Thomson Reuters
Reports First-Quarter 2018 Results
TORONTO, May 11, 2018 /PRNewswire/ -- Thomson Reuters
(TSX/NYSE: TRI) today reported results for the first quarter ended
March 31, 2018. The company also
issued a full-year 2018 Outlook for its continuing operations and
announced a new $500 million share
repurchase program.
"We are encouraged by the best first-quarter performance in
several years with each business having performed at or above our
expectations," said Jim Smith,
president and chief executive officer of Thomson Reuters. "The
health of our Q1 results gives us even greater conviction in our
ability to stay focused on the opportunities at hand, while
simultaneously working quickly to close the proposed
F&R/Blackstone partnership and prepare both companies for
future success. We are excited about the potential to further
strengthen our Legal and Tax businesses -- both organically and
inorganically, with the financial wherewithal and flexibility to
deliver for our customers and shareholders."
Consolidated Financial Highlights –
First Quarter 2018
Unless otherwise noted, all results are from
continuing operations and exclude the results of the company's
Financial & Risk (F&R) business unit. F&R is now
classified as a discontinued operation, Reuters News is now a
reportable segment and prior-year results have been restated
accordingly to reflect these changes. Please see the tables
appended to this news release for additional information.
On January 30, 2018, Thomson
Reuters announced that it signed a definitive agreement to sell a
55% majority stake in the F&R business and enter into a
strategic partnership with private equity funds managed by
Blackstone. Thomson Reuters will receive approximately $17 billion in gross proceeds at closing (subject
to purchase price adjustments) and will retain a 45% interest in
the partnership. The transaction is expected to close in the second
half of 2018 and is subject to specified regulatory approvals and
customary closing conditions.
Three Months Ended
March 31,
(Millions of U.S. dollars, except for adjusted EBITDA margin and
EPS)
(unaudited) |
IFRS Financial Measures(1) |
2018 |
2017 |
Change |
Change at
Constant
Currency |
Revenues |
$1,379 |
$1,331 |
4% |
|
Operating profit |
$268 |
$274 |
-2% |
|
Diluted (loss) earnings per share (EPS) (includes
discontinued operations) |
$(0.48) |
$0.41 |
n/m |
|
Cash flow from operations (includes discontinued
operations) |
$419 |
$(368) |
n/m |
|
|
|
|
|
|
Non-IFRS Financial
Measures(1) |
|
|
|
|
Revenues |
$1,379 |
$1,331 |
4% |
3% |
Adjusted EBITDA |
$430 |
$415 |
4% |
3% |
Adjusted EBITDA margin |
31.2% |
31.2% |
0bp |
0bp |
Adjusted EPS |
$0.28 |
$0.25 |
12% |
12% |
Free cash flow (includes discontinued
operations) |
$120 |
$(585) |
n/m |
|
n/m: not meaningful
(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. |
Revenues increased 4% due to higher recurring revenues
and a positive impact from foreign currency.
- At constant currency, revenues increased 3%.
Operating profit decreased 2% due to the unfavorable
impact of a prior-year period gain on an investment.
- Adjusted EBITDA increased 4% and the margin was
unchanged at 31.2%.
Diluted loss per share reflects an $844 million deferred tax charge associated with
the proposed sale of a 55% interest in the company's Financial
& Risk business. The tax charge is required to be recorded
when a business is first considered held for sale, rather than when
the sale is completed. The company estimates that a cash tax
payment of approximately $300 million
will arise in 2018 in connection with the closing of the
transaction and the remainder deferred until such time as the
company disposes of its 45% interest in the new partnership.
- Adjusted EPS, which excludes discontinued operations,
was $0.28 and increased 12%, or
$0.03 per share, due to higher
adjusted EBITDA and lower interest expense.
Cash flow from operations increased $787 million primarily because the prior-year
period included a $500 million
pension contribution as well as severance payments.
- Free cash flow increased $705
million reflecting similar factors.
Highlights by Business Unit – Three
Months Ended March 31
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited) |
|
|
Three Months
Ended |
|
|
|
|
|
|
March 31, |
|
Change |
|
|
2018 |
2017 |
|
Total |
Foreign
Currency |
Constant
Currency |
Revenues |
|
|
|
|
|
|
|
Legal(1) |
|
$872 |
$841 |
|
4% |
2% |
2% |
Tax & Accounting |
|
437 |
417 |
|
5% |
0% |
5% |
Reuters News |
|
72 |
74 |
|
-3% |
4% |
-7% |
Eliminations |
|
(2) |
(1) |
|
|
|
|
Revenues |
|
$1,379 |
$1,331 |
|
4% |
1% |
3% |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
Legal(1) |
|
$319 |
$314 |
|
2% |
1% |
1% |
Tax & Accounting |
|
147 |
141 |
|
4% |
-1% |
5% |
Reuters News |
|
8 |
13 |
|
-38% |
0% |
-38% |
Corporate |
|
(44) |
(53) |
|
n/a |
n/a |
n/a |
Adjusted EBITDA |
|
$430 |
$415 |
|
4% |
1% |
3% |
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
|
|
|
|
|
Legal(1) |
|
36.6% |
37.3% |
|
-70bp |
-20bp |
-50bp |
Tax & Accounting |
|
33.6% |
33.8% |
|
-20bp |
-30bp |
10bp |
Reuters News |
|
11.1% |
17.6% |
|
-650bp |
-60bp |
-590bp |
Corporate |
|
n/a |
n/a |
|
n/a |
n/a |
n/a |
Adjusted EBITDA margin |
|
31.2% |
31.2% |
|
0bp |
0bp |
0bp |
|
|
|
|
|
|
|
|
n/a: not applicable
(1) Includes certain portions
of the Risk business (Regulatory Intelligence and Compliance
Learning) that will be retained by the Legal segment in connection
with
the proposed sale of 55% of the F&R business. These businesses
generated approximately $69 million of annual revenues in
2017. |
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.
