Business Context and Reporting Period
This Form 8-K, dated November 10, 2020, reports on Clarivate Plc's virtual Investor Day conference. The filing provides updated financial guidance for the fiscal years ending December 31, 2020, and December 31, 2021. The reporting period reflects the recent acquisition of CPA Global, completed on October 1, 2020, and the divestiture of Techstreet, completed on November 6, 2020.
Key Financial Metrics and Guidance
2020 Full Year Outlook (Including Q4 CPA Global)
- Adjusted Revenues: $1.28 billion to $1.295 billion
- Adjusted EBITDA: $480 million to $495 million
- Adjusted EBITDA Margin: 37% to 38%
- Adjusted Diluted EPS: $0.55 to $0.61 (based on approx. 453.3 million fully diluted weighted average shares)
- Adjusted Free Cash Flow: $240 million to $260 million
Note: The 2020 outlook assumes no further currency movements, acquisitions, divestitures, or unanticipated events.
2021 Full Year Outlook (Including CPA Global)
- Adjusted Revenues: $1.78 billion to $1.84 billion (Excludes approx. $70.0 million of Techstreet revenues)
- Adjusted EBITDA: $785 million to $825 million (Excludes approx. $14.0 million of Techstreet EBITDA)
- Adjusted EBITDA Margin: 44% to 45%
- Adjusted Diluted EPS: In process (Company evaluating tax impact of CPA Global acquisition)
- Adjusted Free Cash Flow: $450 million to $500 million
Material Changes and Corporate Actions
- Acquisition: Clarivate completed the acquisition of CPA Global on October 1, 2020. Former CPA Global shareholders received approximately 218 million Clarivate ordinary shares.
- Divestiture: Clarivate divested Techstreet on November 6, 2020. The 2021 guidance explicitly excludes revenue and EBITDA contributions from this divested unit.
- Share Count Impact: The 2020 Adjusted diluted EPS calculation incorporates the fourth-quarter weighted average of the 218 million shares issued for the CPA Global transaction.
Management Commentary, Risks, and Contingencies
Management reaffirmed its October 29, 2020 guidance for 2020 and provided new guidance for 2021. The company expects to provide the 2021 Adjusted EPS figure within a few weeks pending the evaluation of the tax impact from the CPA Global acquisition.
The filing includes standard forward-looking statement disclaimers. Key risks and factors that could cause actual results to differ materially include:
- Success in integrating acquired businesses (specifically CPA Global).
- Realization of anticipated cost savings and transition services expenses.
- Impact of the COVID-19 pandemic and governmental responses.
- Claims, litigation, environmental costs, and contingent liabilities.
- Customer retention, product development, and market position.
Investor Verification Checklist
- Verify the reconciliation of non-GAAP financial measures (Adjusted Revenues, EBITDA, EPS, Free Cash Flow) to GAAP measures in Exhibit 99.2.
- Confirm the final Adjusted diluted EPS for 2021 once the tax impact of the CPA Global acquisition is evaluated.
- Review the specific details of the CPA Global integration and Techstreet divestiture in the Investor Day presentation (Exhibit 99.1).
- Assess the assumptions regarding currency movements and the absence of further M&A activity embedded in the guidance.