Thomson Reuters
Reports Fourth-Quarter and Full-Year 2017 Results
TORONTO, Feb. 8, 2018 -- Thomson Reuters (TSX/NYSE:
TRI) today reported results for the fourth quarter and full year
ended December 31, 2017. As already
announced on January 30, 2018, the
company achieved its full-year 2017 Outlook (as updated in
August).
"Our 2017 fourth-quarter and full-year results show continued
progress in key areas," said Jim
Smith, president and chief executive officer of Thomson
Reuters. "Moving forward, we remain extremely excited about the
future prospects for F&R through our strategic partnership with
Blackstone, and our renewed focus to accelerate growth in the core
businesses of Thomson Reuters. Our ability to capitalize on
opportunities at the intersection of regulation and commerce has
never been stronger."
Consolidated Financial Highlights -
Three Months Ended December 31
(Millions of U.S.
dollars, except for adjusted EBITDA margin and earnings per share
(EPS))
(unaudited) |
|
|
|
|
|
2016 Excluding Q4
2016 Severance
Charges(2) |
IFRS Financial Measures(1) |
2017 |
2016 |
Change |
|
2016 |
Change |
Change at
Constant
Currency |
Revenues |
$2,944 |
$2,860 |
3% |
|
|
|
|
Operating profit |
$445 |
$294 |
51% |
|
|
|
|
Diluted EPS (includes discontinued operations
(3)) |
$0.81 |
$3.03 |
-73% |
|
|
|
|
Cash flow from operations (includes discontinued
operations (3)) |
$755 |
$998 |
-24% |
|
|
|
|
Non-IFRS Financial
Measures(1) |
|
|
|
|
|
|
|
Revenues |
$2,944 |
$2,860 |
3% |
|
$2,860 |
3% |
1% |
Adjusted EBITDA |
$874 |
$635 |
38% |
|
$847 |
3% |
1% |
Adjusted EBITDA margin |
29.7% |
22.2% |
750bp |
|
29.6% |
10bp |
10bp |
Adjusted EPS |
$0.60 |
$0.31 |
94% |
|
$0.60 |
0% |
-5% |
Free cash flow (includes discontinued operations
(3)) |
$506 |
$755 |
-33% |
|
$794 |
-36% |
|
|
|
|
|
|
|
|
|
Revenues increased 3% due to higher recurring revenues
and a positive impact from foreign currency.
- At constant currency, revenues increased 1%.
Operating profit increased 51%, primarily because the
prior year included $212 million of
severance charges.
- Adjusted EBITDA increased 38% to $874 million and the margin increased 750 basis
points to 29.7% from 22.2%.
- Excluding the severance charges from the prior-year period,
adjusted EBITDA increased 3% and the margin increased 10 basis
points.
Diluted EPS, which includes discontinued operations,
decreased 73% to $0.81, primarily
because the prior-year period included a $2.0 billion gain on the sale of the IP &
Science business. The current-year period reflected $304 million of tax benefits from the enactment
of the US Tax Cuts and Jobs Act of 2017.
- Adjusted EPS, which excludes the gain and tax
benefit, among other items, was $0.60
compared to $0.31 per share in the
prior-year period.
- Excluding the severance charges in the prior-year period,
adjusted EPS was unchanged. Currency had a $0.03 favorable impact.
Cash flow from operations decreased 24%, as the
prior-year period benefited from a $200
million tax benefit related to a $500
million pension contribution made in the first quarter of
2017.
- Free cash flow decreased 33% to $506 million reflecting the same factor.
(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. |
(2) |
Results exclude the impact of $212 million of
fourth-quarter 2016 charges from adjusted EBITDA and adjusted EPS.
