)

 

(51,630)

 

(147,560)

   

Loss before income taxes

(2,978)

 

(60,062)

 

(2,908)

 

(116,488)

Provision for (benefit from) income taxes

3,070

 

(13,653)

 

10,016

 

(27,938)

   

Net loss

(6,048)

 

(46,409)

 

(12,924)

 

(88,550)

Other comprehensive income (loss) - foreign currency translation adjustments

 

(2,479)

 

 

13,371

 

 

(20,796)

 

 

35,965

   

Comprehensive loss

$          (8,527)

 

$                  (33,038)

 

$        (33,720)

 

$     (52,585)

                   

Net loss per share:

             
 

Basic and Diluted

$            (0.05)

 

$                      (0.38)

 

$            (0.10)

 

$         (1.47)

Weighted average shares outstanding used in computing per share amounts:

             
         
 

Basic and Diluted

131,104,859

 

120,584,316

 

127,507,314

 

60,120,689

 

Cision Ltd. and its Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2018 and September 30, 2017

(in thousands)

(Unaudited)

 
       
       

2018

 

2017

Cash flows from operating activities

     

Net loss

$  (12,924)

 

$     (88,550)

Adjustments to reconcile net loss to net cash provided by operating activities:

     
 

Depreciation and amortization

100,186

 

103,392

 

Non-cash interest charges and amortization of debt discount and deferred financing costs

10,158

 

62,824

 

Equity-based compensation expense

3,713

 

2,944

 

Provision for doubtful accounts

3,972

 

2,247

 

Deferred income taxes

3,437

 

(29,970)

 

Unrealized currency translation losses (gains)

(10,338)

 

1,551

 

Gain on sale of business

-

 

(1,785)

 

Other

86

 

(171)

 

Changes in operating assets and liabilities, net of effects of acquisitions and disposal:

   

-

   

Accounts receivable

967

 

7,018

   

Prepaid expenses and other current assets 

(1,133)

 

1,072

   

Other assets 

(726)

 

113

   

Accounts payable

(1,721)

 

(2,110)

   

Accrued compensation and benefits

(321)

 

(10,207)

   

Other accrued expenses

(7,320)

 

(4,123)

   

Deferred revenue

1,767

 

(3,593)

   

Other liabilities

(14)

 

(2,310)

     

Net cash provided by operating activities

89,789

 

38,342

             

Cash flows from investing activities

     

Purchases of property and equipment

(10,325)

 

(7,746)

Software development costs

(12,026)

 

(11,365)

Acquisitions of businesses, net of cash received of $2,711 and $12,355

(66,463)

 

(54,992)

Proceeds from disposal of business

-

 

23,675

Change in restricted cash

5

 

607

     

Net cash used in investing activities

(88,809)

 

(49,821)

             

Cash flows from financing activities

     

Proceeds from revolving credit facility

-

 

5,000

Repayment of revolving credit facility

-

 

(38,475)

Payment of amounts due to Cision Owner

-

 

(1,940)

Proceeds from term credit facility, net of debt discount of $10,091

-

 

1,275,634

Repayments of term credit facility

(59,989)

 

(1,494,501)

Payments on capital lease obligations

-

 

(171)

Payments of deferred financing costs

(294)

 

-

Proceeds from merger and recapitalization

-

 

305,210

Payment of contingent consideration

(2,873)

 

-

     

Net cash provided by (used in) financing activities

(63,156)

 

50,757

Effect of exchange rate changes on cash and cash equivalents

(2,286)

 

2,319

     

Increase (decrease) in cash and cash equivalents

(64,462)

 

41,597

             

Cash and cash equivalents

     

Beginning of period

148,654

 

35,135

End of the period

$   84,192

 

$       76,732

             

Supplemental non-cash information

   

-

Issuance of securities by Cision Owner in Connection with acquisitions

$             -

 

$         7,000

Non-cash contribution from Cision Owner in connection with merger

-

 

451,139

Issuance of shares for acquisition

20,143

 

-

Use of Non-GAAP Financial Measures

Non-GAAP results are presented only as a supplement to our financial statements based on U.S. generally accepted accounting principles (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, and non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures, such as Adjusted EBITDA and Adjusted net income per share, are provided within the schedules attached to this release. We use non-GAAP measures in our operational and financial decision-making, believing that it is useful to exclude certain items in order 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. As a result, internal management reports used during monthly operating reviews include Adjusted EBITDA, Adjusted net income per diluted share and organic revenue growth. We define organic revenue growth as the change in our total revenue excluding non-core revenues, calculated on a constant currency basis after giving pro forma effect to all acquisitions as though they occurred at the beginning of the applicable period. Additionally, we believe that the presentation of non-GAAP measures provides information that is useful to investors, research analysts, investment banks and lenders under our 2017 First Lien Credit Facility as it indicates, for example, our ability to meet capital expenditures and working capital requirements and otherwise meet our obligations as they become due. Investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures. This communication also includes certain forward-looking non-GAAP financial measures. We are unable to present without unreasonable efforts a reconciliation of forward-looking non-GAAP financial information to the corresponding GAAP financial information because management cannot reliably predict all of the necessary information. Forward-looking non-GAAP financial information is based on numerous assumptions, including assumptions with respect to general business, economic, market, regulatory and financial conditions and various other factors, all of which are difficult to predict and many of which are beyond our control. Accordingly, investors are cautioned not to place undue reliance on this information.

Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to Cision, 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 an analytical tool. Non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies. They are not presentations made in accordance with GAAP, 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 performance measures in isolation from, or as a substitute analysis for, results of operations as determined in accordance with GAAP.

Cision Ltd. and its Subsidiaries

Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

(in millions)

(Unaudited)

 
 

Three Months Ended September 30, 2018

 

Three Months Ended September 30, 2017

 

 Change

 

Nine Months 
Ended September 30, 2018

 

Nine Months 
Ended September 30, 2017

 

 Change

Net loss

$             (6.0)

 

$           (46.4)

 

$            40.4

 

$           (12.9)

 

$           (88.6)

 

$            75.6

Depreciation and amortization

33.3

 

36.1

 

(2.8)

 

100.2

 

103.4

 

(3.2)

Interest expense and loss on extinguishment of debt

19.8

 

74.9

 

(55.1)

 

62.4

 

148.2

 

(85.8)

Provision for (benefit from) income taxes

3.1

 

(13.7)

 

16.7

 

10.0

 

(27.9)

 

38.0

EBITDA (1)

50.1

 

51.0

 

(0.9)

 

159.6

 

135.1

 

24.5

Acquisition and offering related costs

12.8

 

5.2

 

7.6

 

32.6

 

25.5

 

7.1

Gain on sale of business

-

 

-

 

-

 

-

 

(1.8)

 

1.8

Stock-based compensation

1.5

 

1.0

 

0.5

 

3.7

 

2.9

 

0.8

Deferred revenue reduction from purchase accounting

0.3

 

0.6

 

(0.4)

 

1.5

 

0.8

 

0.7

Sponsor fees and expenses

-

 

-

 

-

 

-

 

0.3

 

(0.3)

Unrealized translation (gain) loss

(2.1)

 

(0.8)

 

(1.2)

 

(10.3)

 

1.6

 

(11.9)

Adjusted EBITDA (2)

$            62.7

 

$            57.0

 

$              5.7

 

$          187.1

 

$          164.4

 

$            22.8


 

Cision Ltd. and its Subsidiaries

Reconciliation of Net Loss to Adjusted Net Income and Adjusted Net Income per Diluted Share

(in millions, except for per share amounts)

(Unaudited)

 
 

Three Months Ended September 30, 2018

 

Three Months Ended September 30, 2017

 

 Change

 

Nine Months Ended September 30, 2018

 

Nine Months Ended September 30, 2017

 

 Change

Net loss

$             (6.0)

 

$           (46.4)

 

$            40.4

 

$           (12.9)

 

$           (88.6)

 

$            75.6

Provision for (benefit from) income taxes

3.1

 

(13.7)

 

16.7

 

10.0

 

(27.9)

 

38.0

Acquisition and offering related costs

12.8

 

5.2

 

7.6

 

32.6

 

25.5

 

7.1

Gain on sale of business

-

 

-

 

-

 

-

 

(1.8)

 

1.8

Stock-based compensation expense

1.5

 

1.0

 

0.5

 

3.7

 

2.9

 

0.8

Deferred revenue reduction from purchase accounting

0.3

 

0.6

 

(0.4)

 

1.5

 

0.8

 

0.7

Amortization related to acquired intangible assets

26.0

 

29.2

 

(3.1)

 

78.1

 

84.5

 

(6.4)

Non-recurring interest and loss on extinguishment of debt

0.4

 

51.9

 

(51.5)

 

4.3

 

55.9

 

(51.6)

Sponsor fees and expenses

-

 

-

 

-

 

-

 

0.3

 

(0.3)

Unrealized translation (gain) loss 

(2.1)

 

(0.8)

 

(1.2)

 

(10.3)

 

1.6

 

(11.9)

Adjusted Income before income taxes

36.0

 

27.0

 

9.0

 

106.9

 

53.2

 

53.8

Less: Income tax at a 26% rate for 2018, and a 33% rate for 2017

(9.4)

 

(8.9)

 

(0.4)

 

(27.8)

 

(17.5)

 

(10.3)

Adjusted net income (3)

$            26.6

 

$            18.1

 

$              8.5

 

$            79.1

 

$            35.6

 

$            43.5

Pro forma fully-diluted weighted average shares outstanding

131,105

 

120,584

 

10,521

 

127,507

 

95,335

 

32,172

Adjusted net income per diluted share (4)

$0.20

 

$0.15

 

$0.05

 

$0.62

 

$0.37

 

$0.24

 

Cision Ltd. and its Subsidiaries

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Net Cash Provided by Operating Activities

