Nielsen Holdings NV Earnings Call Nuggets: Free Cash Flow and Constant Currency Revenue Growth

Nielsen Holdings NV (NYSE:NLSN) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Free Cash Flow

Andrew Steinerman – JPMorgan: Brian, you mentioned about accelerated free cash flow conversion. Could you go over what’s driving that, and if you could give us a sense of headwinds and tailwinds on free cash flow as we look at 2013?

Brian West – CFO: A big part of it is all the work we’ve done about reducing the interest burden on the Company. You saw it in multiple ways in 2012. Taking out those high coupon notes was a big deal. So, that’s a big driver of it. In terms of our headwinds into 2013 on cash flow, this business model holds up real well, and we’ll have nice conversion and we think that we’ve got a reasonable outlook in terms of what the capital market to look like in the corresponding interest environment. So, we feel real good about no real big things out there that would impact us. And as Dave mentioned, we’ve got a business operating plan that’s set for a planning environment that’s not expecting big acceleration. So, we feel pretty comfortable about where we’re at.

Andrew Steinerman – JPMorgan: How about working capital comment as it refers to free cash flow in 2013?

Brian West – CFO: First, working capital is really in line with volume, if you really look at it over a longer period of time, and that will never change. Our real working capital is all about collections and receivables. We don’t have inventory. There’s not big things that stuck up cash on that front of the balance sheet, which again means that we have the high cash flow conversion due to the business model. So, we feel good that anything would be more along volume impact, which we think is a good thing, because that means revenue is growing.

Constant Currency Revenue Growth

Matthew Chesler – Deutsche Bank: I’m sure it’s going to be on the Q, but can you be a little more explicit on what the constant currency revenue growth number was in the quarter. It seems you didn’t have (adjustment) on it.

Brian West – CFO: The constant currency revenue growth for the fourth quarter?

Matthew Chesler – Deutsche Bank: Yes.

Brian West – CFO: The 4% number I mentioned?

Matthew Chesler – Deutsche Bank: Was it like 4.2% or 3.8%?

Brian West – CFO: The exact number was 3.5%.

Matthew Chesler – Deutsche Bank: Just a little bit more explicit on the commentary around not getting some of that short order revenue to book by the year end? Should we expect that it will be – you’re expecting a catch-up in that in the first quarter or is it just a pull-through?

Brian West – CFO: Put it this way. We believe that the Insights business, we’ve seen bottom, right, and we already feel things getting better with momentum. So, that’s kind of what we’re talking about and it’s a narrow part of the business and you know better than anybody, this business grows at mid-single-digits year-on year-out and what we’re talking about plan four is that which is at that a little hard to call, but as we exit the year, orders fell pretty good and we don’t think we’re going to see — we’re confident we’re not going to see continued rates of this Insight that we’ve seen in the second of 2012.

Matthew Chesler – Deutsche Bank: I guess sort of a bigger picture question around expanding your capabilities to cover, to follow audiences as they migrate across platforms. As you can see, the results this season, a lot of companies are talking about being able to measure streaming. Maybe just an update on what’s your plans are for 2013, for rolling out streaming capacities and just in general, — incremental is this going to be incremental revenue to Nielsen when you’re able to deliver those services to clients or is that kind of part of package?

Brian West – CFO: It’s more or less part of the package. Yes, it’s incremental, but in the total scheme of things I don’t think you’re going to notice big differences. We will measure streaming and we will cover it around all devices. To be honest with you, the technology of the metric itself is not hard. It’s usually getting the industry interest to align themselves as to who gets credit, and so I am confident that the answer will be had and it will be a Nielsen answer, and it will gradually find its way into the sort of the commercially acceptable currency. But it’s not going to happen in a day. I do like where we are and I think we’ll be at the leading edge of it.

A Closer Look: Nielsen Holdings Earnings Cheat Sheet>>