Free cash flow excludes 2016 cash payments of $39 million
associated with these charges. Refer to the tables appended to this
news release for a reconciliation of 2016 adjusted EBITDA, the
related margin, adjusted EPS and free cash flow including and
excluding the charges. |
(3) |
Discontinued operations are comprised solely of
our Intellectual Property & Science business (IP &
Science), which was sold in October 2016. |
Highlights by Business Unit – Three
Months Ended December 31
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited) |
|
|
Three Months
Ended
December 31, |
|
Change |
|
|
2017 |
2016 |
|
Total |
Foreign Currency |
Constant Currency |
Revenues |
|
|
|
|
|
|
|
Financial & Risk |
|
$1,551 |
$1,508 |
|
3% |
2% |
1% |
Legal |
|
881 |
864 |
|
2% |
1% |
1% |
Tax & Accounting |
|
443 |
416 |
|
6% |
0% |
6% |
Corporate & Other (Reuters News) |
|
75 |
77 |
|
-3% |
2% |
-5% |
Eliminations |
|
(6) |
(5) |
|
|
|
|
Revenues |
|
$2,944 |
$2,860 |
|
3% |
2% |
1% |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
Financial & Risk |
|
$481 |
$289 |
|
66% |
0% |
66% |
Legal |
|
314 |
296 |
|
6% |
1% |
5% |
Tax & Accounting |
|
156 |
131 |
|
19% |
-1% |
20% |
Corporate & Other (includes Reuters News) |
|
(77) |
(81) |
|
n/a |
n/a |
n/a |
Adjusted EBITDA |
|
$874 |
$635 |
|
38% |
2% |
36% |
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
|
|
|
|
|
Financial & Risk |
|
31.0% |
19.2% |
|
1180bp |
-30bp |
1210bp |
Legal |
|
35.6% |
34.3% |
|
130bp |
0bp |
130bp |
Tax & Accounting |
|
35.2% |
31.5% |
|
370bp |
-40bp |
410bp |
Corporate & Other (includes Reuters News) |
|
n/a |
n/a |
|
n/a |
n/a |
n/a |
Adjusted EBITDA margin |
|
29.7% |
22.2% |
|
750bp |
-10bp |
760bp |
|
|
|
|
|
|
|
|
Excluding 2016 Severance Charges
from Prior-Year Period Amounts and Margins |
Adjusted EBITDA |
|
|
|
|
|
|
|
Financial & Risk |
|
$481 |
$456 |
|
5% |
2% |
3% |
Legal |
|
314 |
322 |
|
-2% |
1% |
-3% |
Tax & Accounting |
|
156 |
149 |
|
5% |
0% |
5% |
Corporate & Other (includes Reuters News) |
|
(77) |
(80) |
|
n/a |
n/a |
n/a |
Adjusted EBITDA |
|
$874 |
$847 |
|
3% |
2% |
1% |
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
|
|
|
|
|
|
Financial & Risk |
|
31.0% |
30.2% |
|
80bp |
0bp |
80bp |
Legal |
|
35.6% |
37.3% |
|
-170bp |
-20bp |
-150bp |
Tax & Accounting |
|
35.2% |
35.8% |
|
-60bp |
-40bp |
-20bp |
Corporate & Other (includes Reuters News) |
|
n/a |
n/a |
|
n/a |
n/a |
n/a |
Adjusted EBITDA margin |
|
29.7% |
29.6% |
|
10bp |
0bp |
10bp |
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 1% to $1.6
billion. Organic revenues were unchanged and
acquisitions contributed 1%.
- Revenues by type:
- Recurring revenues were unchanged (77% of total)
- Transactions revenues grew 7% (16% of total)
- Growth was due to increased revenue from Tradeweb and
contributions from acquisitions, partially offset by the impact of
lower foreign exchange trading revenues.
- Recoveries revenues decreased 6% (7% of
total)
- Revenues by geography:
- Revenues were up 2% in the Americas, unchanged in Europe, Middle
East and Africa (EMEA), and
down 1% in Asia Pacific.
Adjusted EBITDA increased 66% to $481 million and the margin increased to 31.0%
from 19.2%. The increase was primarily driven by the impact of
severance charges incurred in the fourth quarter of 2016.
- In constant currency and excluding the severance charges from
the prior-year period, adjusted EBITDA was up 3% and the margin
increased 80 basis points, driven by savings from the company's
simplification initiatives.
Net sales were positive in the quarter.
Legal
Revenues increased 1% to $881
million.
- Recurring revenues grew 3% (75% of total)
- US Print revenues declined 7% (14% of total)
- Transactions revenues declined 1% (11% of total)
Adjusted EBITDA increased 6% to $314 million and the margin increased to 35.6%
from 34.3% due to the impact of the severance charges incurred in
the fourth quarter of 2016.
- In constant currency and excluding the severance charges from
the prior-year period, adjusted EBITDA declined 3% and the margin
decreased by 150 basis points.
Tax & Accounting
Revenues increased 6% to $443
million.
- Recurring revenues grew 5% (88% of total)
- Transactions revenues grew 11% (12% of total)
Adjusted EBITDA increased 19% to $156 million and the margin increased to 35.2%
from 31.5%, primarily due to the impact of severance charges
incurred in the fourth quarter of 2016.
- In constant currency and excluding the severance charges from
the prior-year period, adjusted EBITDA was up 5% and the margin
decreased 20 basis points.
Corporate & Other (Including
Reuters News)
Reuters News revenues were $75
million, down 5%.
Corporate & Other costs at the adjusted EBITDA level
were $77 million compared to
$81 million in the prior-year period.
