THOMSON REUTERS CORP TORONTO, Nov. 1, 2017 /PRNewswire/ -- Thomson Reuters (TSX/NYSE: TRI) today reported results for the third quarter ended September 30, 2017. Based on its results for the first nine months of the year, the company reaffirmed its full year guidance (as updated in August) and expects to achieve the high end of its full-year 2017 adjusted earnings per share (EPS) guidance, which was increased last quarter to between $2.40 to $2.45.
"It is gratifying to see that the progress we have made over the last several years is continuing to pay off," said Jim Smith, president and chief executive officer of Thomson Reuters. "And, despite lower than expected revenue growth for the quarter, margins continue to improve and our most promising growth initiatives are performing well. We will continue to manage the things within our control with the same rigor and discipline that has turned around our organization, in order to build maximum sustainable long-term profit growth. Our transformation efforts should continue to generate bottom-line growth and provide the added fuel we need to accelerate top-line growth in the future."
Consolidated Financial Highlights - Three Months Ended September 30
(Millions of U.S. dollars, except for adjusted EBITDA margin and EPS)
(unaudited)
IFRS Financial Measures(1) 2017 2016 Change Change at Constant
Currency
--- --------
Revenues $2,792 $2,744 2%
Operating profit $467 $385 21%
Diluted EPS (includes discontinued operations) $0.46 $0.36 28%
Cash flow from operations (includes discontinued operations) $808 $758 7%
Non-IFRS Financial Measures(1)
-----------------------------
Revenues $2,792 $2,744 2% 1%
Adjusted EBITDA $849 $814 4% 4%
Adjusted EBITDA margin 30.4% 29.7% 70bp 70bp
Adjusted EPS $0.68 $0.54 26% 24%
Free cash flow (includes discontinued operations) $531 $519 2%
------------------------------------------------ ---- ---- ---
Revenues increased 2% due to higher recurring revenues and a positive impact from foreign currency.
-- At constant currency, revenues increased 1%.
Operating profit increased 21% due to higher revenues and a gain on the sale of an investment.
-- Adjusted EBITDA increased 4% to $849 million and the margin increased 70
basis points to 30.4% from 29.7%.
Diluted EPS, which includes discontinued operations, increased 28% to $0.46 primarily due to higher operating profit, despite the loss of earnings from IP & Science following its sale in the fourth quarter of 2016. Lower interest and tax expense were offset by higher expenses from non-cash foreign currency fluctuations on intercompany loans.
-- Adjusted EPS was $0.68, an increase of 26%, or $0.14 per share primarily
due to higher adjusted EBITDA, and lower interest and tax expense.
Cash flow from operations increased 7% due to higher operating profit.
-- Free cash flow increased 2% to $531 million as higher adjusted EBITDA
was partly offset by higher capital expenditures.
(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.
The company repurchased 5.0 million shares during the third quarter at a cost of $230 million and repurchased 18.5 million shares during the first nine months of the year at a cost of $808 million under its $1.0 billion share buyback program.
Highlights by Business Unit - Three Months Ended September 30
(Millions of U.S. dollars, except for adjusted EBITDA margins)
(unaudited)
Three Months Ended
September 30, Change
------------- ------
2017 2016 Total Foreign Constant
Currency Currency
---- ---- ----- -------- --------
Revenues
--------
Financial & Risk $1,542 $1,516 2% 1% 1%
Legal 843 835 1% 0% 1%
Tax & Accounting 341 323 6% 1% 5%
Corporate & Other (Reuters News) 73 73 0% 1% -1%
Eliminations (7) (3)
--- ---
Revenues $2,792 $2,744 2% 1% 1%
====== ======
Adjusted EBITDA
---------------
Financial & Risk $495 $460 8% 2% 6%
Legal 338 328 3% 1% 2%
Tax & Accounting 95 87 9% 1% 8%
Corporate & Other (includes Reuters News) (79) (61) n/a n/a n/a
--- ---
Adjusted EBITDA $849 $814 4% 0% 4%
==== ====
Adjusted EBITDA Margin
----------------------
Financial & Risk 32.1% 30.3% 180bp 30bp 150bp
Legal 40.1% 39.3% 80bp 10bp 70bp
Tax & Accounting 27.9% 26.9% 100bp 30bp 70bp
Corporate & Other (includes Reuters News) n/a n/a n/a n/a n/a
Adjusted EBITDA margin 30.4% 29.7% 70bp 0bp 70bp
n/a - not applicable
--------------------
Unless otherwise noted, all revenue growth comparisons by business unit in this news release are at constant currency (or exclude the impact of foreign currency) as Thomson Reuters believes this provides the best basis to measure their performance.
Financial & Risk
Revenues increased 1% to $1.5 billion. Organic revenues were unchanged and acquisitions contributed 1%.
