Thomson
Reuters Reports Second-Quarter 2017 Results
TORONTO, Aug. 1, 2017 /PRNewswire/ -- Thomson Reuters
(TSX/NYSE: TRI) today reported results for the second quarter ended
June 30, 2017. Based on its
first-half results, the company raised its full-year 2017 outlook
for several metrics, as reflected on page 5.
"It is encouraging to see the continued improvement in
underlying operating performance," said Jim
Smith, president and chief executive officer of Thomson
Reuters. "Based on the solid start to the year, we are increasing
full-year EPS guidance. Our execution focus is paying off, and we
believe efforts to improve customer experience will keep the trend
lines moving in the right direction."
Consolidated Financial Highlights
Three Months Ended June 30
(Millions of U.S. dollars, except for adjusted EBITDA margin and
earnings per share (EPS)
(unaudited) |
IFRS Financial
Measures(1) |
2017 |
2016 |
Change |
Change at
Constant
Currency |
Revenues |
$2,782 |
$2,769 |
0% |
|
Operating profit |
$399 |
$401 |
0% |
|
Diluted EPS (includes discontinued
operations) |
$0.27 |
$0.45 |
-40% |
|
Cash flow from operations (includes
discontinued operations) |
$834 |
$770 |
8% |
|
Non-IFRS Financial
Measures(1) |
|
|
|
|
Revenues |
$2,782 |
$2,769 |
0% |
2% |
Adjusted EBITDA |
$838 |
$757 |
11% |
11% |
Adjusted EBITDA margin |
30.1% |
27.3% |
280bp |
230bp |
Adjusted EPS |
$0.60 |
$0.47 |
28% |
28% |
Free cash flow (includes discontinued
operations) |
$580 |
$525 |
10% |
|
|
|
|
|
|
Revenues were slightly higher compared to the prior-year
period as higher recurring revenues and contributions from
acquisitions were mostly offset by the impact of foreign
currency.
- At
constant currency, revenues increased 2%.
Operating profit was essentially unchanged as slightly
higher revenues and lower expenses, which reflected savings from
the company's simplification initiatives, were offset by the
unfavorable impact of fair value adjustments associated with
foreign currency derivatives embedded in certain customer
contracts.
-
Adjusted EBITDA increased 11% to $838
million and the margin increased 280 basis points to 30.1%
from 27.3% primarily due to higher revenues and simplification
initiatives which resulted in lower expenses.
Diluted EPS, which includes discontinued operations,
decreased 40% to $0.27 due to the
same factors that impacted operating profit, as well as non-cash
foreign currency fluctuations on intercompany loans and the loss of
earnings from IP & Science following its sale in the fourth
quarter of 2016.
-
Adjusted EPS was $0.60, an
increase of 28%, or $0.13 per share,
primarily due to higher adjusted EBITDA.
Cash flow from operations increased 8%, despite the
loss of cash flow from IP & Science following its sale, due to
higher operating profit before the impact of non-cash items, such
as fair value adjustments.
-
Free cash flow increased 10% to $580
million, primarily reflecting stronger adjusted EBITDA
performance, partly offset by the loss of cash flow from IP &
Science following its sale.
The company repurchased 6.7 million shares during the second
quarter at a cost of $294 million and
repurchased 13.5 million shares during the first six months of the
year at a cost of $578 million under
its $1.0 billion share buyback
program.
