THOMSON REUTERS CORP TORONTO, Nov. 1, 2016 /PRNewswire/ -- Thomson Reuters (TSX / NYSE: TRI) today reported results for the third quarter ended September 30, 2016.
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"It is encouraging to see our continued progress flow through in the third-quarter numbers," said Jim Smith, president and chief executive officer of Thomson Reuters. "Our core subscription businesses are moving in the right direction, our cost controls are working and we are increasingly confident in our execution capability. That is why we are going to pick up the pace of our transformation efforts."
Consolidated Financial Highlights - Third Quarter
(All amounts are from continuing operations, except cash flow measures)
IFRS Financial Measures
Three Months Ended September 30,
(Millions of U.S. dollars, except earnings per share (EPS) and
margins)
--------------------------------------------------------------
IFRS Financial Measures 2016 2015(1) Change
---- ------ ------
Revenues $2,744 $2,747 0%
Operating profit $385 $386 0%
Diluted EPS $0.34 $0.32 6%
Cash flow from operations (includes discontinued operations) $758 $680 11%
-- Revenues were essentially unchanged as growth in subscription revenues
was offset by the impact of foreign currency and a decline in low margin
recoveries revenues
-- Operating profit was essentially unchanged as higher subscription
revenues were offset by the impact of foreign currency, which included
unfavorable fair value adjustments associated with foreign currency
derivatives embedded in certain customer contracts
-- Diluted EPS increased 6% to $0.34, with the increase driven by the
benefit of lower common shares outstanding
-- Cash flow from operations, which includes discontinued operations,
increased 11% to $758 million, primarily due to favorable timing of
working capital
Non-IFRS Financial Measures ((2))
2016 2015(1) Change Change Before
Currency
--------
Revenues $2,744 $2,747 0% 1%
Adjusted EBITDA $814 $782 4% 2%
Adjusted EBITDA margin 29.7% 28.5% 120bp 20bp
Underlying operating profit $559 $524 7% 3%
Underlying operating profit margin 20.4% 19.1% 130bp 30bp
Adjusted EPS $0.54 $0.45 20% 13%
Free cash flow (includes discontinued operations) $519 $449 16%
(1) Unless otherwise indicated, results exclude the Intellectual Property & Science (IP & Science) business, which was sold in October 2016. IP & Science was classified as a discontinued operation for 2016 reporting purposes through the closing date of sale. 2015 amounts (except cash flow measures) are restated to conform to the current year's presentation.
(2) 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. Additional information is provided in the explanatory footnotes to the appended tables.
-- Revenues were unchanged. Before currency, revenues increased 1%
-- Excluding recoveries, revenues increased 2% (before currency)
-- Adjusted EBITDA increased 4% to $814 million, and the margin increased
120 basis points to 29.7% from 28.5% in the prior-year period. Excluding
currency, the margin increased 20 basis points
-- Underlying operating profit increased 7% to $559 million, and the margin
increased 130 basis points to 20.4% from 19.1% in the prior-year period.
Excluding currency, the margin increased 30 basis points
-- Adjusted EPS increased 20% to $0.54, an increase of $0.09 per share.
Currency had a $0.03 favorable impact
Planned Charge in Fourth-Quarter 2016 and Updated Full-Year 2016 Outlook
-- Thomson Reuters today announced that it plans to record a charge of
approximately $200 million to $250 million to be incurred in the fourth
quarter of 2016. This charge is intended to accelerate the pace of the
company's Transformation program by further simplifying and streamlining
the business. The majority of the charges will be taken in Financial &
Risk and the Enterprise, Technology & Operations Group that was created
in January 2016. The resulting run-rate cash savings in 2017 are
estimated to be of a similar magnitude to the planned charge, with some
of the savings to be reinvested in the business.
-- The company updated its 2016 full-year outlook to reflect the planned
charge, as outlined in the Business Outlook section of this news
release.
Sale of IP & Science Business
The IP & Science business was sold for $3.55 billion in cash on October 3, 2016. The net proceeds from the sale will be approximately $3.2 billion. The company utilized $1.7 billion of the proceeds to repay commercial paper during October and it plans to use the remaining proceeds primarily to buy back shares under its current $1.5 billion share repurchase program, further pay down debt and for reinvestment in the business.