The reduction was driven by the company's ongoing simplification
initiatives, partly offset by investments relating to improving
customer experience.
- Including depreciation and amortization of software, Corporate
& Other costs were $84 million
compared to $92 million in the
prior-year period.
Consolidated Financial Highlights –
Full-Year 2017
(Millions of U.S.
dollars, except for adjusted EBITDA margin and EPS)
(unaudited) |
|
|
|
|
|
2016 Excluding Q4
2016 Severance Charges(2) |
IFRS Financial
Measures(1) |
2017 |
2016 |
Change |
|
2016 |
Change |
Change at
Constant
Currency |
Revenues |
$11,333 |
$11,166 |
1% |
|
|
|
|
Operating profit |
$1,755 |
$1,390 |
26% |
|
|
|
|
Diluted EPS (includes discontinued operations
(3)) |
$1.94 |
$4.13 |
-53% |
|
|
|
|
Cash flow from operations (includes discontinued
operations (3)) |
$2,029 |
$2,984 |
-32% |
|
|
|
|
Non-IFRS Financial
Measures(1) |
|
|
|
|
|
|
|
Revenues |
$11,333 |
$11,166 |
1% |
|
$11,166 |
1% |
2% |
Adjusted EBITDA |
$3,437 |
$2,954 |
16% |
|
$3,166 |
9% |
8% |
Adjusted EBITDA margin |
30.3% |
26.5% |
380bp |
|
28.4% |
190bp |
170bp |
Adjusted EPS |
$2.51 |
$1.79 |
40% |
|
$2.07 |
21% |
20% |
Free cash flow (includes discontinued operations
(3)) |
$1,032 |
$2,022 |
-49% |
|
$2,061 |
-50% |
|
|
|
|
|
|
|
|
|
Revenues increased 1% due to higher recurring revenues,
partly offset by a negative impact from foreign currency.
- At constant currency, revenues increased 2%.
Operating profit increased 26%, primarily because the
prior year included $212 million of
severance charges. Higher revenues and lower operating expenses,
reflecting the company's ongoing simplification initiatives, also
contributed, despite the unfavorable impact of fair value
adjustments associated with foreign currency derivatives embedded
in certain customer contracts.
Adjusted EBITDA increased 16% to $3.4 billion and the margin increased to 30.3%
from 26.5%.
- Excluding the severance charges from the prior year, adjusted
EBITDA increased 9% and the margin increased 190 basis points.
Diluted EPS, which includes discontinued operations,
decreased 53% to $1.94 primarily
because the prior year included a $2.0
billion gain on the sale of the IP & Science business.
The current-year period reflected $304
million of tax benefits from the enactment of the US Tax
Cuts and Jobs Act of 2017.
- Adjusted EPS, which excludes the gain and the tax
benefits, among other items, was $2.51 compared to $1.79 per share in the prior year.
- Excluding the charges from the prior year, adjusted EPS
increased 21%, or $0.44 per share,
driven by higher adjusted EBITDA. Currency had a $0.03 favorable impact.
Cash flow from operations declined 32%, primarily due to
a $500 million pension contribution
in January 2017, $103 million of higher payments related to 2016
severance charges, the loss of cash flows from the IP & Science
business, which was sold in October
2016 ($140 million year on
year reduction), and higher tax payments.
- Free cash flow decreased 49% to $1.0 billion reflecting similar factors as noted
above.
(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. |
(2) |
Results exclude the impact of $212 million of
fourth-quarter 2016 charges from adjusted EBITDA and adjusted EPS.
