THOMSON REUTERS CORP 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 Constant
Currency 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 Constant
Currency 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 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 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 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 Six Months Ended
June 30, 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 - (1) 10 1
investments
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 7 1 5 -
investments
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 Six Months Ended
June 30, 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
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SOURCE Thomson Reuters
