Business Context and Reporting Period
This Form 6-K filing by Clarivate Analytics Plc (Clarivate) covers the month of September 2019. The report, dated September 3, 2019, serves to reaffirm the company's financial outlook for the fiscal year ending December 31, 2019, which was originally announced on August 7, 2019.
Key Financial Metrics and Guidance
Clarivate has provided forward-looking guidance for the full year 2019 based on non-GAAP measures. The filing does not provide historical GAAP results for the period but outlines the following expectations:
- Adjusted Revenues: Expected to range between $962 million and $995 million.
- Adjusted EBITDA: Expected to range between $290 million and $310 million.
- Adjusted EBITDA Margins: Expected to be approximately 30%.
- Cost Savings: Annualized run-rate cost savings from restructuring initiatives are expected to approximate $12 million (net of actual savings realized).
- Infrastructure Costs: The difference between actual standalone infrastructure costs and estimated steady-state costs for 2019 is expected to approximate $31 million.
The filing explicitly states that Clarivate is unable to present a reconciliation of these forward-looking non-GAAP measures to GAAP due to the inability to reliably predict all necessary components.
Material Changes and Assumptions
This filing represents a reaffirmation of previously issued guidance rather than a report of new material changes to historical performance. The outlook assumes no further currency movements, acquisitions, divestitures, or unanticipated events. The company notes that Adjusted Revenues exclude the impact of deferred revenue purchase accounting adjustments from the 2016 separation from Thomson Reuters and revenues from the IPM Product Line prior to its divestiture.
Outlook, Risks, and Unusual Items
Management's outlook is based on current beliefs and assumptions regarding future business trends and economic conditions. The filing includes standard forward-looking statement disclaimers, noting that actual results may differ materially due to factors discussed in the "Risk Factors" section of the proxy statement/prospectus filed on April 26, 2019. Clarivate does not assume an obligation to update these forward-looking statements except as required by law.
Unusual items excluded from Adjusted EBITDA calculations include acquisition or disposal-related transaction costs, losses on extinguishment of debt, stock-based compensation, unrealized foreign currency gains/losses, and separation/integration costs.
Investor Verification Checklist
- Verify the reconciliation of non-GAAP Adjusted Revenues and Adjusted EBITDA to GAAP measures in subsequent quarterly or annual filings, as this filing does not provide one.
- Monitor the realization of the projected $12 million in annualized run-rate cost savings and the $31 million infrastructure cost difference.
- Review the "Risk Factors" in the April 26, 2019 proxy statement/prospectus for detailed risks that could cause actual results to deviate from the reaffirmed outlook.
- Track currency movements, as the current outlook assumes no further fluctuations.
- Confirm whether any acquisitions, divestitures, or unanticipated events occur that would invalidate the assumptions underlying the 2019 guidance.