Highlights by Business Unit
Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency (constant currency) as Thomson Reuters believes this provides the best basis to measure the performance of its business.
Financial & Risk
-- Revenues increased 1%. Revenues grew approximately 2% excluding the
impact of some temporary items, primarily the impact of lower recoveries
revenues and commercial pricing adjustments related to the migration of
certain customers to new platforms.
-- Recurring revenues (77% of the segment's revenues in the quarter)
were up 2%, primarily due to the impact of an annual price increase
and a positive net sales trend, partly offset by lower revenues
resulting from the pricing adjustments referred to above and
macro-economic conditions impacting large European banks and banks
in several emerging markets.
-- Transactions revenues (15% of the segment's revenues in the quarter)
were up 4% due to increased revenue from Tradeweb, BETA brokerage
processing and transactional revenues from the Risk business. This
increase was offset by the impact of lower foreign exchange trading
volumes.
-- Low-margin recoveries revenues (8% of the segment's revenues in the
quarter) decreased 12% as some third-party partners continue to move
to direct billing with their customers. The rate of decline in these
revenues is expected to lessen again in the fourth quarter.
-- Recoveries represent revenues for content or services provided
by third parties and distributed through Financial & Risk's
platform. Reductions in recoveries revenue have no impact on the
unit's EBITDA or operating profit.
-- By geography, revenues in the Americas were up 3% (up 4% excluding
recoveries). Revenues in Europe, Middle East and Africa (EMEA) were
unchanged (up 2% excluding recoveries). Revenues in Asia were unchanged
(up 1% excluding recoveries).
-- EBITDA increased 10% to $460 million and the margin increased 260 basis
points to 30.3% from 27.7% in the prior-year period. Excluding the
impact of currency, the margin increased 160 basis points. The increase
in the margin was primarily due to higher revenues and savings related
to efficiency initiatives and platform closures in 2015.
-- Operating profit increased 15% to $313 million and the margin increased
270 basis points to 20.6% from 17.9% in the prior-year period. Excluding
the impact of currency, the margin increased 160 basis points. The
operating profit margin improvement reflected the same factors that
impacted EBITDA.
-- Net sales were positive in all regions, marking the tenth consecutive
quarter of positive total net sales.
Legal
-- Revenues were unchanged from the prior-year period. Excluding US print,
revenues grew 1%.
-- Solutions businesses (45% of the segment's revenues in the quarter)
grew 1%. Solutions subscription revenue growth of 5% was offset by a
9% reduction in transactional revenues.
-- US Online Legal Information (42% of the segment's revenues in the
quarter) grew 2%, marking the seventh consecutive quarter of growth.
-- US Print (13% of the segment's revenues in the quarter) declined 8%.
-- Subscription revenues (75% of the segment's revenues in the quarter)
grew 3%. However, transactional revenues (12% of the segment's revenues
in the quarter) declined 8% due to lower Legal Managed Services and
Elite transactional revenues.
-- EBITDA declined 2% to $328 million and the margin increased 10 basis
points to 39.3% from 39.2% in the prior-year period. Excluding the
impact of currency, the margin declined 30 basis points.
-- Operating profit decreased 3% to $264 million and the margin decreased
20 basis points to 31.6% from 31.8% in the prior-year period. Excluding
the impact of currency, the margin declined 40 basis points.
Tax & Accounting
-- Revenues increased 6%, driven by the Corporate, Professional and
Knowledge Solutions businesses, partially offset by a decline in the
Government business. Recurring revenues (90% of the segment's revenues
in the quarter) increased 11%.
-- EBITDA increased 10% to $87 million and the margin increased 120 basis
points to 26.9% from 25.7% in the prior-year period. Excluding the
impact of currency, the margin increased 70 basis points.
-- Operating profit increased 18% to $59 million and the margin increased
200 basis points to 18.3% from 16.3% in the prior-year period. Excluding
the impact of currency, the margin increased 120 basis points.
-- 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.
Corporate & Other (Including Reuters News)
-- Reuters News revenues were $73 million, down 1% compared to the
prior-year period.
-- Corporate & Other costs were $77 million compared to $68 million in the
prior-year period.
