Thomson Reuters
Reports Third-Quarter 2015 Results
Third-quarter performance consistent
with full-year expectations
NEW YORK, Oct. 23, 2015 -- Thomson Reuters (TSX
/ NYSE: TRI) today reported results for the third quarter ended
September 30, 2015. The company also
reaffirmed its full-year 2015 outlook.
- Reported revenues were down 4% as the negative impact of
foreign currency reduced revenues by 5%
- Revenues before currency grew 1%
- Financial & Risk's organic revenues were unchanged from the
prior-year period
- Legal, Tax & Accounting and Intellectual Property &
Science's revenues grew 3% in aggregate
- Financial & Risk net sales were positive for the sixth
consecutive quarter
- Adjusted EBITDA grew 2% to $838
million
- The margin increased to 28.1% vs. 26.5% in the prior-year
period, up 160 basis points
- Excluding the impact of currency, adjusted EBITDA grew 7% and
the margin was 160 basis points higher than the prior-year
period
- Underlying operating profit increased 7% to $565 million
- The margin increased to 19.0% vs. 17.1% in the prior-year
period, up 190 basis points
- Excluding the impact of currency, underlying operating profit
grew 13% and the margin was 200 basis points higher than the
prior-year period
- Free cash flow increased 25% to $1.1
billion for the first nine months of the year
- Adjusted EPS was up 16% to $0.52
vs. $0.45 in the prior-year period
- Excluding the impact of currency, adjusted EPS was up 24% or
$0.11 better than the prior-year
period
- Returned $1.25 billion to
shareholders through the repurchase of 31.7 million shares in the
first nine months of the year
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"I am pleased to report another quarter of steady progress,"
said James C. Smith, president and
chief executive officer of Thomson Reuters. "I am encouraged by the
way we continue to execute against our key priorities, by the
progress towards our financial targets and especially by the
underlying performance of our subscription revenues."
Consolidated Financial Highlights –
Third Quarter
|
Three Months Ended
September 30,
(Millions of U.S. dollars, except EPS and margins) |
|
|
|
|
|
IFRS Financial Measures |
2015 |
2014 |
Change |
|
Revenues |
$2,979 |
$3,107 |
-4% |
|
Operating profit |
$419 |
$466 |
-10% |
|
Diluted earnings per share (EPS) |
$0.36 |
$0.28 |
29% |
|
Cash flow from operations |
$665 |
$585 |
14% |
|
|
The decrease in operating profit
was primarily due to lower favorable fair value adjustments largely
associated with foreign currency embedded
derivatives in certain customer contracts. The increase in diluted
EPS resulted from lower finance costs associated with foreign
currency
fluctuations, which more than offset the decrease in operating
profit. |
|
Non-IFRS Financial Measures
(1) |
2015 |
2014 |
Change |
Change Before
Currency |
Revenues from ongoing businesses |
$2,979 |
$3,107 |
-4% |
1% |
Adjusted EBITDA |
$838 |
$822 |
2% |
7% |
Adjusted EBITDA margin |
28.1% |
26.5% |
160bp |
160bp |
Underlying operating profit |
$565 |
$530 |
7% |
13% |
Underlying operating profit margin |
19.0% |
17.1% |
190bp |
200bp |
Adjusted earnings per share (adjusted EPS) |
$0.52 |
$0.45 |
16% |
24% |
Free cash flow |
$449 |
$358 |
25% |
|
|
(1) 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. |
|
- Revenues from ongoing
businesses increased 1% (before currency) from the prior-year
period driven by the Legal, Tax & Accounting and Intellectual
Property & Science businesses, which grew 3% in aggregate. |
|
- Adjusted EBITDA increased 2%
from the prior-year period and the margin increased 160 basis
points to 28.1%. Excluding the impact of currency in the quarter,
adjusted EBITDA increased 7% and the margin was 160 basis points
higher than the prior-year period. |
|
- Underlying operating
profit increased 7% from the prior-year period and the margin
increased 190 basis points to 19.0%. Excluding the impact of
currency, underlying operating profit increased 13% and the margin
was 200 basis points higher than the prior-year period. |
|
- Adjusted EPS was $0.52, up
$0.07 from the prior-year period despite foreign currency having
had a $0.04 negative impact. |
Third-Quarter Business Segment
Highlights
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.
Financial & Risk
- Revenues were unchanged compared to the prior-year period.
Revenue growth exceeded 2% before the impact of lower recoveries
revenues and pricing adjustments related to the migration of
remaining legacy foreign exchange and buy-side customers onto
Financial & Risk's unified platform.
- Recurring revenues (77% of the segment's revenues) increased 1%
as an annual price increase and the impact of positive net sales
more than offset the price adjustments related to the legacy
product migration described above.
- Transactions-related revenues (13% of the segment's revenues)
were unchanged.
- Recoveries revenues (10% of the segment's revenues) were down
7% and are low-margin revenues. Recoveries revenues are expected to
continue to decline in the fourth quarter and throughout 2016 as
more third-party partners move to direct billing with our
customers.
- By geography, revenues in the Americas and Asia were up 2%, while revenues in
Europe, Middle East and Africa (EMEA) were down 2%.