(1) |
In addition to results reported in accordance with
International Financial Reporting Standards (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. |
Highlights by Business Unit – Three
Months Ended June 30
|
|
|
|
(Millions of U.S. dollars, except for adjusted EBITDA margins)
(unaudited) |
|
|
|
Three Months Ended |
|
|
|
|
June
30, |
|
Change |
|
|
2017 |
2016 |
|
Total |
Foreign
Currency |
Constant
Currency |
Revenues |
|
|
|
|
|
|
|
Financial & Risk |
|
$1,517 |
$1,524 |
|
0% |
-2% |
2% |
Legal |
|
842 |
846 |
|
0% |
-1% |
1% |
Tax & Accounting |
|
350 |
324 |
|
8% |
0% |
8% |
Corporate & Other (Reuters
News) |
|
74 |
79 |
|
-6% |
-1% |
-5% |
Eliminations |
|
(1) |
(4) |
|
|
|
|
Revenues |
|
$2,782 |
$2,769 |
|
0% |
-2% |
2% |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
Financial & Risk |
|
$477 |
$443 |
|
8% |
0% |
8% |
Legal |
|
320 |
310 |
|
3% |
-1% |
4% |
Tax & Accounting |
|
103 |
82 |
|
26% |
2% |
24% |
Corporate & Other (includes
Reuters News) |
|
(62) |
(78) |
|
n/a |
n/a |
n/a |
Adjusted EBITDA |
|
$838 |
$757 |
|
11% |
0% |
11% |
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
|
|
|
|
|
Financial & Risk |
|
31.4% |
29.1% |
|
230bp |
50bp |
180bp |
Legal |
|
38.0% |
36.6% |
|
140bp |
30bp |
110bp |
Tax &
Accounting |
|
29.4% |
25.3% |
|
410bp |
20bp |
390bp |
Corporate & Other (includes
Reuters News) |
|
n/a |
n/a |
|
n/a |
n/a |
n/a |
Adjusted EBITDA margin |
|
30.1% |
27.3% |
|
280bp |
50bp |
230bp |
n/a – not applicable |
|
|
|
|
|
|
|
Unless otherwise noted, all revenue growth comparisons by
business unit in this news release are at constant currency (or
exclude the impact of foreign currency) as Thomson Reuters believes
this provides the best basis to measure their
performance.
Financial & Risk
Revenues increased 2% to $1.5
billion. Organic revenues grew 1% and acquisitions
contributed 1%.
-
Revenues by type:
-
Recurring revenues grew 1% (77% of total)
- The
increase was primarily due to an annual price increase and positive
net sales.
-
Transactions revenues grew 8% (15% of total)
-
Growth was due to increased revenue from Tradeweb and the BETA
brokerage processing business, as well as contributions from
acquisitions. These increases were partially offset by the impact
of lower foreign exchange trading revenues.
-
Recoveries revenues decreased 5% (8% of total). The
company does not expect recoveries to have a significant impact on
Financial & Risk's revenue growth in the second half of the
year.
-
Revenues by geography:
-
Revenues were up 3% in the Americas, up 1% in Europe, Middle
East and Africa (EMEA) and
were up slightly in Asia Pacific,
despite the impact of lower recoveries revenues in each
region.
Adjusted EBITDA increased 8% to $477 million.
- The
margin increased to 31.4% from 29.1%. In constant currency, the
margin increased 180 basis points primarily due to savings from the
company's simplification initiatives, including the 2016 severance
charges, and higher revenues.
Net sales were positive in the quarter.
Legal
Revenues increased 1% to $842
million.
-
Recurring revenues grew 4% (76% of total)
- US
Print revenues declined 8% (14% of total)
-
Transactions revenues declined 8% (10% of total)
Adjusted EBITDA increased 3% to $320 million.
- The
margin increased to 38.0% from 36.6%. In constant currency, the
margin increased 110 basis points due to higher revenues, savings
related to the fourth-quarter 2016 severance charges and ongoing
simplification initiatives.
Tax & Accounting
Revenues increased 8% to $350
million primarily due to higher recurring revenues and
improved transactions revenues. Revenue growth also benefited
from a favorable year-over-year comparison, as the Government
business reported lower revenues in the prior-year period due to
delays on certain contracts.
-
Recurring revenues grew 4% (84% of total)
-
Transactions revenues grew 36% (16% of total)
Adjusted EBITDA increased 26% to $103 million.