Consolidated Financial Highlights - Nine Months
(All amounts are from continuing operations, except cash flow measures)
IFRS Financial Measures
Nine Months Ended September 30,
(Millions of U.S. dollars, except EPS and margins)
-------------------------------------------------
2016 2015(1) Change
---- ------ ------
Revenues $8,306 $8,370 -1%
Operating profit $1,096 $1,093 0%
Diluted EPS $0.99 $0.91 9%
Cash flow from operations (includes discontinued operations) $1,986 $1,875 6%
-- Revenues declined 1% as higher subscription revenues were more than
offset by the impact of foreign currency and a decline in low margin
recoveries revenues
-- Operating profit was essentially unchanged as higher subscription
revenues were offset by the impact of foreign currency, which included
unfavorable fair value adjustments associated with foreign currency
derivatives embedded in certain customer contracts
-- Diluted EPS increased 9% to $0.99, primarily due to lower tax expense as
well as the benefit of lower common shares outstanding
-- Cash flow from operations, which includes discontinued operations,
increased 6% due to higher operating profit before the impact of
non-cash items such as depreciation, amortization and fair value
adjustments
Non-IFRS Financial Measures ((2))
2016 2015(1) Change Change Before
Currency
--------
Revenues $8,306 $8,370 -1% 1%
Adjusted EBITDA $2,319 $2,287 1% 0%
Adjusted EBITDA margin 27.9% 27.3% 60bp -10bp
Underlying operating profit $1,562 $1,495 4% 2%
Underlying operating profit margin 18.8% 17.9% 90bp 30bp
Adjusted EPS $1.47 $1.24 19% 15%
Free cash flow (includes discontinued operations) $1,267 $1,093 16%
(1) Unless otherwise indicated, results exclude the IP & Science business, which was sold in October 2016. IP & Science was classified as a discontinued operation for 2016 reporting purposes through the closing date of sale. 2015 amounts (except cash flow measures) are restated to conform to the current period's presentation.
(2) In addition to results reported in accordance with IFRS, the company uses certain non-IFRS financial measures as supplemental indicators of its operating performance and financial position. These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the tables appended to this news release. Additional information is provided in the explanatory footnotes to the appended tables.
-- Revenues declined 1%. Before currency, revenues increased 1%. Excluding
recoveries, revenues increased 2% (before currency)
-- Adjusted EBITDA increased 1% to $2.3 billion, and the margin increased
60 basis points to 27.9% from 27.3% in the prior-year period. Excluding
the impact of currency, the margin was down 10 basis points from the
prior-year period
-- Underlying operating profit increased 4% to $1.6 billion, and the margin
increased 90 basis points to 18.8% from 17.9% in the prior-year period.
Excluding the impact of currency, the margin increased 30 basis points
-- Adjusted EPS increased 19% to $1.47, an increase of $0.23 per share.
Currency had a $0.04 favorable impact
-- Free cash flow for the first nine months of the year increased 16% to
$1.3 billion compared to $1.1 billion in the prior-year period
Business Outlook (Before Currency)
Thomson Reuters updated its full-year business outlook for 2016 to reflect the planned fourth-quarter charge discussed earlier in this news release.
The company's 2016 Outlook assumes constant currency rates compared to 2015 and all metrics below (except for free cash flow) exclude the IP & Science business, which was classified as a discontinued operation for 2016 reporting purposes through the closing date. The 2016 Outlook is based on the expected performance of the company's remaining businesses and does not factor in the impact of any other acquisitions or divestitures that may occur during the year.
For the full-year 2016, the company expects:
-- Low single-digit revenue growth
-- 2% to 3% revenue growth excluding Financial & Risk's recoveries
revenues, which are low margin revenues and are expected to decline
as partners move to direct billing with their customers
-- Adjusted EBITDA margin to range between 25.0% to 26.0% - Including
planned charge
-- Adjusted EBITDA margin to range between 27.3% and 28.3% - Excluding
planned charge
-- Underlying operating profit margin to range between 16.0% to 17.0% -
Including planned charge
-- Underlying operating profit margin to range between 18.4% and 19.4%
- Excluding planned charge
-- Free cash flow to range between $1.7 billion and $1.9 billion in 2016
(most of cash impact from planned charge to be incurred in 2017)
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 2016, the Thomson Reuters board of directors approved a $0.02 per share annualized increase in the dividend to $1.36 per common share. A quarterly dividend of $0.34 per share is payable on December 15, 2016 to common shareholders of record as of November 17, 2016.
