Thomson
Reuters Reports First-Quarter 2017 Results
TORONTO, April 28, 2017 -- Thomson Reuters (TSX
/NYSE: TRI) today reported results for the first quarter ended
March 31, 2017.
- Reported revenues were up 1%, compared to down 1% in the
prior-year period
- Before currency, revenues were up 2%, compared to up 1% in the
prior-year period
- Operating profit increased 43%, from $310 million to $444
million
- Adjusted EBITDA increased 17%, with the margin increasing 430
basis points to 31.1%
- Diluted earnings per share (EPS) was $0.41, an increase of 21%, or $0.07 per share
- Adjusted EPS was $0.63, an
increase of 37%, or $0.17 per
share
- The company repurchased 6.8 million shares at a cost of
$284 million
- The company re-affirmed its 2017 full-year outlook
"Today's results demonstrate the progress we continue to make
strengthening our business," said Jim
Smith, president and chief executive officer of Thomson
Reuters. "It is particularly encouraging to see the investments we
have made behind our most promising growth opportunities beginning
to shine through on the revenue line. That growth, coupled with
savings from our transformation programs, led to a significant
improvement in profitability and earnings per share this quarter.
We expect those trends to continue as we move through the
year."
Consolidated Financial Highlights – First-Quarter 2017
Unless otherwise indicated, all amounts are from
continuing operations and exclude the results of the
company's former IP & Science business, which was sold in
October 2016. IP & Science was
classified as a discontinued operation for 2016 reporting
purposes.
IFRS Financial
Measures (1)
|
Three Months Ended
March 31,
(Millions of U.S. dollars, except earnings per share (EPS)) |
|
2017 |
2016 |
Change |
|
Revenues |
$2,815 |
$2,793 |
1% |
|
Operating profit |
$444 |
$310 |
43% |
|
Diluted EPS (includes
discontinued operations) |
$0.41 |
$0.34 |
21% |
|
Cash flow from operations
(includes discontinued operations) |
$(368) |
$458 |
n/m(2) |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Financial
results reported in accordance with International Financial
Reporting Standards |
(2) n/m - not
meaningful |
- Revenues increased 1% as higher subscription revenues and
contributions from Financial & Risk's acquisitions were partly
offset by the impact of foreign currency and a decline in Financial
& Risk's recoveries revenues.
- Operating profit increased 43% due to higher revenues, lower
expenses (which reflected the impact of transformation initiatives
to simplify the business) and the favorable timing of certain
corporate costs.
- Diluted EPS, which includes discontinued operations, increased
21% to $0.41 as higher operating
profit more than offset the loss of earnings from IP & Science
following its sale.
- Cash flow from operations, which includes discontinued
operations, was negative $368 million
in the quarter due to a $500 million
pension plan contribution, $86
million of payments related to the fourth-quarter 2016
severance charges, and the loss of cash flow from IP & Science
following its sale ($152 million
year-on-year variance). In the fourth quarter of 2016, the company
incurred $212 million of severance
charges. Cash payments associated with the charges did not have a
meaningful impact on the company's cash flow from operations in
2016, as most of the payments are expected to be made in 2017.
Non-IFRS Financial
Measures (1) |
Three Months Ended March 31,
(Millions of U.S. dollars, except EPS and margins) |
|
2017 |
2016 |
Change |
Change
Before
Currency |
Revenues |
$2,815 |
$2,793 |
1% |
2% |
Adjusted EBITDA |
$876 |
$748 |
17% |
17% |
Adjusted EBITDA
margin |
31.1% |
26.8% |
430bp |
400bp |
Adjusted EPS |
$0.63 |
$0.46 |
37% |
37% |
Free cash flow (includes
discontinued
operations) |
$(585) |
$223 |
n/m(2) |
|
|
|
|
|
|
|
|
|
|
|
(1) |
In addition to results
reported in accordance with IFRS, the company uses certain non-IFRS
financial measures as supplemental indicators of its operating
performance and financial position. These and other non-IFRS
financial measures are defined and reconciled to the most directly
comparable IFRS measures in the tables appended to this news
release. Additional information is provided in the explanatory
footnotes to the appended tables. |
(2) |
n/m - not meaningful |
- Revenues increased 1% to $2.8
billion.