- The
margin increased to 29.4% from 25.3%. In constant currency, the
margin increased 390 basis points due to higher revenues and
savings related to the fourth-quarter 2016 severance charges.
Corporate & Other (Including
Reuters News)
Reuters News revenues were $74
million, down 5%.
Corporate & Other costs at the adjusted EBITDA level
were $62 million compared to
$78 million in the prior-year
period.
- The
reduction was driven by savings generated by the company's
simplification initiatives and the elimination of certain costs
following the sale of IP & Science.
-
Including depreciation and amortization of software, Corporate
& Other costs were $74 million
compared to $94 million in the
prior-year period. On this basis, the company expects full-year
Corporate & Other costs to be approximately $280 million.
Consolidated Financial Highlights -
Six Months Ended June 30
(Millions of U.S. dollars, except for adjusted EBITDA margin and
EPS)
(unaudited) |
IFRS Financial Measures |
2017 |
2016 |
Change |
Change At
Constant Currency |
Revenues |
$5,597 |
$5,562 |
1% |
|
Operating profit |
$843 |
$711 |
19% |
|
Diluted EPS (includes discontinued
operations) |
$0.67 |
$0.79 |
-15% |
|
Cash flow from operations (includes
discontinued operations) |
$466 |
$1,228 |
-62% |
|
|
|
|
|
|
Non-IFRS Financial
Measures |
|
|
|
|
Revenues |
$5,597 |
$5,562 |
1% |
2% |
Adjusted EBITDA |
$1,714 |
$1,505 |
14% |
14% |
Adjusted EBITDA margin |
30.6% |
27.1% |
350bp |
310bp |
Adjusted EPS |
$1.23 |
$0.93 |
32% |
32% |
Free cash flow (includes discontinued
operations) |
($5) |
$748 |
n/m |
|
n/m – not meaningful |
|
|
|
|
Revenues increased 1% as higher recurring revenues and
contributions from acquisitions were partly offset by the impact of
foreign currency and a decline in Financial & Risk's recoveries
revenues.
- At
constant currency, revenues increased 2%.
Operating profit increased 19% as higher revenues and
lower expenses were partly offset by unfavorable fair value
adjustments associated with foreign currency derivatives embedded
in certain customer contracts. Lower expenses reflected continued
simplification initiatives.
-
Adjusted EBITDA increased 14% to $1.7 billion and the margin increased to 30.6%
from 27.1%, primarily reflecting higher revenues and the positive
impact of the company's simplification initiatives.
Diluted EPS, which includes discontinued operations,
decreased 15% to $0.67 as higher
operating profit was more than offset by non-cash foreign currency
fluctuations on intercompany loans and the loss of earnings from IP
& Science following its sale.
-
Adjusted EPS was $1.23, an
increase of 32%, or $0.30 per share,
primarily due to higher adjusted EBITDA.
Cash flow from operations declined 62% primarily due to a
$500 million pension plan
contribution, $116 million of
payments related to 2016 severance charges, and the loss of cash
flow from IP & Science following its sale ($243 million year-on-year variance).
-
Free cash flow was negative $5
million reflecting similar factors as noted above.
- 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.