From January 1, 2016 through September 30, 2016, the company repurchased approximately 31.2 million shares at a cost of $1.2 billion. Of this amount, 13.2 million shares were repurchased in the third quarter at a cost of $542 million. Under the current $1.5 billion share repurchase program announced in February 2016, the company has repurchased approximately 26.4 million shares at a cost of about $1.1 billion through September 30, 2016.
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, 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.
As previously disclosed in July 2016, the company redefined adjusted earnings and adjusted EPS in relation to certain tax computations to better align with current market practices and to reflect guidance issued earlier this year by the U.S. Securities and Exchange Commission. These changes were effective for the third quarter and have not impacted the company's reporting of revenues, adjusted EBITDA, underlying operating profit or free cash flow.
The company's 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 2016 impact of changes in foreign exchange rates or the company's share price 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, (iii) the valuation of certain share-based awards and (iv) 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 "2016 Business Outlook (Before Currency)" section, Mr. Smith's comments and statements regarding the planned fourth-quarter charge and expected run-rate savings resulting from the charge, 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 2016. 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 2016 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 and a continued increase in the number of professionals around the world and their demand for high quality information and workflow solutions. 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 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 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@tr.com frank.golden@tr.com
Thomson Reuters will webcast a discussion of its third-quarter 2016 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
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2016 2015(1) 2016 2015(1)
---- ------ ---- ------
CONTINUING OPERATIONS
Revenues $2,744 $2,747 $8,306 $8,370
Operating expenses (1,964) (1,958) (6,064) (6,083)
Depreciation (78) (85) (239) (263)
Amortization of
computer software (177) (173) (518) (529)
Amortization of other
identifiable
intangible assets (128) (135) (388) (415)
Other operating
(losses) gains, net (12) (10) (1) 13
Operating profit 385 386 1,096 1,093
Finance costs, net:
Net interest expense (108) (102) (304) (314)
Other finance (costs)
income (3) (15) (28) 24
Income before tax and
equity method
investments 274 269 764 803
Share of post-tax
earnings in equity
method investments 2 1 2 8
Tax (expense) benefit (8) (7) 16 (42)
--- --- --- ---
Earnings from
continuing
operations 268 263 782 769
Earnings from
discontinued
operations, net of
tax 18 30 126 125
--- --- --- ---
Net earnings $286 $293 $908 $894
==== ==== ==== ====
Earnings attributable to:
Common shareholders 273 280 872 847
Non-controlling
interests 13 13 36 47
Earnings per share:
Basic earnings per share:
From continuing
operations $0.34 $0.32 $0.99 $0.92
From discontinued
operations 0.03 0.04 0.17 0.16
---- ---- ---- ----
Basic earnings per
share $0.37 $0.36 $1.16 $1.08
===== ===== ===== =====
Diluted earnings per share:
From continuing
operations $0.34 $0.32 $0.99 $0.91
From discontinued
operations 0.02 0.04 0.16 0.16
---- ---- ---- ----
Diluted earnings per
share $0.36 $0.36 $1.15 $1.07
===== ===== ===== =====
Basic weighted-
average common
shares 743,939,102 778,334,806 752,226,485 785,932,003
=========== =========== =========== ===========
Diluted weighted-
average common
shares 745,772,211 781,170,075 753,916,599 788,797,817
=========== =========== =========== ===========
(1) Prior-year period amounts have been restated to reflect the current presentation.