- Net sales were positive overall and were positive in all
regions, except for EMEA. This marked the sixth consecutive quarter
of positive net sales. However, net sales were lower than the third
quarter of last year due to a difficult quarterly comparison, as
the third quarter of 2014 was the strongest net sales quarter of
the year.
- EBITDA increased 3% primarily due to savings related to
efficiency initiatives, which were partially offset by the impact
of foreign currency.
- The margin was 27.7%, up 260 basis points from the prior-year
period due to efficiency initiatives undertaken in 2014.
- Excluding the impact of currency from both periods and the
impact of $18 million of charges
taken by the company in the third quarter of 2014, the margin was
up 260 basis points to 28.8% compared to the prior-year
period.
- Foreign currency had a 110 basis point negative impact on the
margin.
- Operating profit increased 8% compared to the prior-year
period, primarily due to the same factors that impacted EBITDA.
- The margin was 17.9%, up 240 basis points from the prior-year
period.
- Before currency and one-time charges, the margin was up 280
basis points from the prior-year period.
- Foreign currency had a 150 basis point negative impact on the
margin.
Legal
- Revenues increased 1%. Excluding US print, revenues grew
3%.
- Solutions businesses (46% of the segment's revenues) grew 4%,
slightly lower than the first half of the year due to timing
factors. Revenue growth was driven by Elite, Serengeti, Pangea3
legal managed services, and the Investigations and Public Records
business. Solutions businesses represent all of Legal's revenues
excluding US print and US online legal information.
- US online legal information (40% of the segment's revenues)
grew 2%, reflecting growth for the third consecutive quarter.
- US print (14% of the segment's revenues) declined 8%, as
expected.
- EBITDA was unchanged and the margin increased 90 basis points
to 38.8% compared to 37.9% in the prior-year period. Excluding the
benefit of currency, the margin increased 30 basis points.
- Operating profit increased 4% and the margin increased 200
basis points to 31.7% compared to 29.7% in the prior-year period.
Excluding the benefit of currency, the margin increased 130 basis
points due to lower depreciation and amortization expense.
Tax & Accounting
- Revenues increased 8% driven by the Corporate, Professional and
Knowledge Solutions businesses, partially offset by a decline in
the Government business. Recurring revenues were up 9%
organically.
- EBITDA increased 10% and the margin increased 180 basis points
to 25.7% compared to 23.9% in the prior-year period. Excluding the
benefit of currency, the margin was up 110 basis points.
- Operating profit increased 16% and the margin increased 200
basis points to 16.3% compared to 14.3% in the prior-year period.
Excluding the benefit of currency, the margin was up 120 basis
points.
- Small movements in the timing of revenues and expenses can
impact margins in any given quarter for the Tax & Accounting
business. Full-year margins are more reflective of the segment's
underlying performance.
Intellectual Property &
Science
- Revenues were up 2% as subscription revenue (approximately 80%
of the segment's revenues) growth of 4% was partially offset by a
7% decline in transactions revenues as fewer one-time deals
affected the growth rate in the quarter.
- Both EBITDA and operating profit margins were affected by the
7% decline in transactions revenues, which are highly profitable.
- EBITDA was relatively unchanged with a margin of 30.9% compared
to 30.6% in the prior-year period. Excluding the benefit of
currency, the margin declined 90 basis points compared to the
prior-year period
- Operating profit decreased 2% with a margin of 21.5% compared
to 21.8% in the prior-year period. Excluding the benefit of
currency, the margin declined 120 basis points compared to the
prior-year period.
- Small movements in the timing of revenues and expenses can
impact margins in any given quarter for the Intellectual Property
& Science business. Full-year margins are more reflective of
the segment's underlying performance.
Corporate & Other (Including
Reuters News)
- Reuters News revenues were $74
million, up 3% compared to the prior-year period.
- Corporate & Other costs were $74
million compared to $73
million in the prior-year period.
Consolidated Financial Highlights –
Nine Months
|
Nine Months Ended
September 30,
(Millions of U.S. dollars, except EPS and margins) |
|
|
|
|
|
IFRS Financial Measures |
2015 |
2014 |
Change |
|
Revenues |
$9,061 |
$9,396 |
-4% |
|
Operating profit |
$1,231 |
$1,206 |
2% |
|
Diluted earnings per share (EPS) |
$1.07 |
$0.93 |
15% |
|
Cash flow from operations |
$1,833 |
$1,574 |
16% |
|
|
|
|
|
|
Non-IFRS Financial Measures
(1) |
2015 |
2014 |
Change |
Change Before
Currency |
Revenues from ongoing businesses |
$9,061 |
$9,394 |
-4% |
1% |
Adjusted EBITDA |
$2,497 |
$2,519 |
-1% |
5% |
Adjusted EBITDA margin |
27.6% |
26.8% |
80bp |
80bp |
Underlying operating profit |
$1,656 |
$1,639 |
1% |
8% |
Underlying operating profit margin |
18.3% |
17.4% |
90bp |
120bp |
Adjusted earnings per share (adjusted EPS) |
$1.48 |
$1.41 |
5% |
16% |
Free cash flow |
$1,093 |
$875 |
25% |
|
|
|
|
|
|
(1) 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. |
- Revenues from ongoing businesses increased 1% (before currency)
from the prior-year period driven by the Legal, Tax &
Accounting and Intellectual Property & Science businesses,
which grew 3% in aggregate.