Highlights by Business Unit – Six
Months Ended June 30
(Millions of U.S. dollars, except for adjusted EBITDA margins)
(unaudited) |
|
|
|
Six Months Ended |
|
|
|
|
June
30, |
|
Change |
|
|
2017 |
2016 |
|
Total |
Foreign
Currency |
Constant
Currency |
Revenues |
|
|
|
|
|
|
|
Financial & Risk |
|
$3,019 |
$3,033 |
|
0% |
-1% |
1% |
Legal |
|
1,666 |
1,668 |
|
0% |
-1% |
1% |
Tax & Accounting |
|
767 |
713 |
|
8% |
1% |
7% |
Corporate & Other (Reuters
News) |
|
148 |
154 |
|
-4% |
-2% |
-2% |
Eliminations |
|
(3) |
(6) |
|
|
|
|
Revenues |
|
$5,597 |
$5,562 |
|
1% |
-1% |
2% |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
Financial & Risk |
|
$940 |
$880 |
|
7% |
0% |
7% |
Legal |
|
627 |
608 |
|
3% |
-1% |
4% |
Tax & Accounting |
|
244 |
196 |
|
24% |
0% |
24% |
Corporate & Other (includes
Reuters News) |
|
(97) |
(179) |
|
n/a |
n/a |
n/a |
Adjusted EBITDA |
|
$1,714 |
$1,505 |
|
14% |
0% |
14% |
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
|
|
|
|
|
Financial & Risk |
|
31.1% |
29.0% |
|
210bp |
40bp |
170bp |
Legal |
|
37.6% |
36.5% |
|
110bp |
0bp |
110bp |
Tax & Accounting |
|
31.8% |
27.5% |
|
430bp |
-10bp |
440bp |
Corporate & Other (includes
Reuters News) |
|
n/a |
n/a |
|
n/a |
n/a |
n/a |
Adjusted EBITDA margin |
|
30.6% |
27.1% |
|
350bp |
40bp |
310bp |
n/a – not applicable |
|
|
|
|
|
|
|
Dividend
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 September 15,
2017 to common shareholders of record as of August 17, 2017.
Business Outlook 2017 (At Constant
Currency)
Based on the results of the first half of the year, the company
raised its full-year outlook for adjusted EBITDA margin and
adjusted EPS. The company reaffirmed its full-year outlook for
revenue growth and free cash flow. For the full-year 2017, the
company currently expects:
- Low
single-digit revenue growth
-
Adjusted EBITDA margin to range between 29.3% - 30.3% - up from
previous guidance of 28.8% - 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 charges, the $500
million pension plan contribution made in the first quarter
of 2017 and the loss of free cash flow from the sale of the IP
& Science business
-
Adjusted EPS target of $2.40 - $2.45
– up from previous guidance of $2.35
The company's 2017 outlook does not factor in the impact of
acquisitions or divestitures that may occur during the year.
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."
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 (other than at the business unit or segment level),
free cash flow, adjusted EPS, and selected measures excluding 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
term "organic" refers to Thomson Reuters' existing businesses
before the impact of acquisitions.
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 (At Constant
Currency)" section, Mr. Smith's comments and statements regarding
recoveries revenues 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
+1 416 649 9904
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
second-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 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 |
|
Six
Months Ended |
|
June
30, |
|
June
30, |
|
2017 |
2016 |
|
2017 |
2016 |
CONTINUING OPERATIONS |
|
|
|
|
|
Revenues |
$2,782 |
$2,769 |
|
$5,597 |
$5,562 |
Operating expenses |
(1,997) |