-- Revenues by type:
-- Recurring revenues grew 1% (77% of total)
-- Transactions revenues grew 7% (15% of total) due to increased
revenue from Tradeweb and contributions from acquisitions.
-- Recoveries revenues decreased 4% (8% of total).
-- Revenues by geography:
-- Revenues were up 3% in the Americas, up 2% in Asia, and decreased 1%
in Europe, Middle East and Africa (EMEA).
Adjusted EBITDA increased 8% to $495 million.
-- The margin increased to 32.1% from 30.3%. In constant currency, the
margin increased 150 basis points primarily due to savings from the
company's simplification initiatives, including 2016 severance charges,
and higher revenues.
Net sales were positive in the quarter.
Legal
Revenues increased 1% to $843 million.
-- Recurring revenues grew 3% (76% of total) -- US Print revenues declined 7% (13% of total) -- Transactions revenues declined 8% (11% of total)Adjusted EBITDA increased 3% to $338 million.
-- The margin increased to 40.1% from 39.3%. In constant currency, the
margin increased 70 basis points due to higher revenues and savings
related to fourth-quarter 2016 severance charges and ongoing
simplification initiatives.
Tax & Accounting
Revenues increased 5% to $341 million.
-- Recurring revenues grew 2% (87% of total) -- Transactions revenues grew 33% (13% of total)Adjusted EBITDA increased 9% to $95 million.
-- The margin increased to 27.9% from 26.9%. In constant currency, the
margin increased 70 basis points due to higher revenues.
Corporate & Other (Including Reuters News)
Reuters News revenues were $73 million, down 1%.
Corporate & Other costs at the adjusted EBITDA level were $79 million compared to $61 million in the prior-year period. The increase was primarily due to investments relating to improving customer experience and costs related to real estate consolidation initiatives.
-- Including depreciation and amortization of software, Corporate & Other
costs were $85 million compared to $77 million in the prior-year period.
On this basis, the company expects full-year Corporate & Other costs
will be approximately $290 million.
Consolidated Financial Highlights - Nine Months Ended September 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 $8,389 $8,306 1%
Operating profit $1,310 $1,096 20%
Diluted EPS (includes discontinued operations) $1.13 $1.15 -2%
Cash flow from operations (includes discontinued operations) $1,274 $1,986 -36%
Non-IFRS Financial Measures
---------------------------
Revenues $8,389 $8,306 1% 2%
Adjusted EBITDA $2,563 $2,319 11% 10%
Adjusted EBITDA margin 30.6% 27.9% 270bp 240bp
Adjusted EPS $1.91 $1.47 30% 29%
Free cash flow (includes discontinued operations) $526 $1,267 -58%
Revenues increased 1% as higher recurring revenues and contributions from acquisitions were partly offset by the impact of foreign currency.
-- At constant currency, revenues increased 2%.
Operating profit increased 20% primarily due to higher revenues and lower expenses, which reflected continued simplification initiatives.
-- Adjusted EBITDA increased 11% to $2.6 billion and the margin increased
to 30.6% from 27.9%, reflecting the same factors.
Diluted EPS, which includes discontinued operations, decreased 2% to $1.13 as higher operating profit and lower interest expense were 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 $1.91, an increase of 30%, or $0.44 per share,
primarily due to higher adjusted EBITDA, as well as lower interest
expense.
Cash flow from operations declined 36% primarily due to a $500 million pension plan contribution in the first quarter of 2017, $137 million of payments related to 2016 severance charges, and the loss of cash flow from IP & Science following its sale ($237 million year-on-year variance).
-- Free cash flow decreased 58% to $526 million reflecting similar factors
as noted above.
Highlights by Business Unit - Nine Months Ended September 30
(Millions of U.S. dollars, except for adjusted EBITDA margins)
(unaudited)
Nine Months Ended
September 30, Change
------------- ------
2017 2016 Total Foreign Constant
Currency Currency
---- ---- ----- -------- --------
Revenues
--------
Financial & Risk $4,561 $4,549 0% -1% 1%
Legal 2,509 2,503 0% -1% 1%
Tax & Accounting 1,108 1,036 7% 1% 6%
Corporate & Other (Reuters News) 221 227 -3% -1% -2%
Eliminations (10) (9)
--- ---
Revenues $8,389 $8,306 1% -1% 2%
====== ======
Adjusted EBITDA
---------------
Financial & Risk $1,435 $1,340 7% 0% 7%
Legal 965 936 3% 0% 3%
Tax & Accounting 339 283 20% 1% 19%
Corporate & Other (includes Reuters News) (176) (240) n/a n/a n/a
---- ----
Adjusted EBITDA $2,563 $2,319 11% 1% 10%
====== ======
Adjusted EBITDA Margin
----------------------
Financial & Risk 31.5% 29.5% 200bp 40bp 160bp
Legal 38.5% 37.4% 110bp 20bp 90bp
Tax & Accounting 30.6% 27.3% 330bp 0bp 330bp
Corporate & Other (includes Reuters News) n/a n/a n/a n/a n/a
Adjusted EBITDA margin 30.6% 27.9% 270bp 30bp 240bp
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 December 15, 2017 to common shareholders of record as of November 16, 2017.