- Adjusted EBITDA decreased 1% from the prior-year period and the
margin increased 80 basis points to 27.6%. Excluding the impact of
currency, adjusted EBITDA increased 5% and the margin was 80 basis
points higher than the prior-year period.
- Underlying operating profit increased 1% from the prior-year
period and the margin increased 90 basis points to 18.3%. Excluding
the impact of currency, underlying operating profit increased 8%
and the margin was 120 basis points higher than the prior-year
period.
- Adjusted EPS was $1.48 compared
to $1.41 in the prior-year period.
- Excluding the impact of currency, adjusted EPS was up 16%,
$0.22 better than the prior-year
period.
- Currency had a negative impact of $0.15 on adjusted EPS.
- Free cash flow for the first nine months of the year was
$1.1 billion compared to $875 million in the prior-year period, primarily
due to lower severance payments than in the prior-year period.
Business Outlook (Before Currency)
Thomson Reuters today re-affirmed its full-year Business Outlook
for 2015, which was previously communicated in February 2015. The company's 2015 Outlook assumes
constant currency rates compared to 2014 and is based on the
expected performance of the company's existing businesses and does
not factor in the impact of any acquisitions or divestitures that
may occur during the year. In light of the increased volatility
recently seen in the foreign currency markets, the company
continues to believe that currency is likely to have a
higher-than-usual impact on its results in 2015.
The company continues to expect:
- Positive organic revenue growth;
- Adjusted EBITDA margin to range between 27.5% and 28.5%;
- Underlying operating profit margin to range between 18.5% and
19.5%; and
- Free cash flow to range between $1.550
billion and $1.750 billion in 2015.
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."
Dividend and Share Repurchases
In February 2015, Thomson Reuters
board of directors approved a $0.02
per share annualized increase in the dividend to $1.34 per share. A quarterly dividend of
$0.335 per share is payable on
December 15, 2015 to common
shareholders of record as of November 19,
2015.
From January 1, 2015 through
September 30, 2015, the company
repurchased approximately 31.7 million shares at a cost of
approximately $1.25 billion. Of this
amount, 14.4 million shares were repurchased in the third quarter
at a cost of approximately $550
million.
Under the current $1.0 billion
share repurchase program announced in May
2015, the company has returned approximately $650 million to shareholders through the
repurchase of approximately 16.9 million shares.
Thomson Reuters
Thomson Reuters is the world's leading source of intelligent
information for businesses and professionals. We combine
industry expertise with innovative technology to deliver critical
information to leading decision makers in the financial and risk,
legal, tax and accounting, intellectual property and science and
media markets, powered by the world's most trusted news
organization. Thomson Reuters shares are listed on the
Toronto and New York Stock
Exchanges (symbol: TRI). For more information, go to
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 revenues from ongoing
businesses, adjusted EBITDA and the related margin, underlying
operating profit 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.
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 (Before Currency)" section and Mr. Smith's comments, 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 2015. 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 2015 business outlook
is based on various external and internal assumptions. Economic and
market assumptions include, but are not limited to, GDP growth in
the countries where Thomson Reuters operates. Internal financial
and operational assumptions include, but are not limited to,
continuing operational improvement in the Financial & Risk
business and the successful execution of new sales initiatives,
ongoing product release programs, 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 or expand into new
geographic markets and identify areas of higher growth; failures or
disruptions of telecommunications, network systems or the Internet;
fraudulent or unpermitted data access or other cyber-security or
privacy breaches; increased accessibility to free or relatively
inexpensive information sources; failure to maintain a high renewal
rate for subscription-based services; dependency on third parties
for data, information and other services; changes to law and
regulations, including the impact of the Dodd-Frank legislation and
similar financial services laws around the world; tax matters,
including changes to tax laws, regulations and treaties;
fluctuations in foreign currency exchange and interest rates;
failure to adapt to recent organizational changes and effectively
implement strategic initiatives; failure to recruit, motivate and
retain high quality management and key employees; failure to meet
the challenges involved in operating globally; failure to derive
fully the anticipated benefits from existing or future
acquisitions, joint ventures, investments or dispositions; failure
to protect the brands and reputation of Thomson Reuters; impairment
of goodwill and identifiable intangible assets; inadequate
protection of intellectual property rights; threat of legal actions
and claims; risk of antitrust/competition-related claims or
investigations; 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 |
INVESTORS |
David Crundwell |
Frank J. Golden |
Senior Vice President, Corporate Affairs |
Senior Vice President, Investor Relations |
+1 646 223 5285 |
+1 646 223 5288 |
david.crundwell@thomsonreuters.com |
frank.golden@thomsonreuters.com |
Thomson Reuters will webcast a discussion of its
third-quarter 2015 results today beginning at 8:30 a.m. Eastern Time (ET). 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 |
Business Segment
Information |
(millions of U.S.