- Before currency, revenues increased 2% as higher subscription
revenues and contributions from Financial & Risk's acquisitions
were partly offset by a decline in Financial & Risk's
recoveries revenues.
- Adjusted EBITDA increased 17% to $876
million and the margin increased to 31.1% from 26.8%,
primarily due to higher revenues and lower expenses, which
reflected savings from transformation initiatives to simplify the
business and favorable timing for certain corporate costs. Currency
had a 30 basis points positive impact on the margin.
- Adjusted EPS was $0.63, an
increase of 37%, or $0.17 per share.
Currency had no impact.
- Free cash flow for the first quarter of 2017 was negative
$585 million, primarily due to (1) a
$500 million pension plan
contribution; (2) $86 million of
payments related to fourth-quarter 2016 severance charges; and (3)
the loss of the free cash flow from the company's former IP &
Science business ($152 million
year-on-year variance).
- Free cash flow for the full year is expected to be between
$0.9 billion and $1.2 billion, as
reflected in the company's Outlook. The first quarter is
historically the company's weakest of the year for free cash flow
generation.
Recent Developments
$500
Million Pension Plan Contribution
As previously disclosed, the company made a voluntary cash
contribution of $500 million to its
US defined benefit pension plan in January
2017, which impacted first-quarter cash flow from operations
and free cash flow.
Dividend and Share Repurchases
In February 2017, the Thomson
Reuters board of directors approved a $0.02 per share annualized increase in the
dividend to $1.38 per common share. A
quarterly dividend of $0.345 per
share is payable on June 15, 2017 to
common shareholders of record as of May 18,
2017.
In February 2017, the company
announced that it planned to repurchase up to an additional
$1.0 billion of its shares after
completing its previous buyback program. In the first quarter of
2017, the company repurchased 6.8 million shares at a cost of
$284 million.
Business Outlook 2017 (Before
Currency)
Thomson Reuters today reaffirmed its Outlook for 2017. The
company's 2017 Outlook assumes constant currency rates compared to
2016 and does not factor in the impact of acquisitions or
divestitures that may occur during the year.
For the full year 2017, the company expects:
- Low single-digit revenue growth
- Adjusted EBITDA margin to range between 28.8% to 29.8%
- Free cash flow to range between $0.9
billion and $1.2 billion (which reflects cash payments in
2017 relating to the fourth-quarter 2016 charge, the $500 million contribution to the US defined
benefit pension plan made earlier in the first quarter and the loss
of free cash flow from the divestiture of the IP & Science
business)
- Adjusted EPS target of $2.35
The information in this section is
forward-looking and should be read in conjunction with the section
below entitled "Special Note Regarding Forward-Looking Statements,
Material Assumptions and Material Risks."
Highlights by Business Unit
Unless otherwise noted, all revenue growth comparisons in
this news release are before the impact of foreign currency
(constant currency) as Thomson Reuters believes this provides the
best basis to measure the performance of its
business.
The impact of currency on
profitability metrics in the first quarter was not material to
either the consolidated results or to the business units and
therefore only reported profitability is discussed below.
Financial & Risk
- Revenues increased 1% to $1.5
billion. Acquisitions contributed approximately 1% to the
first-quarter revenue growth. Organic revenues grew
approximately 2% excluding the impact of lower recoveries revenues
and commercial pricing adjustments related to the migration of
certain customers to new platforms. The company expects these two
factors to have a lesser impact on reported revenue growth in the
second quarter and to have no material impact in the second half of
the year.
- Recurring revenues (77% of the segment's revenues in the
quarter) were up 2%, primarily due to an annual price increase and
positive net sales. Growth was partly offset by the commercial
pricing adjustments described above.
