Cision Reports Third Quarter 2019 Results

Cision Ltd. and its Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except per share and share amounts)

(Unaudited)

September 30, 2019

December 31, 2018

Assets

Current assets:

Cash and cash equivalents

$                     94,929

$                104,769

Accounts receivable, net

126,975

120,882

Prepaid expenses and other current assets

38,897

22,824

Total current assets

260,801

248,475

Property and equipment, net

62,788

57,210

Other intangible assets, net

376,860

377,146

Goodwill

1,411,646

1,171,859

Operating lease right-of-use assets

59,993

-

Deferred tax asset

4,123

4,034

Other assets

9,296

7,652

Total assets

$                2,185,507

$            1,866,376

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt

$                     13,881

$                  13,210

Accounts payable

12,867

15,603

Accrued compensation and benefits

35,057

29,323

Operating lease liabilities

14,139

-

Other accrued expenses

61,820

82,507

Current portion of deferred revenue

161,848

139,725

Total current liabilities

299,612

280,368

Long-term debt, net of current portion

1,261,926

1,205,760

Deferred revenue, net of current portion

968

1,098

Operating lease liabilities, net of current portion

59,514

-

Deferred tax liability

74,062

69,232

Other liabilities

9,986

21,601

Total liabilities

1,706,068

1,578,059

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding at September 30, 2019 and December 31, 2018

-

-

Common stock, $0.0001 par value, 480,000,000 shares authorized; 148,478,535 and 132,716,541 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

15

13

Additional paid-in capital

988,364

797,222

Accumulated other comprehensive loss

(75,204)

(68,941)

Accumulated deficit

(433,736)

(439,977)

Total stockholders' equity

479,439

288,317

Total liabilities and stockholders' equity

$                2,185,507

$            1,866,376

Cision Ltd. and its Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except for per share amounts)

(Unaudited)

Three months ended September 30, 

Nine months ended September 30, 

2019

2018

2019

2018

Revenue

$                        185,653

$                        177,236

$                   561,953

$                  544,004

Cost of revenue

63,408

69,177

198,240

200,212

Gross Profit

122,245

108,059

363,713

343,792

Operating costs and expenses:

Sales and marketing

30,708

27,503

96,370

85,630

Research and development

7,153

7,292

23,021

22,282

General and administrative

44,988

39,002

142,464

126,762

Amortization of intangible assets

18,770

20,167

56,444

60,681

Total operating costs and expenses

101,619

93,964

318,299

295,355

Operating income

20,626

14,095

45,414

48,437

Non operating income (expense):

Foreign exchange gains

8,062

2,196

5,918

10,277

Interest and other income, net

279

380

840

472

Gain on sale of business

-

-

28,144

-

Interest expense

(18,209)

(19,785)

(56,392)

(59,947)

Loss on extinguishment of debt

-

-

(355)

(2,432)

Total non operating loss

(9,868)

(17,209)

(21,845)

(51,630)

Income (loss) before income taxes

10,758

(3,114)

23,569

(3,193)

Provision for income taxes

8,393

3,070

17,328

10,016

Net income (loss)

$                           2,365

$                          (6,184)

$                       6,241

$                  (13,209)

Other comprehensive loss- 

foreign currency translation adjustments

(12,169)

(2,479)

(6,263)

(20,796)

Comprehensive loss

$                          (9,804)

$                          (8,663)

$                           (22)

$                  (34,005)

Net income (loss) per share:

Basic

$                              0.02

$                            (0.05)

$                         0.04

$                      (0.10)

Diluted

$                              0.02

$                            (0.05)

$                         0.04

$                      (0.10)

Weighted average shares outstanding used

in computing per share amounts:

Basic

148,131,135

131,104,859

147,215,180

127,507,314

Diluted

148,520,974

131,104,859

147,257,092

127,507,314

Cision Ltd. and its Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Nine months ended September 30, 

2019

2018

Cash flows from operating activities

Net income (loss)

$                     6,241

$                 (13,209)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

93,709

100,186

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

7,426

10,158

Equity-based compensation expense

8,206

3,713

Provision for doubtful accounts

4,579

3,972

Deferred income taxes

(332)

3,437

Unrealized currency translation gains 

(6,528)

(10,338)

Gain on sale of business

(28,144)

-

Payment of contingent consideration

(4,296)

-

Other

-

86

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

Accounts receivable

609

967

Prepaid expenses and other current assets 

(7,568)

(848)

Other assets 

(976)

(726)

Accounts payable

(4,889)

(1,721)

Accrued compensation and benefits

3,229

(321)

Other accrued expenses

(16,944)

(7,320)