dollars) |
(unaudited) |
|
|
|
Three Months
Ended |
|
|
|
|
|
|
|
September
30, |
|
Change |
|
|
|
2015 |
2014 |
|
Total |
Before
Currency (5) |
Organic |
|
Revenues |
|
|
|
|
|
|
|
|
Financial & Risk |
|
$1,517 |
$1,628 |
|
-7% |
0% |
0% |
|
Legal |
|
837 |
854 |
|
-2% |
1% |
1% |
|
Tax & Accounting |
|
307 |
301 |
|
2% |
8% |
8% |
|
Intellectual Property & Science |
|
246 |
248 |
|
-1% |
2% |
2% |
|
Corporate & Other (includes Reuters News) |
|
74 |
79 |
|
-6% |
3% |
3% |
|
Eliminations |
|
(2) |
(3) |
|
|
|
|
|
Revenues from ongoing businesses
(1) |
|
2,979 |
3,107 |
|
-4% |
1% |
1% |
|
Other Businesses (2) |
|
- |
- |
|
|
|
|
|
Revenues |
|
$2,979 |
$3,107 |
|
-4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin |
Adjusted EBITDA (3) |
|
|
|
|
Change |
2015 |
2014 |
Change |
Financial & Risk |
|
$420 |
$408 |
|
3% |
27.7% |
25.1% |
260bp |
Legal |
|
325 |
324 |
|
0% |
38.8% |
37.9% |
90bp |
Tax & Accounting |
|
79 |
72 |
|
10% |
25.7% |
23.9% |
180bp |
Intellectual Property & Science |
|
76 |
76 |
|
0% |
30.9% |
30.6% |
30bp |
Corporate & Other (includes Reuters News) |
|
(62) |
(58) |
|
|
|
|
|
Adjusted EBITDA |
|
$838 |
$822 |
|
2% |
28.1% |
26.5% |
160bp |
|
|
|
|
|
|
|
|
|
Underlying Operating Profit
(4) |
|
|
|
|
|
|
|
|
Financial & Risk |
|
$271 |
$252 |
|
8% |
17.9% |
15.5% |
240bp |
Legal |
|
265 |
254 |
|
4% |
31.7% |
29.7% |
200bp |
Tax & Accounting |
|
50 |
43 |
|
16% |
16.3% |
14.3% |
200bp |
Intellectual Property & Science |
|
53 |
54 |
|
-2% |
21.5% |
21.8% |
-30bp |
Corporate & Other (includes Reuters News) |
|
(74) |
(73) |
|
|
|
|
|
Underlying operating profit |
|
$565 |
$530 |
|
7% |
19.0% |
17.1% |
190bp |
|
Refer to page 12 for explanation of
footnotes. |
Thomson Reuters
Corporation |
Business Segment
Information |
(millions of U.S.
dollars) |
(unaudited) |
|
|
|
Nine Months
Ended |
|
|
|
|
|
|
|
September
30, |
|
Change |
|
|
|
2015 |
2014 |
|
Total |
Before
Currency (5) |
Organic |
|
Revenues |
|
|
|
|
|
|
|
|
Financial & Risk |
|
$4,621 |
$4,941 |
|
-6% |
0% |
0% |
|
Legal |
|
2,487 |
2,507 |
|
-1% |
2% |
2% |
|
Tax & Accounting |
|
1,007 |
973 |
|
3% |
8% |
7% |
|
Intellectual Property & Science |
|
731 |
742 |
|
-1% |
1% |
1% |
|
Corporate & Other (includes Reuters News) |
|
222 |
240 |
|
-8% |
2% |
2% |
|
Eliminations |
|
(7) |
(9) |
|
|
|
|
|
Revenues from ongoing businesses
(1) |
|
9,061 |
9,394 |
|
-4% |
1% |
1% |
|
Other Businesses (2) |
|
- |
2 |
|
|
|
|
|
Revenues |
|
$9,061 |
$9,396 |
|
-4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin |
Adjusted EBITDA (3) |
|
|
|
|
Change |
2015 |
2014 |
Change |
Financial & Risk |
|
$1,251 |
$1,233 |
|
1% |
27.1% |
25.0% |
210bp |
Legal |
|
918 |
939 |
|
-2% |
36.9% |
37.5% |
-60bp |
Tax & Accounting |
|
295 |
285 |
|
4% |
29.3% |
29.3% |
0bp |
Intellectual Property & Science |
|
217 |
233 |
|
-7% |
29.7% |
31.4% |
-170bp |
Corporate & Other (includes Reuters News) |
|
(184) |
(171) |
|
|
|
|
|
Adjusted EBITDA |
|
$2,497 |
$2,519 |
|
-1% |
27.6% |
26.8% |
80bp |
|
|
|
|
|
|
|
|
|
Underlying Operating Profit
(4) |
|
|
|
|
|
|
|
|
Financial & Risk |
|
$786 |
$758 |
|
4% |
17.0% |
15.3% |
170bp |
Legal |
|
729 |
730 |
|
0% |
29.3% |
29.1% |
20bp |
Tax & Accounting |
|
211 |
192 |
|
10% |
21.0% |
19.7% |
130bp |
Intellectual Property & Science |
|
149 |
167 |
|
-11% |
20.4% |
22.5% |
-210bp |
Corporate & Other (includes Reuters News) |
|
(219) |
(208) |
|
|
|
|
|
Underlying operating profit |
|
$1,656 |
$1,639 |
|
1% |
18.3% |
17.4% |
90bp |
|
Refer to page 12 for explanation of
footnotes. |
Thomson Reuters
Corporation |
Reconciliation of
Operating Profit to Adjusted EBITDA (3) |
(millions of U.S.