(1,991) |
|
(4,001) |
(4,100) |
Depreciation |
(77) |
(80) |
|
(149) |
(161) |
Amortization of computer software |
(168) |
(172) |
|
(348) |
(341) |
Amortization of other identifiable
intangible assets |
(120) |
(132) |
|
(239) |
(260) |
Other operating (losses) gains,
net |
(21) |
7 |
|
(17) |
11 |
Operating profit |
399 |
401 |
|
843 |
711 |
Finance costs, net: |
|
|
|
|
|
Net interest
expense |
(95) |
(103) |
|
(188) |
(196) |
Other finance
(costs) income |
(91) |
9 |
|
(118) |
(25) |
Income before tax and equity method
investments |
213 |
307 |
|
537 |
490 |
Share of post-tax losses in equity
method investments |
(7) |
(1) |
|
(5) |
- |
Tax (expense) benefit |
(5) |
(2) |
|
(14) |
24 |
Earnings from continuing
operations |
201 |
304 |
|
518 |
514 |
Earnings from discontinued operations,
net of tax |
5 |
46 |
|
2 |
108 |
Net earnings |
$206 |
$350 |
|
$520 |
$622 |
|
|
|
|
|
|
Earnings attributable to: |
|
|
|
|
|
Common shareholders |
192 |
337 |
|
489 |
599 |
Non-controlling interests |
14 |
13 |
|
31 |
23 |
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
Basic and diluted earnings per
share: |
|
|
|
|
|
From continuing
operations |
$0.26 |
$0.39 |
|
$0.67 |
$0.65 |
From discontinued
operations |
0.01 |
0.06 |
|
- |
0.14 |
Basic and diluted earnings per
share |
$0.27 |
$0.45 |
|
$0.67 |
$0.79 |
|
|
|
|
|
|
Basic weighted-average common
shares |
721,009,957 |
751,598,761 |
|
724,088,186 |
756,163,267 |
Diluted weighted-average common
shares |
722,504,109 |
753,350,217 |
|
725,409,478 |
757,795,444 |
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited) |
|
|
June
30, |
|
December
31, |
|
2017 |
|
2016 |
Assets |
|
|
|
Cash and cash equivalents |
$771 |
|
$2,368 |
Trade and other receivables |
1,545 |
|
1,392 |
Other financial assets |
86 |
|
188 |
Prepaid expenses and other current
assets |
735 |
|
686 |
Current assets |
3,137 |
|
4,634 |
|
|
|
|
Computer hardware and other property,
net |
877 |
|
961 |
Computer software, net |
1,404 |
|
1,394 |
Other identifiable intangible assets,
net |
5,539 |
|
5,655 |
Goodwill |
14,856 |
|
14,485 |
Other financial assets |
84 |
|
135 |
Other non-current assets |
565 |
|
537 |
Deferred tax |
55 |
|
51 |
Total assets |
$26,517 |
|
$27,852 |
|
|
|
|
Liabilities and equity |
|
|
|
Liabilities |
|
|
|
Current indebtedness |
$718 |
|
$1,111 |
Payables, accruals and provisions |
2,027 |
|
2,448 |
Deferred revenue |
1,023 |
|
901 |
Other financial liabilities |
195 |
|
102 |
Current liabilities |
3,963 |
|
4,562 |
|
|
|
|
Long-term indebtedness |
6,326 |
|
6,278 |
Provisions and other non-current
liabilities |
1,687 |
|
2,258 |
Other financial liabilities |
315 |
|
340 |
Deferred tax |
1,093 |
|
1,158 |
Total liabilities |
13,384 |
|
14,596 |
|
|
|
|
Equity |
|
|
|
Capital |
9,571 |
|
9,589 |
Retained earnings |
6,990 |
|
7,477 |
Accumulated other comprehensive
loss |
(3,922) |
|
(4,293) |
Total shareholders' equity |
12,639 |
|
12,773 |
Non-controlling interests |
494 |
|
483 |
Total equity |
13,133 |
|
13,256 |
Total liabilities and
equity |
$26,517 |
|
$27,852 |
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited) |
|
|
Three Months Ended
June 30, |
|
Six
Months Ended
June 30, |
|
2017 |
2016 |
|
2017 |
2016 |
Cash provided by (used
in): |
|
|
|
|
|
Operating activities |
|
|
|
|
|