- Transactions revenues (15% of the segment's revenues in the
quarter) were up 4% due to increased revenue from Tradeweb and the
BETA brokerage processing business, as well as contributions from
acquisitions. This increase was offset by the impact of lower
foreign exchange trading and outright revenues.
- Low-margin recoveries revenues (8% of the segment's revenues in
the quarter) decreased 9%, partially due to third parties
continuing to move to direct billing with their customers.
Recoveries revenues are expected to be only marginally lower for
the full-year 2017 compared to 2016.
- Recoveries represent revenues for content or services provided
by third parties and distributed through or in conjunction with
Financial & Risk's platform. Reductions in recoveries revenue
have no material impact on the unit's adjusted EBITDA.
- By geography, revenues in the Americas were up 3%, Europe, Middle
East and Africa (EMEA) and
Asia were unchanged. Excluding the
impact of lower recoveries and commercial pricing adjustments, all
regions reported revenue growth.
- Adjusted EBITDA increased 6% to $463
million and the margin increased to 30.8% from 29.0% due to
savings related to the fourth-quarter 2016 charges and higher
revenues.
- Net sales were positive, driven by sales in EMEA and
Asia. This was partially offset by
the Americas, where negative net sales were impacted by the
migration of legacy asset management products to Eikon, which is
expected to be largely complete by the end of the second
quarter.
Legal
- Revenues increased 1% to $824
million. Excluding US print, revenues grew 2%.
- Solutions businesses (44% of the segment's revenues in the
quarter) grew 2% resulting from subscription revenue growth of 5%,
partially offset by a 9% reduction in transactional revenues.
- US Online Legal Information (43% of the segment's revenues in
the quarter) grew 2%.
- US Print (13% of the segment's revenues in the quarter)
declined 4%.
- Subscription revenues (76% of the segment's revenues in the
quarter) grew 4%. However, transactional revenues (11% of the
segment's revenues in the quarter) declined 8%. US Print (13%
of the segment's revenues in the quarter) declined 4%.
- Adjusted EBITDA increased 3% to $307
million and the margin increased to 37.3% from 36.3%
primarily due to the impact of higher revenues. Expenses were
slightly lower than the prior-year period, reflecting
transformation and cost-management initiatives.
Tax & Accounting
- Revenues increased 6% to $417
million, driven by the Corporate and Professional
businesses. Growth was partially offset by declines in the
Knowledge Solutions and Government businesses.
- Adjusted EBITDA increased 24% to $141
million and the margin increased to 33.8% from 29.3% due to
higher revenues, savings related to the fourth-quarter 2016 charges
and the absence of severance costs incurred in the first quarter of
2016 that did not repeat in the first quarter of 2017.
Corporate & Other (Including
Reuters News)
- Reuters News revenues were $74
million, up 1%.
- Corporate & Other costs at the adjusted EBITDA level were
$35 million compared to $101 million in the prior-year period. Including
depreciation and amortization of software, Corporate & Other
costs were $46 million compared to
$118 million in the prior-year
period. The reduction on both bases was driven by savings generated
by the company's Enterprise, Technology & Operations group, the
elimination of certain retained costs relating to the sale of IP
& Science, increased allocation of costs to the business units
and the timing of spend within 2017.
- For the full year, the company expects Corporate costs,
inclusive of depreciation and amortization of software, to be
approximately $300 million.
Thomson Reuters
Thomson Reuters is the world's leading source of news and
information for professional markets. Our customers rely on us to
deliver the intelligence, technology and expertise they need to
find trusted answers. The business has operated in more than 100
countries for more than 100 years. Thomson Reuters shares are
listed on the Toronto and New York
Stock Exchanges (symbol: TRI). For more information, visit
http://www.thomsonreuters.com/.
NON-IFRS FINANCIAL MEASURES
Thomson Reuters prepares its
financial statements in accordance with International Financial
Reporting Standards (IFRS), as issued by the International
Accounting Standards Board (IASB).