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
September 30, December 31,
2016 2015(1)
---- ------
Assets
Cash
and
cash
equivalents $831 $966
Trade
and
other
receivables 1,403 1,755
Other
financial
assets 125 176
Prepaid
expenses
and
other
current
assets 668 683
--- ---
Current
assets
excluding
assets
held
for
sale 3,027 3,580
Assets
held
for
sale 1,674 -
Current
assets 4,701 3,580
Computer
hardware
and
other
property,
net 943 1,067
Computer
software,
net 1,399 1,486
Other
identifiable
intangible
assets,
net 5,862 6,417
Goodwill 14,795 15,878
Other
financial
assets 109 116
Other
non-
current
assets 555 544
Deferred
tax 49 47
--- ---
Total
assets $28,413 $29,135
======= =======
Liabilities and equity
Liabilities
Current
indebtedness $2,855 $1,595
Payables,
accruals
and
provisions 2,128 2,278
Deferred
revenue 896 1,319
Other
financial
liabilities 193 238
--- ---
Current
liabilities
excluding
liabilities
associated
with
assets
held
for
sale 6,072 5,430
Liabilities
associated
with
assets
held
for
sale 474 -
Current
liabilities 6,546 5,430
Long-
term
indebtedness 6,307 6,829
Provisions
and
other
non-
current
liabilities 2,404 2,124
Other
financial
liabilities 344 387
Deferred
tax 982 1,265
--- -----
Total
liabilities 16,583 16,035
Equity
Capital 9,627 9,852
Retained
earnings 5,599 6,458
Accumulated
other
comprehensive
loss (3,878) (3,697)
------ ------
Total
shareholders'
equity 11,348 12,613
Non-
controlling
interests 482 487
--- ---
Total
equity 11,830 13,100
------ ------
Total
liabilities
and
equity $28,413 $29,135
======= =======
(1) Prior-year period amounts have been restated to reflect the current presentation.
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2016 2015(1) 2016 2015(1)
---- ------ ---- ------
Cash provided by (used
in):
Operating activities
Earnings
from
continuing
operations $268 $263 $782 $769
Adjustments for:
Depreciation 78 85 239 263
Amortization
of
computer
software 177 173 518 529
Amortization
of
other
identifiable
intangible
assets 128 135 388 415
Net
(gains)
losses
on
disposals
of
businesses
and
investments (2) 1 (4) (24)
Deferred
tax (46) (43) (130) (108)
Other 129 88 354 184
Changes
in
working
capital
and
other
items 37 (35) (344) (401)
--- --- ---- ----
Operating
cash
flows
from
continuing
operations 769 667 1,803 1,627
Operating
cash
flows
from
discontinued
operations (11) 13 183 248
--- --- --- ---
Net cash
provided
by
operating
activities 758 680 1,986 1,875
--- --- ----- -----
Investing activities
Acquisitions,
net of
cash
acquired - (2) (111) (17)
Proceeds
from
disposals
of
businesses
and 3 - 4 75
investments,
net of taxes
paid
Capital
expenditures,
less
proceeds
from
disposals (213) (203) (658) (703)
Other
investing
activities 3 2 23 5
--- --- --- ---
Investing
cash
flows
from
continuing
operations (207) (203) (742) (640)
Investing
cash
flows
from
discontinued
operations (13) (14) (38) (40)
--- --- --- ---
Net cash
used in
investing
activities (220) (217) (780) (680)
---- ---- ---- ----
Financing activities
Proceeds
from
debt - 4 498 4
Repayments
of debt - (593) (503) (593)
Net
borrowings
under
short-
term
loan
facilities 398 529 702 1,099
Repurchases
of
common
shares (542) (554) (1,232) (1,250)
Dividends
paid on
preference
shares (1) (1) (2) (2)
Dividends
paid on
common
shares (243) (253) (740) (765)
Dividends
paid to
non-
controlling
interests (15) (15) (44) (42)
Other
financing
activities 9 11 22 63
--- --- --- ---
Net cash
used in
financing
activities (394) (872) (1,299) (1,486)
---- ---- ------ ------
Increase
(decrease)in
cash and
bank
overdrafts 144 (409) (93) (291)
Translation
adjustments (2) (10) (3) (19)
Cash and
bank
overdrafts
at
beginning
of
period 684 1,124 922 1,015
--- ----- --- -----
Cash and
bank
overdrafts
at end
of
period $826 $705 $826 $705
==== ==== ==== ====
Cash and bank overdrafts
at end of period
comprised of:
Cash and
cash
equivalents $831 $900 $831 $900
Bank
overdrafts (5) (195) (5) (195)
--- ---- --- ----
$826 $705 $826 $705
==== ==== ==== ====
(1) Prior-year period amounts have been restated to reflect the current presentation.