Free cash flow excludes 2016 cash payments of $39 million
associated with these charges. Refer to the tables appended to this
news release for a reconciliation of 2016 adjusted EBITDA, the
related margin, adjusted EPS and free cash flow including and
excluding the charges. |
(3) |
Discontinued operations are comprised solely of
our Intellectual Property & Science business (IP &
Science), which was sold in October 2016. |
Highlights by Business Unit –
Full-Year 2017
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited) |
|
Year Ended |
|
|
|
|
|
December
31, |
|
Change |
|
|
2017 |
2016 |
|
Total |
Foreign
Currency |
Constant
Currency |
Revenues |
|
|
|
|
|
|
|
Financial & Risk |
|
$6,112 |
$6,057 |
|
1% |
0% |
1% |
Legal |
|
3,390 |
3,367 |
|
1% |
0% |
1% |
Tax & Accounting |
|
1,551 |
1,452 |
|
7% |
1% |
6% |
Corporate & Other (Reuters
News) |
|
296 |
304 |
|
-3% |
0% |
-3% |
Eliminations |
|
(16) |
(14) |
|
|
|
|
Revenues |
|
$11,333 |
$11,166 |
|
1% |
-1% |
2% |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
Financial & Risk |
|
$1,916 |
$1,629 |
|
18% |
1% |
17% |
Legal |
|
1,279 |
1,232 |
|
4% |
0% |
4% |
Tax & Accounting |
|
495 |
414 |
|
20% |
1% |
19% |
Corporate & Other (includes
Reuters News) |
|
(253) |
(321) |
|
n/a |
n/a |
n/a |
Adjusted EBITDA |
|
$3,437 |
$2,954 |
|
16% |
0% |
16% |
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
|
|
|
|
|
Financial & Risk |
|
31.3% |
26.9% |
|
440bp |
10bp |
430bp |
Legal |
|
37.7% |
36.6% |
|
110bp |
10bp |
100bp |
Tax & Accounting |
|
31.9% |
28.5% |
|
340bp |
-10bp |
350bp |
Corporate & Other (includes
Reuters News) |
|
n/a |
n/a |
|
n/a |
n/a |
n/a |
Adjusted EBITDA margin |
|
30.3% |
26.5% |
|
380bp |
10bp |
370bp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding 2016 Severance
Charges from Prior-Year Period Amounts and
Margins |
Adjusted EBITDA |
|
|
|
|
|
|
|
Financial & Risk |
|
$1,916 |
$1,796 |
|
7% |
1% |
6% |
Legal |
|
1,279 |
1,258 |
|
2% |
0% |
2% |
Tax & Accounting |
|
495 |
432 |
|
15% |
1% |
14% |
Corporate & Other (includes
Reuters News) |
|
(253) |
(320) |
|
n/a |
n/a |
n/a |
Adjusted EBITDA |
|
$3,437 |
$3,166 |
|
9% |
1% |
8% |
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
|
|
|
|
|
|
Financial & Risk |
|
31.3% |
29.7% |
|
160bp |
20bp |
140bp |
Legal |
|
37.7% |
37.4% |
|
30bp |
0bp |
30bp |
Tax & Accounting |
|
31.9% |
29.8% |
|
210bp |
-10bp |
220bp |
Corporate & Other (includes
Reuters News) |
|
n/a |
n/a |
|
n/a |
n/a |
n/a |
Adjusted EBITDA margin |
|
30.3% |
28.4% |
|
190bp |
20bp |
170bp |
n/a – not applicable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial & Risk
Revenues increased 1% to $6.1
billion. Organic revenues were unchanged and
acquisitions contributed 1%.
- Revenues by type:
- Recurring revenues grew 1% (77% of total)
- Transactions revenues grew 6% (16% of total)
- Growth was due to increased revenue from Tradeweb and
contributions from acquisitions, partially offset by the impact of
lower foreign exchange trading revenues.
- Recoveries revenues decreased 6% (7% of
total)
- Revenues by geography:
- Revenues were up 3% in the Americas, and were unchanged in EMEA
and Asia Pacific. Excluding the
impact of lower recoveries, all regions reported revenue
growth.
Adjusted EBITDA increased 18% to $1.9 billion and the margin increased to 31.3%
from 26.9% due to the impact of severance charges incurred in the
fourth quarter of 2016, savings from the company's simplification
initiatives and higher revenues.
- In constant currency and excluding the severance charges from
the prior year, adjusted EBITDA was up 6% and the margin increased
140 basis points.
Net sales for the full year were positive.
Legal
Revenues increased 1% to $3.4
billion.
- Recurring revenues grew 3% (76% of total)
- US Print revenues declined 6% (13% of total)
- Transactions revenues declined 6% (11% of total)
Adjusted EBITDA increased 4% to $1.3 billion and the margin increased to 37.7%
from 36.6%. The increase was driven by the impact of severance
charges incurred in the fourth quarter of 2016, higher revenues and
savings from ongoing simplification initiatives.
- In constant currency and excluding the severance charges from
the prior year, adjusted EBITDA was up 2% and the margin increased
30 basis points.
Tax & Accounting
Revenues increased 6% to $1.6
billion.
- Recurring revenues grew 5% (85% of total)
- Transactions revenues grew 18% (15% of total)
Adjusted EBITDA increased 20% to $495 million and the margin increased to 31.9%
from 28.5%. The increase was driven by higher revenues, savings
from the company's simplification initiatives and the impact of
severance charges incurred in the fourth quarter of 2016.
- In constant currency and excluding the severance charges from
the prior year, adjusted EBITDA was up 14% and the margin increased
220 basis points.
Corporate & Other (Including
Reuters News)
Reuters News revenues were $296
million, down 3%.