Earnings from continuing
operations |
$201 |
$304 |
|
$518 |
$514 |
Adjustments for: |
|
|
|
|
|
Depreciation |
77 |
80 |
|
149 |
161 |
Amortization of computer software |
168 |
172 |
|
348 |
341 |
Amortization of other identifiable
intangible assets |
120 |
132 |
|
239 |
260 |
Net gains on disposals of businesses
and investments |
- |
(1) |
|
- |
(2) |
Deferred tax |
(52) |
(26) |
|
(73) |
(84) |
Other |
274 |
47 |
|
437 |
225 |
Pension contributions |
- |
- |
|
(500) |
- |
Changes in working capital and other
items |
54 |
(10) |
|
(603) |
(381) |
Operating cash flows from continuing
operations |
842 |
698 |
|
515 |
1,034 |
Operating cash flows from discontinued
operations |
(8) |
72 |
|
(49) |
194 |
Net cash provided by operating
activities |
834 |
770 |
|
466 |
1,228 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Acquisitions, net of cash
acquired |
(5) |
(65) |
|
(183) |
(111) |
(Payments for)
proceeds from disposals of businesses and
investments |
- |
(1) |
|
10 |
1 |
Capital expenditures, less proceeds
from disposals |
(241) |
(212) |
|
(454) |
(445) |
Other investing activities |
9 |
1 |
|
15 |
20 |
Investing cash flows from continuing
operations |
(237) |
(277) |
|
(612) |
(535) |
Investing cash flows from discontinued
operations |
17 |
(14) |
|
17 |
(25) |
Net cash used in investing
activities |
(220) |
(291) |
|
(595) |
(560) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Proceeds from debt |
- |
498 |
|
- |
498 |
Repayments of debt |
- |
(500) |
|
(550) |
(503) |
Net (repayments) borrowings under
short-term loan facilities |
(105) |
(138) |
|
150 |
304 |
Repurchases of common shares |
(294) |
(258) |
|
(578) |
(690) |
Dividends paid on preference
shares |
- |
- |
|
(1) |
(1) |
Dividends paid on common shares |
(241) |
(248) |
|
(483) |
(497) |
Dividends paid to non-controlling
interests |
(22) |
(20) |
|
(31) |
(29) |
Other financing activities |
11 |
9 |
|
16 |
13 |
Net cash used in financing
activities |
(651) |
(657) |
|
(1,477) |
(905) |
Decrease in cash and bank
overdrafts |
(37) |
(178) |
|
(1,606) |
(237) |
Translation adjustments |
3 |
(5) |
|
5 |
(1) |
Cash and bank overdrafts at beginning
of period |
800 |
867 |
|
2,367 |
922 |
Cash and bank overdrafts at end of
period |
$766 |
$684 |
|
$766 |
$684 |
|
|
|
|
|
|
Cash and bank overdrafts at end of
period comprised of: |
|
|
|
|
|
Cash and cash equivalents |
$771 |
$686 |
|
$771 |
$686 |
Bank overdrafts |
(5) |
(2) |
|
(5) |
(2) |
|
$766 |
$684 |
|
$766 |
$684 |
Thomson Reuters Corporation
Reconciliation of Earnings from Continuing Operations to
Adjusted EBITDA(1)
(millions of U.S. dollars, except for margins)
(unaudited) |
|
|
Three Months Ended |
|
|
Six
Months Ended |
|
|
June
30, |
|
|
June
30, |
|
|
2017 |
2016 |
Change |
|
2017 |
2016 |
Change |
|
|
|
|
|
|
|
|
Earnings from continuing
operations |
$201 |
$304 |
-34% |
|
$518 |
$514 |
1% |
Adjustments to remove: |
|
|
|
|
|
|
|
Tax expense (benefit) |
5 |
2 |
|
|
14 |
(24) |
|
Other finance costs (income) |
91 |
(9) |
|
|
118 |
25 |
|
Net interest expense |
95 |
103 |
|
|
188 |
196 |
|
Amortization of other identifiable
intangible assets |
120 |
132 |
|
|
239 |
260 |
|
Amortization of computer software |
168 |
172 |
|
|
348 |
341 |
|
Depreciation |
77 |
80 |
|
|
149 |
161 |
|
EBITDA |
$757 |
$784 |
|
|