This news release includes certain
non-IFRS financial measures, such as adjusted EBITDA and the
related margin, free cash flow, adjusted EPS, and selected measures
before the impact of foreign currency. Thomson Reuters uses these
non-IFRS financial measures as supplemental indicators of its
operating performance and financial position. These measures do not
have any standardized meanings prescribed by IFRS and therefore are
unlikely to be comparable to the calculation of similar measures
used by other companies, and should not be viewed as alternatives
to measures of financial performance calculated in accordance with
IFRS. Non-IFRS financial measures are defined and reconciled to the
most directly comparable IFRS measures in the appended tables.
The company no longer reports
underlying operating profit, reflecting a simplification of its
reporting, in line with how the businesses are currently managed
internally, and consistent with how the company provided its 2017
business outlook.
The company's business outlook
contains various non-IFRS financial measures. For outlook purposes
only, the company is unable to reconcile these non-IFRS measures to
the most comparable IFRS measures because it cannot predict, with
reasonable certainty, the 2017 impact of changes in foreign
exchange rates which impact (i) the translation of its results
reported at average foreign currency rates for the year, (ii) fair
value adjustments associated with foreign currency derivatives
embedded in certain customer contracts, and (iii) other finance
income or expense related to foreign exchange contracts and
intercompany financing arrangements. Additionally, the company
cannot reasonably predict the occurrence or amount of other
operating gains and losses, which generally arise from business
transactions that it does not anticipate.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS, MATERIAL ASSUMPTIONS AND MATERIAL RISKS
Certain statements in this news release, including, but not
limited to, statements in the "Business Outlook 2017 (Before
Currency)" section, Mr. Smith's comments and statements regarding
recoveries revenues , the timing of product migrations within the
Financial & Risk business, and corporate costs, are
forward-looking. As a result, forward-looking statements are
subject to a number of risks and uncertainties that could cause
actual results or events to differ materially from current
expectations. There is no assurance that the events
described in any forward-looking statement will materialize. A
business outlook is provided for the purpose of presenting
information about current expectations for 2017. This information
may not be appropriate for other purposes. You are cautioned not to
place undue reliance on forward-looking statements which reflect
expectations only as of the date of this news release. Except as
may be required by applicable law, Thomson Reuters disclaims any
obligation to update or revise any forward-looking
statements.
The company's 2017 business outlook
is based on various external and internal assumptions. Economic and
market assumptions include, but are not limited to, GDP growth in
most of the countries where Thomson Reuters operates, a continued
increase in demand for high quality information and workflow
solutions and a continued need for trusted products and services
that help customers navigate changing geopolitical, economic and
regulatory environments. Internal financial and operational
assumptions include, but are not limited to, the successful
execution of sales initiatives, ongoing product release programs,
our globalization strategy and other growth and efficiency
initiatives.
Some of the material risk factors that could cause
actual results or events to differ materially from those expressed
in or implied by forward-looking statements in this news
release include, but are not limited to, changes in the
general economy; actions of competitors; failure to develop new
products, services, applications and functionalities to meet
customers' needs, attract new customers and retain existing ones,
or expand into new geographic markets and identify areas of higher
growth; fraudulent or unpermitted data access or other
cyber-security or privacy breaches; failures or disruptions of
telecommunications, data centers, network systems or the Internet;
increased accessibility to free or relatively inexpensive
information sources; failure to meet the challenges involved in
operating globally; failure to maintain a high renewal rate for
recurring, subscription-based services; dependency on third parties
for data, information and other services; changes to law and
regulations; tax matters, including changes to tax laws,
regulations and treaties; fluctuations in foreign currency exchange
and interest rates; failure to adapt to organizational changes and
effectively implement strategic initiatives; failure to attract,
motivate and retain high quality management and key employees;
failure to protect the brands and reputation of Thomson Reuters;
inadequate protection of intellectual property rights; threat of
legal actions and claims; failure to derive fully the anticipated
benefits from existing or future acquisitions, joint ventures,
investments or dispositions; risk of antitrust/competition-related
claims or investigations; impairment of goodwill and other
identifiable intangible assets; downgrading of credit ratings and
adverse conditions in the credit markets; the effect of factors
outside of the control of Thomson Reuters on funding obligations in
respect of pension and post-retirement benefit arrangements; and
actions or potential actions that could be taken by the company's
principal shareholder, The Woodbridge Company Limited. These
and other factors are discussed in materials that Thomson Reuters
from time to time files with, or furnishes to, the Canadian
securities regulatory authorities and the U.S. Securities and
Exchange Commission. Thomson Reuters annual and quarterly reports
are also available in the "Investor Relations" section of
http://www.thomsonreuters.com/.
