Nielsen Holdings N.V.
) reported adjusted second-quarter 2014 earnings of 59 cents per
share, beating the Zacks Consensus Estimate by a penny on higher
revenues and solid global expansion. The adjusted earnings per
share exclude one-time items but include stock-based compensation
Nielsen reported revenues of $1.59 billion in the second quarter,
up 7.1% sequentially and 15% from the year-ago quarter. The
increase was due to higher demand for the company's analytics
services and growth in retail and audience measurement business.
Revenues by Segment
Buy business which accounted for 56% of second-quarter revenues
were $900 million, up 6.6% year over year or 7.9% on a constant
currency basis. Excluding the Harris acquisition, Buy revenues grew
4.8% on a constant currency basis, driven by new client wins and
increase in developing market revenues. Within the segment,
Information Services contributed $676 million, up 5% on a constant
currency basis. Insights Services grew 17.9% on a constant currency
basis, driven by strength in developing markets and modest growth
in North America. Revenues from developing markets grew 9.2% on a
constant currency basis. Management expects to see double-digit
growth in these markets, driven by growing local clients and steady
progress with multinational clients in China, Latin America and
Watch business which accounted for the remaining 44% of
second-quarter revenues were $694 million, up 28% year over year or
28.3% on a constant currency basis. The increase was driven by
constant currency growth in audience measurement. The Watch segment
includes such services as TV ratings, Internet and mobile audience
Reported gross margin for the quarter was 57.5%, down 70 basis
points (bps) from the comparable year-ago quarter due to
Nielsen reported total operating expenses of $640.0 million, up
12.7% from $568.0 million incurred in the year-ago quarter. As a
percentage of sales, selling, general & administrative expenses
decreased from the year-ago quarter, while depreciation &
amortization expenses remained flat. GAAP operating margin was
17.4%, up 20 bps from the year-ago quarter.
Nielsen Holdings N V - Earnings Surprise |
On a GAAP basis, Nielsen recorded a net profit of $74 million or
19 cents per share compared with $426 million or $1.12 per share in
the year-ago quarter.
On a non-GAAP basis, Nielsen generated adjusted net profit of
$227.4 million compared with $157.7 million in the year-ago
quarter. Pro-forma earnings came in at 59 cents per share compared
with 41 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Nielsen exited the second quarter with cash balance of
approximately $310 million versus $301 million in the last quarter.
Gross debt was $6,692 million versus $6,646 million in the prior
Net debt (gross debt excluding cash and cash equivalents) was
$6,382 million and net debt leverage ratio was 3.66x at the end of
Cash flow from operations increased to $210.0 million from $90.0
million in the prior quarter. Capex was $94 million versus $77
million in the prior quarter. Free cash flow was $116 million
versus $13 million in the prior quarter.
Nielsen Holdings is an information and measurement company which
provides clients with media and marketing information about what
consumers watch and buy on a global and local basis. The company's
second-quarter earnings beat the Zacks Consensus Estimate on the
back of higher revenues and solid international growth.
Management stated that the company's product launches such as
TV/social media report are making good progress and will lead to
revenue expansion in the near term. However, lack of visibility and
macro uncertainty will likely hurt the share price in the near
Currently, Nielsen has a Zacks Rank #5 (Strong Sell). Other stocks
that have been performing well and are worth a look include Analog
), Agilent Technologies (
) and Fairchild Semiconductor International Inc. (
). All these stocks carry the same Zacks Rank as Nielsen.
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