dollars) |
(unaudited) |
|
|
Three Months
Ended |
|
|
Nine Months
Ended |
|
September
30, |
|
|
September
30, |
|
|
2015 |
2014 |
Change |
|
2015 |
2014 |
Change |
|
|
|
|
|
|
|
|
Operating profit |
$419 |
$466 |
-10% |
|
$1,231 |
$1,206 |
2% |
Adjustments to remove: |
|
|
|
|
|
|
|
Amortization of other
identifiable intangible assets |
144 |
160 |
|
|
440 |
488 |
|
Fair value
adjustments |
(8) |
(88) |
|
|
(2) |
(53) |
|
Other operating losses
(gains), net |
10 |
(9) |
|
|
(13) |
(4) |
|
Operating loss from Other
Businesses (2) |
- |
1 |
|
|
- |
2 |
|
Underlying operating profit |
$565 |
$530 |
7% |
|
$1,656 |
$1,639 |
1% |
Remove: depreciation and amortization
of computer
software (excluding Other Businesses
(2)) |
273 |
292 |
|
|
841 |
880 |
|
Adjusted EBITDA |
$838 |
$822 |
2% |
|
$2,497 |
$2,519 |
-1% |
|
|
|
|
|
|
|
|
Underlying operating profit margin
(4) |
19.0% |
17.1% |
190bp |
|
18.3% |
17.4% |
90bp |
Adjusted EBITDA margin (3) |
28.1% |
26.5% |
160bp |
|
27.6% |
26.8% |
80bp |
|
|
|
|
|
|
|
|
|
Thomson Reuters
Corporation |
Reconciliation of
Net Earnings to Adjusted EBITDA (3) |
(millions of U.S.
dollars) |
(unaudited) |
|
|
Three Months
Ended |
|
|
Nine Months
Ended |
|
September
30, |
|
|
September
30, |
|
|
2015 |
2014 |
Change |
|
2015 |
2014 |
Change |
|
|
|
|
|
|
|
|
Net earnings |
$293 |
$250 |
17% |
|
$894 |
$802 |
11% |
Adjustments to remove: |
|
|
|
|
|
|
|
Tax expense |
11 |
26 |
|
|
53 |
53 |
|
Other finance costs (income) |
14 |
82 |
|
|
(23) |
25 |
|
Net interest expense |
102 |
110 |
|
|
314 |
329 |
|
Amortization of other identifiable intangible
assets |
144 |
160 |
|
|
440 |
488 |
|
Amortization of computer software |
186 |
195 |
|
|
572 |
586 |
|
Depreciation |
87 |
97 |
|
|
269 |
294 |
|
EBITDA |
$837 |
$920 |
|
|
$2,519 |
$2,577 |
|
Adjustments to remove: |
|
|
|
|
|
|
|
Share of post-tax earnings in equity
method
investments |
(1) |
(2) |
|
|
(7) |
(3) |
|
Other operating losses (gains), net |
10 |
(9) |
|
|
(13) |
(4) |
|
Fair value adjustments |
(8) |
(88) |
|
|
(2) |
(53) |
|
EBITDA from Other Businesses (2) |
- |
1 |
|
|
- |
2 |
|
Adjusted EBITDA |
$838 |
$822 |
2% |
|
$2,497 |
$2,519 |
-1% |
|
Refer to page 12 for explanation of
footnotes. |
Thomson Reuters
Corporation |
Reconciliation of
Underlying Operating Profit (4) to Adjusted EBITDA
(3) by Business Segment |
(millions of U.S.