Corporate & Other costs at the adjusted EBITDA level
were $253 million compared to
$321 million in the prior year. The
reduction was driven by the company's ongoing simplification
initiatives, partly offset by investments relating to improving
customer experience and costs related to real estate consolidation
initiatives.
- Including depreciation and amortization of software, Corporate
& Other costs were $289 million
compared to $381 million in the prior
year.
Business Update: Proposed Financial
& Risk Strategic Partnership with Blackstone
On January 30, 2018, Thomson
Reuters announced that it signed a definitive agreement to enter
into a strategic partnership with private equity funds managed by
Blackstone related to the company's Financial & Risk business.
As part of the transaction, Thomson Reuters has agreed to sell a
55% majority stake in Financial & Risk and will retain a 45%
interest in the business. The transaction values the Financial
& Risk business at approximately $20
billion. Thomson Reuters will receive approximately
$17 billion in gross proceeds at
closing (subject to purchase price adjustments). Thomson Reuters
will maintain full ownership of its Legal, Tax & Accounting and
the Reuters News businesses. The transaction is expected to close
in the second half of the year and is subject to specified
regulatory approvals and customary closing conditions.
Financial & Risk will be classified as a discontinued
operation for 2018 reporting purposes.
Dividend
On January 30, 2018, Thomson
Reuters announced that its board of directors approved maintaining
its dividend at $1.38 per common
share. A quarterly dividend of $0.345
per share is payable on March 15,
2018 to common shareholders of record as of February 22, 2018.
Note on 2018 Business Outlook
As announced on January 30, 2018,
Thomson Reuters plans to provide a 2018 Business Outlook when it
reports first-quarter results in early May as a result of the
company's recently signed agreement to form a strategic partnership
for Financial & Risk with Blackstone, and the related
allocation of costs that will need to be made between Thomson
Reuters and the proposed new partnership.
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
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 and the impact of the fourth quarter
2016 severance charges. 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.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS, MATERIAL ASSUMPTIONS AND MATERIAL RISKS
Certain statements in this news
release, including, but not limited to, Mr. Smith's comments and
statements regarding the proposed strategic partnership with
Blackstone involving the Financial & Risk business, 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 a transaction involving
all or part of the Financial & Risk business will be completed
or that the events described in any other forward-looking statement
will materialize. 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.
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
www.thomsonreuters.com.
As previously announced, the company will not webcast a
discussion of its fourth-quarter and full-year 2017 results today
because it pre-released expectations for its results and hosted a
conference call on January 30, 2018
after it announced that the company had signed a definitive
agreement to enter into a strategic partnership with Blackstone
involving its Financial & Risk business. You can access an
archive of the January 30, 2018
webcast by visiting the "Investor Relations" section
of www.thomsonreuters.com.
CONTACTS |
|
|
|
MEDIA |
INVESTORS |
David Crundwell |
Frank J. Golden |
Senior Vice President, Corporate Affairs |
Senior Vice President, Investor Relations |
+1 416 649 9904 |
+1 646 223 5288 |
david.crundwell@tr.com |
frank.golden@tr.com |
Thomson Reuters
Corporation |
Consolidated Income
Statement |
(millions of U.S.
dollars, except per share data) |
(unaudited) |
|
|
Three Months
Ended |
|
Year Ended |
|
December
31, |
|
December
31, |
|
2017 |
2016 |
|
2017 |
2016 |
CONTINUING OPERATIONS |
|
|
|
|
|
Revenues |
$2,944 |
$2,860 |
|
$11,333 |
$11,166 |
Operating expenses |
(2,082) |
(2,168) |
|
(8,079) |
(8,232) |
Depreciation |
(74) |
(74) |
|
(296) |
(313) |
Amortization of computer software |
(180) |
(193) |
|
(699) |
(711) |
Amortization of other identifiable intangible
assets |
(114) |
(140) |
|
(468) |
(528) |
Other operating (losses) gains, net |
(49) |
9 |
|
(36) |
8 |
Operating profit |
445 |
294 |
|
1,755 |
1,390 |
Finance costs, net: |
|
|
|
|
|
Net interest expense |
(90) |
(99) |
|
(362) |
(403) |
Other finance (costs)
income |
(27) |
78 |
|
(203) |
50 |
Income before tax and equity method
investments |
328 |
273 |
|
1,190 |
1,037 |
Share of post-tax earnings (losses) in equity
method
investments |
1 |
2 |
|
(2) |
4 |
Tax benefit (expense) |
266 |
(1) |
|
274 |
15 |
Earnings from continuing operations |
595 |
274 |
|
1,462 |
1,056 |
(Loss) earnings from discontinued operations, net
of tax |
(4) |
1,967 |
|
(3) |
2,093 |
Net earnings |
$591 |
$2,241 |
|
$1,459 |
$3,149 |
|
|
|
|
|
|
Earnings attributable to: |
|
|
|
|
|
Common shareholders |
576 |
2,226 |
|
1,395 |
3,098 |
Non-controlling interests |
15 |
15 |
|
64 |
51 |
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
Basic earnings per share: |
|
|
|
|
|
From continuing operations |
$0.81 |
$0.35 |
|
$1.94 |
$1.34 |
From discontinued operations |
- |
2.69 |
|
- |
2.80 |
Basic earnings per share |
$0.81 |
$3.04 |
|
$1.94 |
$4.14 |
|
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
|
From continuing operations |
$0.81 |
$0.35 |
|
$1.94 |
$1.34 |
From discontinued operations |
- |
2.68 |
|
- |
2.79 |
Diluted earnings per share |
$0.81 |
$3.03 |
|
$1.94 |
$4.13 |
|
|
|
|
|
|
Basic weighted-average common shares |
711,543,112 |
732,740,952 |
|
718,769,705 |
747,328,483 |
Diluted weighted-average common shares |
713,001,123 |
734,538,534 |
|
720,193,505 |
748,961,494 |
Thomson Reuters
Corporation |
Consolidated
Statement of Financial Position |
(millions of U.S.