Thomson Reuters Corporation
Reconciliation of Changes in Revenues, Adjusted EBITDA, Underlying Operating Profit and the Related Margins
Excluding the Effects of Foreign Currency by Business Segment
(millions of U.S. dollars, except for margins)
(unaudited)
Three Months Ended
September 30, Change
-------------
2016 2015(1) Total Foreign Currency (4) Before
Currency (4)
-----------
Revenues
--------
Financial & Risk $1,516 $1,517 0% -1% 1%
Legal 835 851 -2% -2% 0%
Tax & Accounting 323 307 5% -1% 6%
Corporate & Other (includes Reuters News) 73 74 -1% 0% -1%
Eliminations (3) (2)
--- ---
Revenues $2,744 $2,747 0% -1% 1%
====== ======
Change
Total Foreign Before
Currency (4)
Currency (4)
-----------
Adjusted EBITDA (2)
------------------
Financial & Risk $460 $420 10% 3% 7%
Legal 328 334 -2% -1% -1%
Tax & Accounting 87 79 10% 1% 9%
Corporate & Other (includes Reuters News) (61) (51) n/a n/a n/a
--- ---
Adjusted EBITDA $814 $782 4% 2% 2%
==== ====
Adjusted EBITDA Margin (2)
-------------------------
Financial & Risk 30.3% 27.7% 260bp 100bp 160bp
Legal 39.3% 39.2% 10bp 40bp -30bp
Tax & Accounting 26.9% 25.7% 120bp 50bp 70bp
Corporate & Other (includes Reuters News) n/a n/a n/a n/a n/a
Adjusted EBITDA margin 29.7% 28.5% 120bp 100bp 20bp
Change
------
Total Foreign Before
Currency (4) Currency (4)
----------- -----------
Underlying Operating Profit (3)
------------------------------
$313
Financial & Risk $271 15% 5% 10%
Legal 264 271 -3% -2% -1%
Tax & Accounting 59 50 18% 4% 14%
Corporate & Other (includes Reuters News) (77) (68) n/a n/a n/a
--- ---
Underlying operating profit $559 $524 7% 4% 3%
==== ====
Underlying Operating Profit Margin (3)
-------------------------------------
Financial & Risk 20.6% 17.9% 270bp 110bp 160bp
Legal 31.6% 31.8% -20bp 20bp -40bp
Tax & Accounting 18.3% 16.3% 200bp 80bp 120bp
Corporate & Other (includes Reuters News) n/a n/a n/a n/a n/a
Underlying operating profit margin 20.4% 19.1% 130bp 100bp 30bp
n/a - not applicable
Refer to page 16 for footnotes.
Thomson Reuters Corporation
Reconciliation of Changes in Revenues, Adjusted EBITDA, Underlying Operating Profit and the Related Margins
Excluding the Effects of Foreign Currency by Business Segment
(millions of U.S. dollars, except for margins)
(unaudited)
Nine Months Ended
September 30, Change
-------------
2016 2015(1) Total Foreign Currency (4) Before
Currency (4)
-----------
Revenues
--------
Financial & Risk $4,549 $4,621 -2% -2% 0%
Legal 2,503 2,527 -1% -2% 1%
Tax & Accounting 1,036 1,007 3% -2% 5%
Corporate & Other (includes Reuters News) 227 222 2% -1% 3%
Eliminations (9) (7)
--- ---
Revenues $8,306 $8,370 -1% -2% 1%
====== ======
Change
Total Foreign Before Currency (4)
Currency (4)
-----------
Adjusted EBITDA (2)
------------------
Financial & Risk $1,340 $1,251 7% 1% 6%
Legal 936 941 -1% -1% 0%
Tax & Accounting 283 295 -4% 1% -5%
Corporate & Other (includes Reuters News) (240) (200) n/a n/a n/a
---- ----
Adjusted EBITDA $2,319 $2,287 1% 1% 0%
====== ======
Adjusted EBITDA Margin (2)
-------------------------
Financial & Risk 29.5% 27.1% 240bp 80bp 160bp
Legal 37.4% 37.2% 20bp 50bp -30bp
Tax & Accounting 27.3% 29.3% -200bp 100bp -300bp
Corporate & Other (includes Reuters News) n/a n/a n/a n/a n/a
Adjusted EBITDA margin 27.9% 27.3% 60bp 70bp -10bp
Change
------
Total Foreign Before Currency (4)
Currency (4)
-----------
Underlying Operating Profit (3)
------------------------------
15% 2%
Financial & Risk $905 $786 13%
0% 0%
Legal 749 749 0%
-7% 2%
Tax & Accounting 197 211 -9%
n/a
Corporate & Other (includes Reuters News) (289) (251) n/a n/a
---- ----
4% 2%
Underlying operating profit $1,562 $1,495 2%
====== ======
Underlying Operating Profit Margin (3)
-------------------------------------
Financial & Risk 19.9% 17.0% 290bp 70bp 220bp
Legal 29.9% 29.6% 30bp 40bp -10bp
Tax & Accounting 19.0% 21.0% -200bp 80bp -280bp
Corporate & Other (includes Reuters News) n/a n/a n/a n/a n/a
Underlying operating profit margin 18.8% 17.9% 90bp 60bp 30bp
n/a - not applicable
Refer to page 16 for footnotes.