Business Outlook 2017 (At Constant Currency)
Based on the results of the first nine months of the year, the company reaffirmed its full-year outlook, as communicated in August 2017:
-- Low single-digit revenue growth
-- Adjusted EBITDA margin to range between 29.3% - 30.3%
-- Free cash flow to range between $0.9 billion and $1.2 billion, which
reflects cash payments in 2017 relating to fourth-quarter 2016 severance
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, which is now forecast to be at the
top of this range.
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 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 third-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 Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
CONTINUING OPERATIONS
Revenues $2,792 $2,744 $8,389 $8,306
Operating expenses (1,996) (1,964) (5,997) (6,064)
Depreciation (73) (78) (222) (239)
Amortization of computer software (171) (177) (519) (518)
Amortization of other identifiable intangible assets (115) (128) (354) (388)
Other operating gains (losses), net 30 (12) 13 (1)
Operating profit 467 385 1,310 1,096
Finance costs, net:
Net interest expense (84) (108) (272) (304)
Other finance costs (58) (3) (176) (28)
Income before tax and equity method investments 325 274 862 764
Share of post-tax earnings (losses) in equity method 2 2 (3) 2
investments
Tax benefit (expense) 22 (8) 8 16
--- --- --- ---
Earnings from continuing operations 349 268 867 782
(Loss) earnings from discontinued operations, net of tax (1) 18 1 126
--- --- --- ---
Net earnings $348 $286 $868 $908
==== ==== ==== ====
Earnings attributable to:
Common shareholders 330 273 819 872
Non-controlling interests 18 13 49 36
Earnings per share:
Basic earnings per share:
From continuing operations $0.46 $0.34 $1.13 $0.99
From discontinued operations - 0.03 - 0.17
--- ---- --- ----
Basic earnings per share $0.46 $0.37 $1.13 $1.16
===== ===== ===== =====
Diluted earnings per share:
From continuing operations $0.46 $0.34 $1.13 $0.99
From discontinued operations - 0.02 - 0.16
--- ---- --- ----
Diluted earnings per share $0.46 $0.36 $1.13 $1.15
===== ===== ===== =====
Basic weighted-average common shares 715,532,769 743,939,102 721,205,041 752,226,485
=========== =========== =========== ===========
Diluted weighted-average common shares 716,900,125 745,772,211 722,527,597 753,916,599
=========== =========== =========== ===========
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
September 30, December 31,
2017 2016
---- ----
Assets
Cash and cash equivalents $898 $2,368
Trade and other receivables 1,530 1,392
Other financial assets 106 188
Prepaid expenses and other current assets 724 686
--- ---
Current assets 3,258 4,634
Computer hardware and other property, net 903 961
Computer software, net 1,411 1,394
Other identifiable intangible assets, net 5,429 5,655
Goodwill 15,019 14,485
Other financial assets 93 135
Other non-current assets 596 537
Deferred tax 56 51
--- ---
Total assets $26,765 $27,852
======= =======
Liabilities and equity
Liabilities
Current indebtedness $1,723 $1,111
Payables, accruals and provisions 2,219 2,448
Deferred revenue 935 901
Other financial liabilities 315 102
--- ---
Current liabilities 5,192 4,562
Long-term indebtedness 5,383 6,278
Provisions and other non-current liabilities 1,680 2,258
Other financial liabilities 285 340
Deferred tax 987 1,158
--- -----
Total liabilities 13,527 14,596
------ ------
Equity
Capital 9,536 9,589
Retained earnings 6,920 7,477
Accumulated other comprehensive loss (3,712) (4,293)
------ ------
Total shareholders' equity 12,744 12,773
Non-controlling interests 494 483
--- ---
Total equity 13,238 13,256
------ ------
Total liabilities and equity $26,765 $27,852
======= =======
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Cash provided by (used in):
Operating activities
Earnings from continuing operations $349 $268 $867 $782
Adjustments for:
Depreciation 73 78 222 239
Amortization of computer software 171 177 519 518
Amortization of other identifiable intangible assets 115 128 354 388
Net gains on disposals of businesses and investments (35) (2) (35) (4)
Deferred tax (121) (46) (194) (130)
Other 164 129 601 354
Pension contribution - - (500) -
Changes in working capital and other items 97 37 (506) (344)
--- --- ---- ----
Operating cash flows from continuing operations 813 769 1,328 1,803
Operating cash flows from discontinued operations (5) (11) (54) 183