CONTACTS
MEDIA
David Crundwell
Senior Vice President, Corporate Affairs
+1 646 223 5285
david.crundwell@tr.com |
INVESTORS
Frank J. Golden
Senior Vice President, Investor Relations
+1 646 223 5288
frank.golden@tr.com |
Thomson Reuters will webcast a discussion of its
first-quarter 2017 results today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You
can access the webcast by visiting the "Investor Relations" section
of http://www.thomsonreuters.com/. An archive of the webcast
will be available following the presentation.
Thomson Reuters
Corporation
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited) |
|
|
Three Months
Ended |
|
March 31, |
|
2017 |
2016 |
CONTINUING OPERATIONS |
|
|
Revenues |
$2,815 |
$2,793 |
Operating expenses |
(2,004) |
(2,109) |
Depreciation |
(72) |
(81) |
Amortization of computer software |
(180) |
(169) |
Amortization of other identifiable intangible
assets |
(119) |
(128) |
Other operating gains, net |
4 |
4 |
Operating profit |
444 |
310 |
Finance costs, net: |
|
|
Net interest expense |
(93) |
(93) |
Other finance costs |
(27) |
(34) |
Income before tax and equity method investments |
324 |
183 |
Share of post-tax earnings in equity method
investments |
2 |
1 |
Tax (expense) benefit |
(9) |
26 |
Earnings from continuing operations |
317 |
210 |
(Loss) earnings from discontinued operations, net of
tax |
(3) |
62 |
Net earnings |
$314 |
$272 |
|
|
|
Earnings attributable to: |
|
|
Common shareholders |
297 |
262 |
Non-controlling interests |
17 |
10 |
|
|
|
Earnings per share: |
|
|
Basic and diluted earnings per share: |
|
|
From continuing operations |
$0.41 |
$0.26 |
From discontinued operations |
- |
0.08 |
Basic and diluted earnings per share |
$0.41 |
$0.34 |
|
|
|
Basic weighted-average common shares |
727,200,617 |
760,727,773 |
Diluted weighted-average common shares |
729,194,404 |
762,216,127 |
Thomson Reuters
Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited) |
|
|
March 31, |
|
December 31, |
2017 |
|
2016 |
Assets |
|
|
|
Cash and cash equivalents |
$812 |
|
$2,368 |
Trade and other receivables |
1,573 |
|
1,392 |
Other financial assets |
131 |
|
188 |
Prepaid expenses and other current assets |
740 |
|
686 |
Current assets |
3,256 |
|
4,634 |
|
|
|
|
Computer hardware and other property, net |
937 |
|
961 |
Computer software, net |
1,396 |
|
1,394 |
Other identifiable intangible assets, net |
5,622 |
|
5,655 |
Goodwill |
14,673 |
|
14,485 |
Other financial assets |
102 |
|
135 |
Other non-current assets |
565 |
|
537 |
Deferred tax |
55 |
|
51 |
Total assets |
$26,606 |
|
$27,852 |
|
|
|
|
Liabilities and equity |
|
|
|
Liabilities |
|
|
|
Current indebtedness |
$828 |
|
$1,111 |
Payables, accruals and provisions |
2,033 |
|
2,448 |
Deferred revenue |
970 |
|
901 |
Other financial liabilities |
130 |
|
102 |
Current liabilities |
3,961 |
|
4,562 |
|
|
|
|
Long-term indebtedness |
6,288 |
|
6,278 |
Provisions and other non-current liabilities |
1,662 |
|
2,258 |
Other financial liabilities |
330 |
|
340 |
Deferred tax |
1,130 |
|
1,158 |
Total liabilities |
13,371 |
|
14,596 |
|
|
|
|
Equity |
|
|
|
Capital |
9,617 |
|
9,589 |
Retained earnings |
7,284 |
|
7,477 |
Accumulated other comprehensive loss |
(4,158) |
|
(4,293) |
Total shareholders' equity |
12,743 |
|
12,773 |
Non-controlling interests |
492 |
|
483 |
Total equity |
13,235 |
|
13,256 |