Thomson Reuters Corporation
Reconciliation of Operating Profit to Adjusted EBITDA (2)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2016 2015(1) Change 2016 2015(1) Change
---- ------ ------ ---- ------ ------
Operating profit $385 $386 0% $1,096 $1,093 0%
Adjustments to remove:
Amortization of other identifiable intangible assets 128 135 388 415
Fair value adjustments 34 (7) 77 -
Other operating losses (gains), net 12 10 1 (13)
Underlying operating profit $559 $524 7% $1,562 $1,495 4%
Remove: depreciation and amortization of computer 255 258 757 792
software
Adjusted EBITDA $814 $782 4% $2,319 $2,287 1%
==== ==== ====== ======
Underlying operating profit margin (3) 20.4% 19.1% 130bp 18.8% 17.9% 90bp
==== ==== ==== ====
Adjusted EBITDA margin (2) 29.7% 28.5% 120bp 27.9% 27.3% 60bp
==== ==== ==== ====
Thomson Reuters Corporation
Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA (2)
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2016 2015(1) Change 2016 2015(1) Change
---- ------ ------ ---- ------ ------
Earnings from continuing operations $268 $263 2% $782 $769 2%
Adjustments to remove:
Tax expense (benefit) 8 7 (16) 42
Other finance costs (income) 3 15 28 (24)
Net interest expense 108 102 304 314
Amortization of other identifiable intangible assets 128 135 388 415
Amortization of computer software 177 173 518 529
Depreciation 78 85 239 263
--- --- --- ---
EBITDA $770 $780 $2,243 $2,308
Adjustments to remove:
Share of post-tax earnings in equity method (2) (1) (2) (8)
investments
Other operating losses (gains), net 12 10 1 (13)
Fair value adjustments 34 (7) 77 -
Adjusted EBITDA $814 $782 4% $2,319 $2,287 1%
==== ==== ====== ======
Refer to page 16 for footnotes.
Thomson Reuters Corporation
Reconciliation of Underlying Operating Profit (3) to Adjusted EBITDA (2) by Business Segment
(millions of U.S. dollars)
(unaudited)
Three Months Ended Three Months Ended
September 30, 2016 September 30, 2015(1)
------------------ --------------------
Underlying Add: Adjusted Underlying Add: Adjusted
Operating Profit Depreciation EBITDA Operating Profit Depreciation and Amortization of
Computer Software EBITDA
and
Amortization
of Computer Software
---
Financial & Risk $313 $147 $460 $271 $149 $420
Legal 264 64 328 271 63 334
Tax & Accounting 59 28 87 50 29 79
Corporate & Other (includes Reuters News) (77) 16 (61) (68) 17 (51)
$559 $255 $814 $524 $258 $782
==== ==== ==== ==== ==== ====
Nine Months Ended Nine Months Ended
September 30, 2016 September 30, 2015(1)
------------------ --------------------
Underlying Add: Adjusted Underlying Add: Adjusted
Operating Profit Depreciation EBITDA Operating Profit Depreciation and Amortization of
Computer Software EBITDA
and
Amortization
of Computer Software
--------------------
Financial & Risk $905 $435 $1,340 $786 $465 $1,251
Legal 749 187 936 749 192 941
Tax & Accounting 197 86 283 211 84 295
Corporate & Other (includes Reuters News) (289) 49 (240) (251) 51 (200)
$1,562 $757 $2,319 $1,495 $792 $2,287
====== ==== ====== ====== ==== ======
Refer to page 16 for footnotes.