--- --- --- ---
Net cash provided by operating activities 808 758 1,274 1,986
--- --- ----- -----
Investing activities
Acquisitions, net of cash acquired (1) - (184) (111)
Proceeds from disposals of businesses and investments 40 3 50 4
Capital expenditures, less proceeds from disposals (256) (213) (710) (658)
Other investing activities (1) 3 14 23
--- --- --- ---
Investing cash flows from continuing operations (218) (207) (830) (742)
Investing cash flows from discontinued operations - (13) 17 (38)
--- --- --- ---
Net cash used in investing activities (218) (220) (813) (780)
---- ---- ---- ----
Financing activities
Proceeds from debt - - - 498
Repayments of debt (550) - (1,100) (503)
Net borrowings under short-term loan facilities 555 398 705 702
Repurchases of common shares (230) (542) (808) (1,232)
Dividends paid on preference shares (1) (1) (2) (2)
Dividends paid on common shares (237) (243) (720) (740)
Dividends paid to non-controlling interests (19) (15) (50) (44)
Other financing activities 14 9 30 22
--- --- --- ---
Net cash used in financing activities (468) (394) (1,945) (1,299)
---- ---- ------ ------
Increase (decrease) in cash and bank overdrafts 122 144 (1,484) (93)
Translation adjustments 4 (2) 9 (3)
Cash and bank overdrafts at beginning of period 766 684 2,367 922
--- --- ----- ---
Cash and bank overdrafts at end of period $892 $826 $892 $826
==== ==== ==== ====
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents $898 $831 $898 $831
Bank overdrafts (6) (5) (6) (5)
--- --- --- ---
$892 $826 $892 $826
==== ==== ==== ====
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 Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
Earnings from continuing operations $349 $268 30% $867 $782 11%
Adjustments to remove:
Tax (benefit) expense (22) 8 (8) (16)
Other finance costs 58 3 176 28
Net interest expense 84 108 272 304
Amortization of other identifiable intangible assets 115 128 354 388
Amortization of computer software 171 177 519 518
Depreciation 73 78 222 239
--- --- --- ---
EBITDA $828 $770 $2,402 $2,243
Adjustments to remove:
Share of post-tax (earnings) losses in equity (2) (2) 3 (2)
method investments
Other operating (gains) losses, net (30) 12 (13) 1
Fair value adjustments 53 34 171 77
Adjusted EBITDA $849 $814 4% $2,563 $2,319 11%
---- ---- ------ ------
Adjusted EBITDA margin(1) 30.4% 29.7% 70bp 30.6% 27.9% 270bp
==== ==== ==== ====
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 Nine Months Ended
September 30, September 30,
-------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
Earnings attributable to common shareholders $330 $273 21% $819 $872 -6%
Adjustments to remove:
Fair value adjustments 53 34 171 77
Amortization of other identifiable intangible assets 115 128 354 388
Other operating (gains) losses, net (30) 12 (13) 1
Other finance costs 58 3 176 28
Share of post-tax (earnings) losses in equity method (2) (2) 3 (2)
investments
Tax on above items (19) (46) (108) (138)
Tax items impacting comparability (5) 7 (3) 13
Loss (earnings) from discontinued operations, net of tax 1 (18) (1) (126)
Interim period effective tax rate normalization(3) (13) 13 (15) -
Dividends declared on preference shares (1) (1) (2) (2)
Adjusted earnings $487 $403 21% $1,381 $1,111 24%
==== ==== === ====== ====== ===
Adjusted EPS $0.68 $0.54 26% $1.91 $1.47 30%
===== ===== === ===== ===== ===
Foreign currency(4) 2% 1%
Constant currency(4) 24% 29%
Diluted weighted-average common shares (millions) 716.9 745.8 722.5 753.9
===== ===== ===== =====
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 Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Net cash provided by operating activities $808 $758 $1,274 $1,986
Capital expenditures, less proceeds from disposals (256) (213) (710) (658)
Capital expenditures from discontinued operations - (13) - (38)
Other investing activities (1) 3 14 23
Dividends paid on preference shares (1) (1) (2) (2)
Dividends paid to non-controlling interests (19) (15) (50) (44)
Free cash flow $531 $519 $526 $1,267
==== ==== ==== ======
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 Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Financial & Risk $147 $147 $434 $435
Legal 60 64 183 187
Tax & Accounting 31 28 95 86
Corporate & Other (includes Reuters News) 6 16 29 49
Total depreciation and amortization of computer software $244 $255 $741 $757
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SOURCE Thomson Reuters