dollars) |
(unaudited) |
|
|
December 31,
|
|
December 31, |
2017 |
|
2016 |
Assets |
|
|
|
Cash and cash equivalents |
$874 |
|
$2,368 |
Trade and other receivables |
1,457 |
|
1,392 |
Other financial assets |
98 |
|
188 |
Prepaid expenses and other current assets |
548 |
|
686 |
Current assets |
2,977 |
|
4,634 |
|
|
|
|
Computer hardware and other property, net |
921 |
|
961 |
Computer software, net |
1,458 |
|
1,394 |
Other identifiable intangible assets, net |
5,315 |
|
5,655 |
Goodwill |
15,042 |
|
14,485 |
Other financial assets |
83 |
|
135 |
Other non-current assets |
596 |
|
537 |
Deferred tax |
79 |
|
51 |
Total assets |
$26,471 |
|
$27,852 |
|
|
|
|
Liabilities and equity |
|
|
|
Liabilities |
|
|
|
Current indebtedness |
$1,644 |
|
$1,111 |
Payables, accruals and provisions |
2,086 |
|
2,448 |
Deferred revenue |
937 |
|
901 |
Other financial liabilities |
129 |
|
102 |
Current liabilities |
4,796 |
|
4,562 |
|
|
|
|
Long-term indebtedness |
5,382 |
|
6,278 |
Provisions and other non-current liabilities |
1,731 |
|
2,258 |
Other financial liabilities |
279 |
|
340 |
Deferred tax |
708 |
|
1,158 |
Total liabilities |
12,896 |
|
14,596 |
|
|
|
|
Equity |
|
|
|
Capital |
9,549 |
|
9,589 |
Retained earnings |
7,201 |
|
7,477 |
Accumulated other comprehensive loss |
(3,673) |
|
(4,293) |
Total shareholders' equity |
13,077 |
|
12,773 |
Non-controlling interests |
498 |
|
483 |
Total equity |
13,575 |
|
13,256 |
Total liabilities and equity |
$26,471 |
|
$27,852 |
Thomson Reuters
Corporation |
Consolidated
Statement of Cash Flow |
(millions of U.S.