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders to Adjusted Earnings (5)
(millions of U.S. dollars, except for share and per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------
2016 2015(1) Change 2016 2015(1) Change
---- ------ ------ ---- ------ ------
Earnings attributable to common shareholders $273 $280 -3% $872 $847 3%
Adjustments to remove:
Fair value adjustments 34 (7) 77 -
Amortization of other identifiable intangible assets 128 135 388 415
Other operating losses (gains), net 12 10 1 (13)
Other finance costs (income) 3 15 28 (24)
Share of post-tax earnings in equity method investments (2) (1) (2) (8)
Tax on above items (46) (39) (138) (108)
Tax items impacting comparability 7 3 13 1
Earnings from discontinued operations, net of tax (18) (30) (126) (125)
Interim period effective tax rate normalization (6) 13 (13) - (8)
Dividends declared on preference shares (1) (1) (2) (2)
Adjusted earnings $403 $352 14% $1,111 $975 14%
==== ==== === ====== ==== ===
Adjusted earnings per share $0.54 $0.45 20% $1.47 $1.24 19%
===== ===== === ===== ===== ===
Foreign currency(4) 7% 4%
Before currency(4) 13% 15%
Diluted weighted-average common shares (millions) 745.8 781.2 753.9 788.8
===== ===== ===== =====
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (7)
(millions of U.S. dollars)
(unaudited)
Three Months
Ended Nine Months Ended
September 30, September 30,
------------- -------------
2016 2015(1) 2016 2015(1)
---- ------ ---- ------
Net cash provided by
operating activities $758 $680 $1,986 $1,875
Capital expenditures,
less proceeds from
disposals (213) (203) (658) (703)
Other investing
activities 3 2 23 5
Dividends paid on
preference shares (1) (1) (2) (2)
Dividends paid to
non-controlling
interests (15) (15) (44) (42)
Capital expenditures
from discontinued
operations (13) (14) (38) (40)
Free cash flow $519 $449 $1,267 $1,093
==== ==== ====== ======
Refer to page 16 for footnotes.
Footnotes
(1) Prior-year period amounts have been restated to reflect the reclassification of the Intellectual Property & Science segment as a discontinued operation through the closing date of the sale.
(2) 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. Thomson Reuters uses adjusted EBITDA as it provides a measure commonly reported and widely used by investors as an indicator of a company's operating performance and as a valuation metric. Additionally, this measure is used by Thomson Reuters and investors to assess a company's ability to incur and service debt.
(3) 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. Thomson Reuters uses underlying operating profit as it provides a basis to evaluate operating profitability and performance trends, excluding the impact of items which distort the performance of the company's operations.
(4) The changes in revenues, 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-year period's local currency equivalent using the same exchange rates.
(5) Adjusted earnings and adjusted earnings per share (EPS) include dividends declared on preference shares but exclude the post-tax impacts of fair value adjustments, amortization of other identifiable intangible assets, other operating (gains) and losses, certain impairment charges, other finance (income) costs, Thomson Reuters share of post-tax (earnings) losses in equity method investments, discontinued operations and other items affecting comparability. Thomson Reuters calculates the post-tax amount of each item excluded from adjusted earnings based on the specific tax rules and tax rates associated with the nature and jurisdiction of each item. Adjusted earnings per share is calculated using diluted weighted-average shares and does not represent actual earnings or loss per share attributable to shareholders. Thomson Reuters uses adjusted earnings and adjusted EPS as they provide a more comparable basis to analyze earnings and they are also measures commonly used by shareholders to measure the company's performance.
(6) 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.
(7) Free cash flow (includes free cash flow from continuing and discontinued operations) is net cash provided by 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.
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SOURCE Thomson Reuters