dollars) |
(unaudited) |
|
|
Three Months
Ended
September 30, 2015 |
|
Three Months
Ended
September 30, 2014 |
|
Underlying
Operating Profit |
Add:
Depreciation
and
Amortization of
Computer
Software |
Adjusted
EBITDA |
|
Underlying
Operating Profit |
Add:
Depreciation
and
Amortization of
Computer
Software ** |
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
Financial & Risk |
$271 |
$149 |
$420 |
|
$252 |
$156 |
$408 |
Legal |
265 |
60 |
325 |
|
254 |
70 |
324 |
Tax & Accounting |
50 |
29 |
79 |
|
43 |
29 |
72 |
Intellectual Property & Science |
53 |
23 |
76 |
|
54 |
22 |
76 |
Corporate & Other (includes Reuters News) |
(74) |
12 |
(62) |
|
(73) |
15 |
(58) |
|
$565 |
$273 |
$838 |
|
$530 |
$292 |
$822 |
|
|
|
|
Nine Months
Ended
September 30, 2015 |
|
Nine Months
Ended
September 30, 2014 |
|
Underlying
Operating
Profit |
Add:
Depreciation
and
Amortization of
Computer
Software |
Adjusted
EBITDA |
|
Underlying
Operating
Profit |
Add:
Depreciation
and
Amortization
of Computer
Software ** |
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
Financial & Risk |
$786 |
$465 |
$1,251 |
|
$758 |
$475 |
$1,233 |
Legal |
729 |
189 |
918 |
|
730 |
209 |
939 |
Tax & Accounting |
211 |
84 |
295 |
|
192 |
93 |
285 |
Intellectual Property & Science |
149 |
68 |
217 |
|
167 |
66 |
233 |
Corporate & Other (includes Reuters News) |
(219) |
35 |
(184) |
|
(208) |
37 |
(171) |
|
$1,656 |
$841 |
$2,497 |
|
$1,639 |
$880 |
$2,519 |
|
_________________________ |
** Excludes Other Businesses
(2) |
|
Refer to page 12 for explanation of
footnotes. |
Thomson Reuters
Corporation |
Reconciliation of
Changes in Adjusted EBITDA (5), Underlying Operating
Profit (5) and the Related Margins, and |
Adjusted Earnings
Per Share (EPS) (5) Excluding the Effects of Foreign
Currency |
(millions of U.S.
dollars, except for per share amounts, and margins) |
(unaudited) |
|
|
Three Months Ended
September 30, |
|
|
|
|
% Change |
|
|
|
BP Change |
|
|
|
2015 |
2014 |
|
Total |
Foreign Currency |
Before Currency |
|
2015 Margin |
2014 Margin |
Total |
Foreign Currency |
Before Currency |
|
|
Adjusted EBITDA |
$838 |
$822 |
|
2% |
(5%) |
7% |
|
28.1% |
26.5% |
160bp |
0bp |
160bp |
|
|
Underlying operating profit |
$565 |
$530 |
|
7% |
(6%) |
13% |
|
19.0% |
17.1% |
190bp |
(10)bp |
200bp |
|
|
Adjusted EPS |
$0.52 |
$0.45 |
|
16% |
(8%) |
24% |
|
n/a |
n/a |
n/a |
n/a |
n/a |
|
|
|
|
|
|
Nine Months Ended
September 30, |
|
|
|
% Change |
|
|
|
BP Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
2014 |
|
Total |
Foreign Currency |
Before Currency |
|
2015 Margin |
2014 Margin |
Total |
Foreign Currency |
Before Currency |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$2,497 |
$2,519 |
|
(1%) |
(6%) |
5% |
|
27.6% |
26.8% |
80bp |
0bp |
80bp |
|
|
|
|
|
|
|
|
|
|
|
|
Underlying operating profit |
$1,656 |
$1,639 |
|
1% |
(7%) |
8% |
|
18.3% |
17.4% |
90bp |
(30)bp |
120bp |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS |
$1.48 |
$1.41 |
|
5% |
(11%) |
16% |
|
n/a |
n/a |
n/a |
n/a |
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a – not applicable |
|
|
|
|
|
|
|
|
|
|
|
|
Thomson Reuters
Corporation |
Reconciliation of
Earnings Attributable to Common Shareholders |
to Adjusted Earnings
(6) |
(millions of U.S.
dollars, except for share and per share data) |
(unaudited) |
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September
30, |
|
September
30, |
|
2015 |
2014 |
|
2015 |
2014 |
Earnings attributable to common
shareholders |
$280 |
$231 |
|
$847 |
$762 |
Adjustments to remove: |
|
|
|
|
|
Operating loss from Other Businesses
(2) |
- |
1 |
|
- |
2 |
Fair value adjustments |
(8) |
(88) |
|
(2) |
(53) |
Other operating losses (gains), net |
10 |
(9) |
|
(13) |
(4) |
Other finance costs (income) |
14 |
82 |
|
(23) |
25 |
Share of post-tax earnings in equity method
investments |
(1) |
(2) |
|
(7) |
(3) |
Tax on above items |
(5) |
14 |
|
(2) |
10 |
Tax items impacting comparability |
3 |
(10) |
|
1 |
(10) |
Amortization of other identifiable
intangible assets |
144 |
160 |
|
440 |
488 |
Interim period effective tax rate normalization
(7) |
(9) |
5 |
|
(6) |
- |
Tax charge amortization (8) |
(22) |
(22) |
|
(65) |
(65) |
Dividends declared on preference shares |
(1) |
(1) |
|
(2) |
(2) |
Adjusted earnings |
$405 |
$361 |
|
$1,168 |
$1,150 |
Adjusted earnings per share |
$0.52 |
$0.45 |
|
$1.48 |
$1.41 |
|
|
|
|
|
|
Diluted weighted-average common shares
(millions) |
781.2 |
807.6 |
|
788.8 |
814.0 |
|
Refer to page 12 for explanation of
footnotes. |
Thomson Reuters
Corporation |
Reconciliation of
Net Cash Provided by Operating Activities |
to Free Cash Flow
from Ongoing Businesses (9) |
(millions of U.S.