dollars) |
(unaudited) |
|
|
Three Months
Ended
December 31, |
|
Year Ended
December 31, |
|
2017 |
2016 |
|
2017 |
2016 |
Cash provided by (used in): |
|
|
|
|
|
Operating activities |
|
|
|
|
|
Earnings from continuing operations |
$595 |
$274 |
|
$1,462 |
$1,056 |
Adjustments for: |
|
|
|
|
|
Depreciation |
74 |
74 |
|
296 |
313 |
Amortization of computer software |
180 |
193 |
|
699 |
711 |
Amortization of other identifiable intangible
assets |
114 |
140 |
|
468 |
528 |
Net (gains) losses on disposals of businesses and
investments |
(1) |
1 |
|
(36) |
(3) |
Deferred tax |
(317) |
119 |
|
(511) |
(11) |
Other |
172 |
(66) |
|
773 |
288 |
Pension contribution |
- |
- |
|
(500) |
- |
Changes in working capital and other items |
(60) |
362 |
|
(566) |
18 |
Operating cash flows from continuing
operations |
757 |
1,097 |
|
2,085 |
2,900 |
Operating cash flows from discontinued
operations |
(2) |
(99) |
|
(56) |
84 |
Net cash provided by operating activities |
755 |
998 |
|
2,029 |
2,984 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Acquisitions, net of cash acquired |
(1) |
(1) |
|
(185) |
(112) |
Proceeds from disposals of businesses and
investments |
- |
1 |
|
50 |
5 |
Capital expenditures, less proceeds from
disposals |
(240) |
(247) |
|
(950) |
(905) |
Other investing activities |
7 |
17 |
|
21 |
40 |
Investing cash flows from continuing
operations |
(234) |
(230) |
|
(1,064) |
(972) |
Investing cash flows from discontinued operations,
net of taxes paid |
- |
3,196 |
|
17 |
3,158 |
Net cash (used in) provided by investing
activities |
(234) |
2,966 |
|
(1,047) |
2,186 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Proceeds from debt |
- |
- |
|
- |
498 |
Repayments of debt |
(1,012) |
- |
|
(2,112) |
(503) |
Net borrowings (repayments) under short-term loan
facilities |
936 |
(1,740) |
|
1,641 |
(1,038) |
Repurchases of common shares |
(192) |
(441) |
|
(1,000) |
(1,673) |
Dividends paid on preference shares |
- |
- |
|
(2) |
(2) |
Dividends paid on common shares |
(236) |
(240) |
|
(956) |
(980) |
Dividends paid to non-controlling interests |
(16) |
(13) |
|
(66) |
(57) |
Other financing activities |
(25) |
21 |
|
5 |
43 |
Net cash used in financing activities |
(545) |
(2,413) |
|
(2,490) |
(3,712) |
(Decrease) increase in cash and bank
overdrafts |
(24) |
1,551 |
|
(1,508) |
1,458 |
Translation adjustments |
- |
(10) |
|
9 |
(13) |
Cash and bank overdrafts at beginning of
period |
892 |
826 |
|
2,367 |
922 |
Cash and bank overdrafts at end of period |
$868 |
$2,367 |
|
$868 |
$2,367 |
|
|
|
|
|
|
Cash and bank overdrafts at end of period
comprised of: |
|
|
|
|
|
Cash and cash equivalents |
$874 |
$2,368 |
|
$874 |
$2,368 |
Bank overdrafts |
(6) |
(1) |
|
(6) |
(1) |
|
$868 |
$2,367 |
|
$868 |
$2,367 |
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 |
|
|
|
Year Ended |
|
December
31, |
|
|
|
December
31, |
|
|
2017 |
2016 |
Change |
|
2017 |
2016 |
Change |
|
|
|
|
|
|
|
|
Earnings from continuing operations |
$595 |
$274 |
117% |
|
$1,462 |
$1,056 |
38% |
Adjustments to remove: |
|
|
|
|
|
|
|
Tax (benefit) expense |
(266) |
1 |
|
|
(274) |
(15) |
|
Other finance costs (income) |
27 |
(78) |
|
|
203 |
(50) |
|
Net interest expense |
90 |
99 |
|
|
362 |
403 |
|
Amortization of other identifiable intangible
assets |
114 |
140 |
|
|
468 |
528 |
|
Amortization of computer software |
180 |
193 |
|
|
699 |
711 |
|
Depreciation |
74 |
74 |
|
|
296 |
313 |
|
EBITDA |
$814 |
$703 |
|
|
$3,216 |
$2,946 |
|
Adjustments to remove: |
|
|
|
|
|
|
|
Share of post-tax (earnings)losses in
equity
method investments |
(1) |
(2) |
|
|
2 |
(4) |
|
Other operating losses (gains), net |
49 |
(9) |
|
|
36 |
(8) |
|
Fair value adjustments |
12 |
(57) |
|
|
183 |
20 |
|
Adjusted EBITDA |
$874 |
$635 |
38% |
|
$3,437 |
$2,954 |
16% |
Adjusted EBITDA margin(1) |
29.7% |
22.2% |
750bp |
|
30.3% |
26.5% |
380bp |