Total liabilities and equity |
$26,606 |
|
$27,852 |
Thomson Reuters
Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited) |
|
|
Three Months
Ended
March 31, |
|
2017 |
2016(1) |
Cash provided by (used in): |
|
|
Operating activities |
|
|
Earnings from continuing operations |
$317 |
$210 |
Adjustments for: |
|
|
Depreciation |
72 |
81 |
Amortization of computer software |
180 |
169 |
Amortization of other identifiable intangible
assets |
119 |
128 |
Net gains on disposals of businesses and
investments |
- |
(1) |
Deferred tax |
(21) |
(58) |
Other |
163 |
178 |
Pension contributions |
(500) |
- |
Changes in working capital and other items |
(657) |
(371) |
Operating cash flows from continuing operations |
(327) |
336 |
Operating cash flows from discontinued operations |
(41) |
122 |
Net cash (used in) provided by operating
activities |
(368) |
458 |
|
|
|
Investing activities |
|
|
Acquisitions, net of cash acquired |
(178) |
(46) |
Proceeds from disposals of businesses and
investments |
10 |
2 |
Capital expenditures, less proceeds from
disposals |
(213) |
(233) |
Other investing activities |
6 |
19 |
Investing cash flows from continuing operations |
(375) |
(258) |
Investing cash flows from discontinued operations |
- |
(11) |
Net cash used in investing activities |
(375) |
(269) |
|
|
|
Financing activities |
|
|
Repayments of debt |
(550) |
(3) |
Net borrowings under short-term loan facilities |
255 |
442 |
Repurchases of common shares |
(284) |
(432) |
Dividends paid on preference shares |
(1) |
(1) |
Dividends paid on common shares |
(242) |
(249) |
Dividends paid to non-controlling interests |
(9) |
(9) |
Other financing activities |
5 |
4 |
Net cash used in financing activities |
(826) |
(248) |
Decrease in cash and bank overdrafts |
(1,569) |
(59) |
Translation adjustments |
2 |
4 |
Cash and bank overdrafts at beginning of period |
2,367 |
922 |
Cash and bank overdrafts at end of period |
$800 |
$867 |
|
|
|
Cash and bank overdrafts at end of period comprised
of: |
|
|
Cash and cash equivalents |
$812 |
$898 |
Bank overdrafts |
(12) |
(31) |
|
$800 |
$867 |
|
Refer to page 12 for
footnotes. |
Thomson Reuters Corporation
Reconciliation of Changes in Revenues, Adjusted EBITDA and the
Related Margin
Excluding the Effects of Foreign Currency by Business
Segment
(millions of U.S. dollars, except for margins)
(unaudited) |
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
Change |
|
|
2017 |
2016 |
|
Total |
Foreign
Currency (3) |
Before
Currency (3) |
Revenues |
|
|
|
|
|
|
|
Financial & Risk |
|
$1,502 |
$1,509 |
|
0% |
-1% |
1% |
Legal |
|
824 |
822 |
|
0% |
-1% |
1% |
Tax & Accounting |
|
417 |
389 |
|
7% |
1% |
6% |
Corporate & Other (includes
Reuters News) |
|
74 |
75 |
|
-1% |
-2% |
1% |
Eliminations |
|
(2) |
(2) |
|
|
|
|
Revenues |
|
$2,815 |
$2,793 |
|
1% |
-1% |
2% |
|
|
|
|
|
|
Change |
|
|
|
|
Total |
Foreign
Currency (3) |
Before
Currency (3) |
Adjusted
EBITDA(2) |
|
|
|
|
|
|
|
Financial & Risk |
|
$463 |
$437 |
|
6% |
-1% |
7% |
Legal |
|
307 |
298 |
|
3% |
-1% |
4% |
Tax & Accounting |
|
141 |
114 |
|
24% |
0% |
24% |
Corporate & Other (includes
Reuters News) |
|
(35) |
(101) |
|
n/a |
n/a |
n/a |
Adjusted EBITDA |
|
$876 |
$748 |
|
17% |
0% |
17% |
|
Adjusted EBITDA
Margin(2) |
|
|
|
|
|
|
|
Financial & Risk |
|
30.8% |
29.0% |
|
180bp |
20bp |
160bp |
Legal |
|
37.3% |
36.3% |
|