dollars) |
(unaudited) |
|
|
Three Months
Ended |
Nine Months
Ended |
September
30, |
September
30, |
|
2015 |
2014 |
2015 |
2014 |
Net cash provided by operating activities |
$665 |
$585 |
$1,833 |
$1,574 |
Capital expenditures, less proceeds from
disposals |
(217) |
(231) |
(743) |
(704) |
Other investing activities |
2 |
5 |
5 |
7 |
Dividends paid on preference shares |
(1) |
(1) |
(2) |
(2) |
Free cash flow |
449 |
358 |
1,093 |
875 |
Remove: Other Businesses (2) |
- |
(2) |
- |
(1) |
Free cash flow from ongoing businesses |
$449 |
$356 |
$1,093 |
$874 |
Footnotes |
|
(1) |
Revenues from ongoing businesses are revenues from
reportable segments and Corporate & Other (which includes
Reuters News) less eliminations. Other Businesses (see note (2)
below) are excluded. |
(2) |
Other Businesses are businesses that have been or
are expected to be exited through sale or closure that did not
qualify for discontinued operations classification. |
(3) |
Thomson Reuters defines adjusted EBITDA as
underlying operating profit excluding the related depreciation and
amortization of computer software. Adjusted EBITDA margin is
adjusted EBITDA expressed as a percentage of revenues from ongoing
businesses. |
(4) |
Underlying operating profit is operating profit
from reportable segments and Corporate & Other (includes
Reuters News). Underlying operating profit margin is the underlying
operating profit expressed as a percentage of revenues from ongoing
businesses. |
(5) |
The changes in revenues from ongoing businesses,
adjusted EBITDA and underlying operating profit 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 period's local
currency equivalent using the same exchange rates. |
(6) |
Adjusted earnings and adjusted earnings per share
include dividends declared on preference shares and amortization of
the 2013 tax charges associated with the consolidation of
technology and content assets but exclude the pre-tax impacts of
amortization of other identifiable intangible assets as well as the
post-tax impacts of fair value adjustments, other operating (gains)
and losses, certain impairment charges, the results of Other
Businesses (see note (2) above), other finance (income) costs,
Thomson Reuters share of post-tax (earnings) losses in equity
method investments, discontinued operations and other items
affecting comparability. Adjusted earnings per share is calculated
using diluted weighted-average shares and does not represent actual
earnings or loss per share attributable to shareholders. |
(7) |
Adjustment to reflect income taxes based on
estimated full-year effective tax rate. Reported earnings or loss
for interim periods reflect income taxes based on the estimated
effective tax rates of each of the jurisdictions in which Thomson
Reuters operates. The adjustment reallocates estimated full-year
income taxes between interim periods, but has no effect on
full-year income taxes. |
(8) |
Reflects amortization of the 2013 tax charges
associated with the consolidation of the ownership and management
of technology and content assets. For the non-IFRS measure, the
majority of the charges are amortized over seven years, the period
over which the tax is expected to be paid. |
(9) |
Free cash flow is net cash provided by operating
activities and other investing activities less capital expenditures
and dividends paid on the company's preference shares. Other
Businesses (see note (2) above) are also removed to arrive at free
cash flow from ongoing businesses. |
Thomson Reuters
Corporation |
Consolidated Income
Statement |
(millions of U.S.
dollars, except per share data) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September
30, |
|
September
30, |
|
2015 |
2014 |
|
2015 |
2014 |
|
|
|
|
|
|
Revenues |
$2,979 |
$3,107 |
|
$9,061 |
$9,396 |
Operating expenses |
(2,133) |
(2,198) |
|
(6,562) |
(6,826) |
Depreciation |
(87) |
(97) |
|
(269) |
(294) |
Amortization of computer software |
(186) |
(195) |
|
(572) |
(586) |
Amortization of other identifiable intangible
assets |
(144) |
(160) |
|
(440) |
(488) |
Other operating (losses) gains, net |
(10) |
9 |
|
13 |
4 |
Operating profit |
419 |
466 |
|
1,231 |
1,206 |
Finance costs, net: |
|
|
|
|
|
Net interest expense |
(102) |
(110) |
|
(314) |
(329) |
Other finance (costs)
income |
(14) |
(82) |
|
23 |
(25) |
Income before tax and equity method
investments |
303 |
274 |
|
940 |
852 |
Share of post-tax earnings in equity method
investments |
1 |
2 |
|
7 |
3 |
Tax expense |
(11) |
(26) |
|
(53) |
(53) |
Net earnings |
$293 |
$250 |
|
$894 |
$802 |
|
|
|
|
|
|
Earnings attributable to: |
|
|
|
|
|
Common shareholders |
280 |
231 |
|
847 |
762 |
Non-controlling interests |
13 |
19 |
|
47 |
40 |
|
|
|
|
|
|
Basic earnings per share |
$0.36 |
$0.29 |
|
$1.08 |
$0.94 |
Diluted earnings per share |
$0.36 |
$0.28 |
|
$1.07 |
$0.93 |
|
|
|
|
|
|
Basic weighted-average common shares |
778,334,806 |
804,034,944 |
|
785,932,003 |
810,582,179 |
Diluted weighted-average common shares |
781,170,075 |
807,567,416 |
|
788,797,817 |
813,987,831 |
Thomson Reuters
Corporation |
Consolidated
Statement of Financial Position |
(millions of U.S.