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
December 31, |
|
Year
Ended
December 31, |
|
|
|
2017 |
2016 |
Change |
|
2017 |
2016 |
Change |
Earnings attributable to common
shareholders |
$576 |
$2,226 |
-74% |
|
$1,395 |
$3,098 |
-55% |
Adjustments to remove: |
|
|
|
|
|
|
|
Fair value adjustments |
12 |
(57) |
|
|
183 |
20 |
|
Amortization of other identifiable intangible
assets |
114 |
140 |
|
|
468 |
528 |
|
Other operating losses (gains), net |
49 |
(9) |
|
|
36 |
(8) |
|
Other finance costs (income) |
27 |
(78) |
|
|
203 |
(50) |
|
Share of post-tax (earnings) losses in equity
method investments |
(1) |
(2) |
|
|
2 |
(4) |
|
Tax on above items |
(67) |
(46) |
|
|
(175) |
(184) |
|
Tax items impacting comparability |
(301) |
21 |
|
|
(304) |
34 |
|
Loss (earnings) from discontinued operations, net
of tax |
4 |
(1,967) |
|
|
3 |
(2,093) |
|
Interim period effective tax rate
normalization(3) |
15 |
- |
|
|
- |
- |
|
Dividends declared on preference shares |
- |
- |
|
|
(2) |
(2) |
|
Adjusted earnings |
$428 |
$228 |
88% |
|
$1,809 |
$1,339 |
35% |
Adjusted EPS |
$0.60 |
$0.31 |
94% |
|
$2.51 |
$1.79 |
40% |
Foreign currency(4) |
|
|
7% |
|
|
|
1% |
Constant currency(4) |
|
|
87% |
|
|
|
39% |
|
|
|
|
|
|
|
|
Excluding 2016 Severance
Charges from Prior-Year Period Amounts |
|
|
|
|
|
|
|
Adjusted EPS |
$0.60 |
$0.60 |
0% |
|
$2.51 |
$2.07 |
21% |
Foreign currency(4) |
|
|
5% |
|
|
|
1% |
Constant currency(4) |
|
|
-5% |
|
|
|
20% |
|
|
|
|
|
|
|
|
Diluted weighted-average common shares
(millions) |
713.0 |
734.5 |
|
|
720.2 |
749.0 |
|
Refer to page 14 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 |
|
Year Ended |
December
31, |
|
December
31, |
|
2017 |
2016 |
|
2017 |
2016 |
Net cash provided by operating activities |
$755 |
$998 |
|
$2,029 |
$2,984 |
Capital expenditures, less proceeds from
disposals |
(240) |
(247) |
|
(950) |
(905) |
Capital expenditures from discontinued
operations |
- |
- |
|
- |
(38) |
Other investing activities |
7 |
17 |
|
21 |
40 |
Dividends paid on preference shares |
- |
- |
|
(2) |
(2) |
Dividends paid to non-controlling interests |
(16) |
(13) |
|
(66) |
(57) |
Free cash flow |
$506 |
$755 |
|
$1,032 |
$2,022 |
Thomson Reuters
Corporation |
Reconciliation of
2016 Adjusted EBITDA(1), Adjusted EPS(2) and
Free Cash Flow(5) |
Excluding the
Fourth-Quarter 2016 Severance Charges |
(millions of U.S.
dollars, except per share data) |
(unaudited) |
|
|
Three Months
Ended |
|
Year Ended |
December 31,
2016 |
|
December 31,
2016 |
|
Actual |
Remove Charges |
Excluding Charges |
|
Actual |
Remove Charges |
Excluding Charges |
Adjusted EBITDA |
|
|
|
|
|
|
|
Financial & Risk |
$289 |
$167 |
$456 |
|
$1,629 |
$167 |
$1,796 |
Legal |
296 |
26 |
322 |
|
1,232 |
26 |
1,258 |
Tax & Accounting |
131 |
18 |
149 |
|
414 |
18 |
432 |
Corporate & Other (includes Reuters News) |
(81) |
1 |
(80) |
|
(321) |
1 |
(320) |
Adjusted EBITDA |
$635 |
$212 |
$847 |
|
$2,954 |
$212 |
$3,166 |
|
|
|
|
|
|
|
|
Adjusted EPS |
$0.31 |
$0.29 |
$0.60 |
|
$1.79 |
$0.28 |
$2.07 |
|
|
|
|
|
|
|
|
Free cash flow (includes discontinued
operations) |
$755 |
$39 |
$794 |
|
$2,022 |
$39 |
$2,061 |
Refer to page 14 for footnotes.
Footnotes |
|
|
(1) |
Thomson Reuters defines adjusted EBITDA for its
business units 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. Consolidated adjusted
EBITDA is comprised of adjusted EBITDA for its business units and
Corporate & Other. 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 |
|
Year Ended |
December
31, |
|
December
31, |
|
2017 |
2016 |
|
2017 |
2016 |
Financial & Risk |
$147 |
$150 |
|
$581 |
$585 |
Legal |
64 |
61 |
|
247 |
248 |
Tax & Accounting |
36 |
45 |
|
131 |
131 |
Corporate & Other (includes
Reuters News) |
7 |
11 |
|
36 |
60 |
Total depreciation and amortization
of computer software |
$254 |
$267 |
|
$995 |
$1,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|