100bp |
-10bp |
110bp |
Tax & Accounting |
|
33.8% |
29.3% |
|
450bp |
-30bp |
480bp |
Corporate & Other (includes
Reuters News) |
|
n/a |
n/a |
|
n/a |
n/a |
n/a |
Adjusted EBITDA margin |
|
31.1% |
26.8% |
|
430bp |
30bp |
400bp |
|
n/a - not applicable
Refer to page 12 for footnotes. |
Thomson Reuters
Corporation
Reconciliation of Earnings from Continuing Operations to
Adjusted EBITDA (2)
(millions of U.S. dollars, except for margins)
(unaudited) |
|
|
Three Months
Ended |
|
March 31, |
|
|
2017 |
2016 |
Change |
Earnings from continuing operations |
$317 |
$210 |
51% |
Adjustments to remove: |
|
|
|
Tax expense (benefit) |
9 |
(26) |
|
Other finance costs |
27 |
34 |
|
Net interest expense |
93 |
93 |
|
Amortization of other identifiable intangible
assets |
119 |
128 |
|
Amortization of computer software |
180 |
169 |
|
Depreciation |
72 |
81 |
|
EBITDA |
$817 |
$689 |
|
Adjustments to remove: |
|
|
|
Share of post-tax earnings in equity method
investments |
(2) |
(1) |
|
Other operating gains, net |
(4) |
(4) |
|
Fair value adjustments |
65 |
64 |
|
Adjusted EBITDA |
$876 |
$748 |
17% |
Adjusted EBITDA margin (2) |
31.1% |
26.8% |
430bp |
Thomson Reuters
Corporation
Reconciliation of Earnings Attributable to Common Shareholders
to Adjusted Earnings (4)
(millions of U.S. dollars, except for share and per share data)
(unaudited) |
|
|
Three Months
Ended |
|
|
March 31, |
|
|
2017 |
2016(1) |
Change |
|
Earnings attributable to common
shareholders |
$297 |
$262 |
13% |
|
Adjustments to remove: |
|
|
|
|
Fair value adjustments |
65 |
64 |
|
|
Amortization of other identifiable
assets |
119 |
128 |
|
|
Other operating gains, net |
(4) |
(4) |
|
|
Other finance costs |
27 |
34 |
|
|
Share of post-tax earnings in equity
method investments |
(2) |
(1) |
|
|
Tax on above items |
(47) |
(57) |
|
|
Tax items impacting comparability |
- |
(7) |
|
|
Loss (earnings) from discontinued
operations, net of tax |
3 |
(62) |
|
|
Interim period effective tax rate
normalization (5) |
1 |
(5) |
|
|
Dividends declared on preference
shares |
(1) |
(1) |
|
|
Adjusted earnings |
$458 |
$351 |
30% |
|
Adjusted EPS |
$0.63 |
$0.46 |
37% |
|
Foreign currency (3) |
|
|
0% |
|
Before currency (3) |
|
|
37% |
|
|
|
|
|
|
Diluted weighted-average common shares (millions) |
729.2 |
762.2 |
|
|
|
Refer to page 12 for footnotes. |
Thomson Reuters
Corporation
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow (6)
(millions of U.S. dollars)
(unaudited) |
|
|
Three Months
Ended |
March 31, |
|
2017 |
2016 |
Net cash (used in) provided by operating
activities |
$(368) |
$458 |
Capital expenditures, less proceeds from
disposals |
(213) |
(233) |
Capital expenditures from discontinued operations |
- |
(11) |
Other investing activities |
6 |
19 |
Dividends paid on preference shares |
(1) |
(1) |
Dividends paid to non-controlling interests |
(9) |
(9) |
Free cash flow |
$(585) |
$223 |
Footnotes |
(1) |
Prior-year period amounts have been revised to reflect
the current presentation. |
(2) |
Thomson Reuters defines adjusted EBITDA as earnings
from continuing operations before tax expense or benefit, net
interest expense, other finance costs or income, depreciation,
amortization of software and other identifiable intangible assets,
Thomson Reuters share of post-tax (earnings) losses in equity
method investments, other operating gains and losses, certain asset