dollars) |
(unaudited) |
|
|
September 30, |
|
December 31, |
2015 |
|
2014 |
Assets |
|
|
|
Cash and cash equivalents |
$710 |
|
$1,018 |
Trade and other receivables |
1,633 |
|
1,810 |
Other financial assets |
159 |
|
161 |
Prepaid expenses and other current assets |
726 |
|
657 |
Current assets |
3,228 |
|
3,646 |
|
|
|
|
Computer hardware and other property, net |
1,047 |
|
1,182 |
Computer software, net |
1,481 |
|
1,529 |
Other identifiable intangible assets, net |
6,579 |
|
7,124 |
Goodwill |
16,006 |
|
16,403 |
Other financial assets |
123 |
|
127 |
Other non-current assets |
537 |
|
536 |
Deferred tax |
47 |
|
50 |
Total assets |
$29,048 |
|
$30,597 |
|
|
|
|
Liabilities and equity |
|
|
|
Liabilities |
|
|
|
Current indebtedness |
$1,619 |
|
$534 |
Payables, accruals and provisions |
2,079 |
|
2,443 |
Deferred revenue |
1,228 |
|
1,355 |
Other financial liabilities |
69 |
|
265 |
Current liabilities |
4,995 |
|
4,597 |
|
|
|
|
Long-term indebtedness |
6,874 |
|
7,576 |
Provisions and other non-current liabilities |
2,246 |
|
2,171 |
Other financial liabilities |
368 |
|
161 |
Deferred tax |
1,294 |
|
1,433 |
Total liabilities |
15,777 |
|
15,938 |
|
|
|
|
Equity |
|
|
|
Capital |
9,918 |
|
10,157 |
Retained earnings |
6,421 |
|
7,168 |
Accumulated other comprehensive loss |
(3,557) |
|
(3,147) |
Total shareholders' equity |
12,782 |
|
14,178 |
Non-controlling interests |
489 |
|
481 |
Total equity |
13,271 |
|
14,659 |
Total liabilities and equity |
$29,048 |
|
$30,597 |
Thomson Reuters
Corporation |
Consolidated
Statement of Cash Flow |
(millions of U.S.
dollars) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended
September 30, |
|
Nine Months
Ended
September 30, |
|
2015 |
2014 |
|
2015 |
2014 |
Cash provided by (used in): |
|
|
|
|
|
Operating activities |
|
|
|
|
|
Net earnings |
$293 |
$250 |
|
$894 |
$802 |
Adjustments for: |
|
|
|
|
|
Depreciation |
87 |
97 |
|
269 |
294 |
Amortization of computer software |
186 |
195 |
|
572 |
586 |
Amortization of other identifiable intangible
assets |
144 |
160 |
|
440 |
488 |
Net losses (gains) on disposals of businesses and
investments |
1 |
(2) |
|
(24) |
(1) |
Deferred tax |
(43) |
(112) |
|
(109) |
(187) |
Other |
89 |
37 |
|
191 |
148 |
Changes in working capital and other items |
(92) |
(40) |
|
(400) |
(556) |
Net cash provided by operating activities |
665 |
585 |
|
1,833 |
1,574 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Acquisitions, net of cash acquired |
(2) |
(28) |
|
(17) |
(165) |
Proceeds from disposals of businesses
and investments,
net of taxes paid |
- |
2 |
|
75 |
14 |
Capital expenditures, less proceeds from
disposals |
(217) |
(231) |
|
(743) |
(704) |
Other investing activities |
2 |
5 |
|
5 |
7 |
Net cash used in investing activities |
(217) |
(252) |
|
(680) |
(848) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Proceeds from debt |
4 |
997 |
|
4 |
997 |
Repayments of debt |
(593) |
- |
|
(593) |
- |
Net borrowings under short-term loan
facilities |
529 |
- |
|
1,099 |
- |
Repurchases of common shares |
(554) |
(109) |
|
(1,250) |
(726) |
Dividends paid on preference shares |
(1) |
(1) |
|
(2) |
(2) |
Dividends paid on common shares |
(253) |
(258) |
|
(765) |
(778) |
Other financing activities |
11 |
19 |
|
63 |
148 |
Net cash (used in) provided by financing
activities |
(857) |
648 |
|
(1,444) |
(361) |
(Decrease) increase in cash and bank
overdrafts |
(409) |
981 |
|
(291) |
365 |
Translation adjustments |
(10) |
(17) |
|
(19) |
(14) |
Cash and bank overdrafts at beginning of
period |
1,124 |
699 |
|
1,015 |
1,312 |
Cash and bank overdrafts at end of period |
$705 |
$1,663 |
|
$705 |
$1,663 |
|
|
|
|
|
|
Cash and bank overdrafts at end of period
comprised of: |
|
|
|
|
|
Cash and cash equivalents |
$710 |
$1,686 |
|
$710 |
$1,686 |
Bank overdrafts |
(5) |
(23) |
|
(5) |
(23) |
|
$705 |
$1,663 |
|
$705 |
$1,663 |