$1,574 |
$1,473 |
|
Adjustments to remove: |
|
|
|
|
|
|
|
Share of post-tax losses in equity
method
investments |
7 |
1 |
|
|
5 |
- |
|
Other operating losses (gains),
net |
21 |
(7) |
|
|
17 |
(11) |
|
Fair value adjustments |
53 |
(21) |
|
|
118 |
43 |
|
Adjusted EBITDA |
$838 |
$757 |
11% |
|
$1,714 |
$1,505 |
14% |
Adjusted EBITDA
margin(1) |
30.1% |
27.3% |
280bp |
|
30.6% |
27.1% |
350bp |
|
|
|
|
|
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders
to Adjusted Earnings(2)
(millions of U.S. dollars, except for share and per share
data) |
(unaudited) |
|
|
Three Months Ended
June 30, |
|
Six
Months Ended
June 30, |
|
2017 |
2016 |
Change |
|
2017 |
2016 |
Change |
Earnings attributable to common
shareholders |
$192 |
$337 |
-43% |
|
$489 |
$599 |
-18% |
Adjustments to remove: |
|
|
|
|
|
|
|
Fair value adjustments |
53 |
(21) |
|
|
118 |
43 |
|
Amortization of other identifiable
intangible assets |
120 |
132 |
|
|
239 |
260 |
|
Other operating losses (gains),
net |
21 |
(7) |
|
|
17 |
(11) |
|
Other finance costs (income) |
91 |
(9) |
|
|
118 |
25 |
|
Share of post-tax losses in equity
method investments |
7 |
1 |
|
|
5 |
- |
|
Tax on above items |
(42) |
(35) |
|
|
(89) |
(92) |
|
Tax items impacting comparability |
2 |
13 |
|
|
2 |
6 |
|
Earnings from discontinued operations,
net of tax |
(5) |
(46) |
|
|
(2) |
(108) |
|
Interim period effective tax rate
normalization(3) |
(3) |
(8) |
|
|
(2) |
(13) |
|
Dividends declared on preference
shares |
- |
- |
|
|
(1) |
(1) |
|
Adjusted earnings |
$436 |
$357 |
22% |
|
$894 |
$708 |
26% |
Adjusted EPS |
$0.60 |
$0.47 |
28% |
|
$1.23 |
$0.93 |
32% |
Foreign currency(4) |
|
|
0% |
|
|
|
0% |
Constant currency(4) |
|
|
28% |
|
|
|
32% |
|
|
|
|
|
|
|
|
Diluted weighted-average common shares
(millions) |
722.5 |
753.4 |
|
|
725.4 |
757.8 |
|
Refer to page 11 for footnotes.
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow(5)
(millions of U.S. dollars)
(unaudited) |
|
|
Three Months Ended |
|
Six
Months Ended |
|
June
30, |
|
June
30, |
|
2017 |
2016 |
|
2017 |
2016 |
Net cash provided by operating
activities |
$834 |
$770 |
|
$466 |
$1,228 |
Capital expenditures, less proceeds
from disposals |
(241) |
(212) |
|
(454) |
(445) |
Capital expenditures from discontinued
operations |
- |
(14) |
|
- |
(25) |
Other investing activities |
9 |
1 |
|
15 |
20 |
Dividends paid on preference
shares |
- |
- |
|
(1) |
(1) |
Dividends paid to non-controlling
interests |
(22) |
(20) |
|
(31) |
(29) |
Free cash flow |
$580 |
$525 |
|
$(5) |
$748 |
Footnotes |
(1) |
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. |
(2) |
Adjusted earnings and adjusted 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 EPS 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. |
(3) |
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. |
(4) |
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. |
(5) |
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 |
|
Six
Months Ended |
|
June
30, |
|
June
30, |
|
2017 |
2016 |
|
2017 |
2016 |
Financial & Risk |
$140 |
$146 |
|
$287 |
$288 |
Legal |
61 |
63 |
|
123 |
123 |
Tax & Accounting |
32 |
27 |
|
64 |
58 |
Corporate & Other (includes
Reuters News) |
12 |
16 |
|
23 |
33 |
Total depreciation and amortization
of computer software |
$245 |
$252 |
|
$497 |
$502 |