impairment charges, fair value adjustments and corporate related
items. Adjusted EBITDA margin is adjusted EBITDA expressed as a
percentage of revenues. Thomson Reuters uses adjusted EBITDA
because it provides a consistent basis to evaluate operating
profitability and performance trends by excluding items that the
Company does not consider to be controllable activities for this
purpose. Adjusted EBITDA also represents a measure commonly
reported and widely used by investors as a valuation metric.
Additionally, this measure is used by Thomson Reuters and investors
to assess a company's ability to incur and service debt. |
(3) |
The changes in revenues, adjusted EBITDA and the
related margins, and adjusted earnings per share before currency
(at constant currency or excluding the effects of currency) are
determined by converting the current and prior-year period's local
currency equivalent using the same exchange rates. |
(4) |
Adjusted earnings and adjusted earnings per share
(EPS) include dividends declared on preference shares but exclude
the post-tax impacts of fair value adjustments, amortization of
other identifiable intangible assets, other operating gains and
losses, certain asset impairment charges, other finance costs or
income, Thomson Reuters share of post-tax (earnings) losses in
equity method investments, discontinued operations and other items
affecting comparability. Thomson Reuters calculates the post-tax
amount of each item excluded from adjusted earnings based on the
specific tax rules and tax rates associated with the nature and
jurisdiction of each item. Adjusted earnings per share is
calculated using diluted weighted-average shares and does not
represent actual earnings or loss per share attributable to
shareholders. Thomson Reuters uses adjusted earnings and adjusted
EPS as they provide a more comparable basis to analyze earnings and
they are also measures commonly used by shareholders to measure the
company's performance. |
(5) |
Adjustment to reflect income taxes based on estimated
full-year effective tax rate. Earnings or losses for interim
periods under IFRS reflect income taxes based on the estimated
effective tax rates of each of the jurisdictions in which Thomson
Reuters operates. The non-IFRS adjustment reallocates estimated
full-year income taxes between interim periods, but has no effect
on full-year income taxes. |
(6) |
Free cash flow (includes free cash flow from
continuing and discontinued operations) is net cash provided by
(used in) operating activities, and other investing activities less
capital expenditures, dividends paid on the company's preference
shares, and dividends paid to non-controlling interests. Thomson
Reuters uses free cash flow as it helps assess the company's
ability, over the long term, to create value for its shareholders
as it represents cash available to repay debt, pay common dividends
and fund share repurchases and new acquisitions. |
Supplemental |
|
Thomson Reuters
Corporation
Depreciation and Amortization of Computer Software by Business
Segment
(millions of U.S. dollars)
(unaudited) |
|
|
Three Months
Ended |
March 31, |
|
2017 |
2016 |
Financial & Risk |
$147 |
$142 |
Legal |
62 |
60 |
Tax & Accounting |
32 |
31 |
Corporate & Other (includes Reuters News) |
11 |
17 |
Total depreciation and amortization of computer
software |
$252 |
$250 |