Deferred revenue

11,658

1,767

Other liabilities and net change in operating leases

1,488

(14)

Net cash provided by operating activities

67,468

89,789

Cash flows from investing activities

Purchases of property and equipment

(8,774)

(10,325)

Software development costs

(22,531)

(12,026)

Acquisitions of businesses, net of cash and restricted cash acquired of $6,068 and $2,711

(148,541)

(66,463)

Proceeds from disposal of business

44,865

-

Other

23

5

Net cash used in investing activities

(134,958)

(88,809)

Cash flows from financing activities

Proceeds from revolving credit facility

40,000

-

Repayment of revolving credit facility

(40,000)

-

Proceeds from term credit facility, net of debt discount of $1,013

73,987

-

Repayments of term credit facility

(10,471)

(59,989)

Payments of deferred financing costs

(1,619)

(294)

Proceeds from the exercise of stock options

552

-

Payment of contingent consideration

(3,695)

(2,873)

Net cash provided by (used in) financing activities

58,754

(63,156)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(1,104)

(2,286)

Decrease in cash, cash equivalents and restricted cash

(9,840)

(64,462)

Cash, cash equivalents and restricted cash

Beginning of period

104,769

148,654

End of the period

$                   94,929

$                  84,192

Cision Ltd. and its Subsidiaries

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

(in millions)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

Change

2019

2018

Change

Net income (loss)

$                  2.4

$                (6.2)

$                  8.6

$                  6.3

$              (13.2)

$               19.5

Depreciation and amortization

31.5

33.3

(1.8)

93.7

100.2

(6.5)

Interest expense and loss on extinguishment of debt

18.2

19.8

(1.6)

56.7

62.4

(5.7)

Income tax

8.4

3.1

5.3

17.4

10.0

7.4

EBITDA (1)

60.5

50.0

10.5

174.1

159.4

14.7

Acquisition and offering-related costs

8.7

12.8

(4.1)

39.1

32.6

6.5

Stock-based compensation

3.6

1.5

2.1

8.2

3.7

4.5

Deferred revenue reduction from purchase accounting

3.7

0.3

3.4

10.6

1.5

9.1

Gain on sale of business

-

-

-

(28.1)

-

(28.1)

Unrealized translation gain

(8.4)

(2.1)

(6.3)

(6.6)

(10.3)

3.7

Adjusted EBITDA (2)

$               68.1

$               62.5

$                  5.6

$             197.3

$             186.8

$               10.5

Cision Ltd. and its Subsidiaries

Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Net Income per

Diluted Share

(in millions, except for per share and share amounts)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

Change

2019

2018

Change

Net income (loss)

$                  2.4

$                (6.2)

$                  8.6

$                  6.3

$              (13.2)

$               19.5

Income tax

8.4

3.1

5.3

17.4

10.0

7.4

Acquisition and offering-related costs

8.7

12.8

(4.1)

39.1

32.6

6.5

Gain on sale of business

-

-

-

(28.1)

-

(28.1)

Stock-based compensation expense

3.6

1.5

2.1

8.2

3.7

4.5

Deferred revenue reduction from purchase accounting

3.7

0.3

3.4

10.6

1.5

9.1

Amortization related to acquired intangible assets

23.8

26.0

(2.2)

71.4

78.1

(6.7)

Non-recurring interest and loss on extinguishment of debt

-

0.4

(0.4)

0.4

4.3

(3.9)

Unrealized translation gain

(8.4)

(2.1)

(6.3)

(6.6)

(10.3)

3.7

Adjusted Income before income tax

42.2

35.8

6.4

118.7

106.6

12.1

Less: Income tax at a 26% rate

(11.0)

(9.3)

(1.7)

(30.9)

(27.7)

(3.2)

Adjusted net income (3)

$               31.2

$               26.5

$                  4.7

$               87.8

$               78.9

$                  8.9

Pro forma fully-diluted weighted average shares outstanding

148,131

131,105

17,026

147,215

127,507

19,708

Adjusted net income per diluted share (4)

$0.21

$0.20

$0.01

$0.60

$0.62

($0.02)

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,

Nine Months Ended September 30,

2019

2018

Change

2019

2018

Change

Net cash provided by operating activities

$                34.7

$                26.2

$                  8.5

$                67.5

$                89.8

$              (22.3)

Acquisition and offering-related costs

8.7

12.8

(4.1)

39.1

32.6

6.5

Adjusted net cash provided by operating activities (5)

$                43.4

$                39.0

$                  4.4

$             106.6

$             122.4

$              (15.8)

(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 26%. 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. 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 Third 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.

(5)

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