(in millions)

(Unaudited)

 
 

Three Months 
Ended 
September 30, 
2018

 

Three Months 
Ended 
September 30,
2017

 

Change

 

Nine Months 
Ended 
September 30,
2018

 

Nine Months 
Ended 
September 30, 
2017

 

Change

Net cash provided by operating activities

$                  26.2

 

$                  20.2

 

$                    5.9

 

$                89.8

 

$                38.3

 

$                51.4

Acquisition and offering related costs 

12.8

 

5.2

 

7.6

 

32.6

 

25.5

 

7.1

Adjusted net cash provided by operating activities (5)

$                  39.0

 

$                  25.5

 

$                  13.5

 

$              122.4

 

$                63.9

 

$                58.5

   

(1)

Cision defines EBITDA as net income (loss), plus depreciation and amortization expense, plus interest expense and loss on extinguishment of debt, plus provision for (or minus benefit from) income taxes.

   

(2)

Cision defines Adjusted EBITDA as EBITDA, further adjusted for acquisition and offering related costs, stock-based compensation, deferred revenue reduction from purchase accounting, (gains) losses related to divested businesses or assets, sponsor fees and expenses, and unrealized translation losses (gains). All of the items included in the reconciliation from net income to Adjusted EBITDA are either non-cash items or are items that we consider to be less useful in assessing our operating performance. In the case of the non-cash items, we believe that investors can better assess our operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect our ability to generate free cash flow or invest in our business. For example, by excluding depreciation and amortization from EBITDA, users can compare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, we believe that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

   

(3)

Cision defines Adjusted net income as net income (loss) plus provision for (or minus benefit from) income taxes, further adjusted for acquisition and offering related costs, (gains) losses related to divested businesses or assets, stock-based compensation, deferred revenue reduction from purchase accounting, amortization related to acquired intangibles, non-recurring interest and losses on extinguishment of debt, sponsor fees and expenses, and unrealized translation losses (gains), which together, sum to Adjusted net income (loss) before income taxes. Adjusted net income (loss) before income taxes is then taxed at an assumed long term corporate tax rate of 33% for 2017 and periods prior, and 26% for 2018 and beyond, pursuant to our preliminary analysis with respect to recent U.S. tax law changes, to determine Adjusted net income. The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a provisional net one-time tax of $11.9 million in the fourth quarter of 2017 based on a reasonable estimate of the income tax effects, primarily from a tax on accumulated foreign earnings, the remeasurement of deferred tax assets and liabilities and new limitations on the deductibility of interest. Our calculation of Adjusted net income excludes this provisional net one-time tax. We continue to finalize the analysis of the tax reform provisions in 2018. All of the items included in the reconciliation from net income to Adjusted net income are either non-cash items or are items that we consider to be less useful in assessing our operating performance. In the case of the non-cash items, we believe that investors can better assess our operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect our ability to generate free cash flow or invest in our business. For example, by excluding the amortization related to acquired intangibles, users can compare operating performance without regard to highly variable amortization expenses related to our acquisitions. In the case of the other items, we believe that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

   

(4)

Cision defines Adjusted net income per diluted share as Adjusted net income, as defined above, divided by the fully-diluted pro forma weighted average shares outstanding for the period. The fully-diluted pro forma weighted average shares outstanding for the respective period assume that the exchange of shares pursuant to our merger with Capitol Acquisition Corp. III had taken effect as of the beginning of such period. Additionally, for purposes of calculating the number of fully diluted shares outstanding, we have excluded the potential impact of dilution from outstanding warrants to purchase shares of our common stock prior to the dates of their conversion, and stock options and restricted units issued and outstanding pursuant to our 2017 Omnibus Incentive Plan. During the second quarter of fiscal 2018, we issued an aggregate of 6,342,989 ordinary shares (6,100,209 ordinary shares on May 18, 2018 and 242,780 ordinary shares on June 4, 2018), in exchange for all of our outstanding warrants, pursuant to the completion of our warrant exchange transactions. During the third quarter of 2018, we issued 2,000,000 ordinary shares for the earn-out achieved during the quarter. Commencing on these respective issuance dates, we included the issued shares in our fully-diluted pro forma weighted average share count. Using our average share price of $16.46 for the three months ended September 30, 2018, our fully-diluted pro forma weighted average shares outstanding for the three months ended September 30, 2018 would have been approximately 131.7 million had we incorporated the dilutive effects of the stock options and restricted units.

   

(5)

Cision defines Adjusted net cash provided by operating activities as net cash provided by operating activities adjusted for acquisition and offering related costs.

Investor Contact:
Jack Pearlstein
Chief Financial Officer
Jack.Pearlstein@cision.com 

Media Contact:
Nick Bell
Vice President, Marketing Communications and Content
CisionPR@cision.com 

Logo - https://mma.prnewswire.com/media/467136/cision_logo.jpg

Source: Cision Ltd.
Related stocks: NYSE:CISN
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Source: PR Newswire
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