Legal
Revenues increased 2% to $872
million.
- Recurring revenues grew 4% (73% of total)
- Print revenues declined 2% (18% of total)
- Transactions revenues declined 1% (9% of
total)
Adjusted EBITDA increased 2% to $319 million.
- The margin decreased to 36.6% from 37.3% due to product and
marketing investments. In constant currency, the margin decreased
50 basis points.
Tax & Accounting
Revenues increased 5% to $437
million.
- Recurring revenues grew 8% (71% of total)
- Transactions revenues declined 1% (26% of total)
- Print revenues declined 7% (3% of total)
Adjusted EBITDA increased 4% to $147 million.
- The margin decreased to 33.6% from 33.8%. In constant currency,
the margin increased 10 basis points.
Reuters News
Revenues decreased 7% to $72
million due to a reduction in Agency spend, and a
contractual payment received in the first quarter of 2017, which
created a difficult year-on-year comparison.
When the F&R transaction closes, Reuters News and the new
F&R partnership will enter into a 30-year agreement for Reuters
News to supply news and editorial content to the partnership for a
minimum amount of $325 million per
year. Reuters News revenues will not reflect F&R payments until
after the transaction closes.
- Recurring revenues declined 6% (86% of total)
- Transactions revenues declined 9% (14% of total)
Adjusted EBITDA decreased 38% to $8 million.
- The margin decreased to 11.1% from 17.6%. In constant currency,
the margin decreased 590 basis points due to lower revenues.
Corporate
Corporate costs at the adjusted EBITDA level were
$44 million, compared to $53 million in the prior-year period, a decrease
of 17%, largely timing related. Corporate costs are expected to
increase over the balance of the year as the company expects to
retain stranded costs (as previously announced) that will not be
eliminated with the sale of the 55% interest in F&R. These
stranded costs are expected to decline to $50 million or less by 2020.
The company also expects to incur cash costs and to make
investments in 2018 and 2019 in the ongoing Thomson Reuters
business resulting from the operational separation of F&R from
the rest of the company. These cash costs and investments are
expected to be incurred over the next two years starting in the
second quarter of 2018 and will be reflected in Corporate
costs.
Financial & Risk – Discontinued
Operation
(Millions of U.S.
dollars, except for adjusted EBITDA margin)
(unaudited) |
Financial & Risk (Discontinued
Operations)(1) |
|
Three Months
Ended
March 31, |
|
Change |
|
|
2018 |
2017 |
|
Total |
Foreign
Currency |
Constant
Currency(2) |
Revenues |
|
$1,583 |
$1,485 |
|
7% |
4% |
3% |
Adjusted EBITDA |
|
526 |
461 |
|
14% |
5% |
9% |
Adjusted EBITDA margin |
|
33.2% |
31.0% |
|
220bp |
20bp |
200bp |
Cash flow from operations |
|
$210 |
$70 |
|
n/m |
|
|
Free cash flow (non-IFRS
measure)(2) |
|
$91 |
$(44) |
|
n/m |
|
|
Capital expenditures |
|
$108 |
$105 |
|
3% |
|
|
|
n/m: not
meaningful |
(1) Excludes certain portions
of the Risk business (Regulatory Intelligence and Compliance
Learning) that will be retained by the Legal segment in connection
with
the proposed sale of 55% of the F&R business. These businesses
generated approximately $69 million of annual revenues in
2017. |
(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. |
|
Revenues increased 3% to $1.6
billion.
- Recurring revenues grew 1% (77% of total)
- Transactions revenues grew 14% (16% of total)
- Growth was driven by increased market volatility in the
quarter.
- Recoveries revenues decreased 5% (7% of
total).
Adjusted EBITDA increased 14% to $526 million.
- The margin increased to 33.2% from 31.0%. In constant currency,
the margin increased 200 basis points.
Cash flow from operations increased $140 million primarily due to higher earnings,
excluding non-cash items, and severance payments in the prior-year
period.
- Free cash flow increased $135
million reflecting similar factors.
Dividend & Share Repurchases;
Financial & Risk Transaction Proceeds Update
In January 2018, the Thomson
Reuters board of directors approved an annual dividend of
$1.38 per common share for the year.
A quarterly dividend of $0.345 per
share is payable on June 15, 2018 to
common shareholders of record as of May 17,
2018.
The company has not repurchased any shares to date in 2018. Today,
the company announced that it may buy back up to $500 million of its shares prior to the closing
of the proposed Financial & Risk transaction under its normal
course issuer bid (NCIB). The company's current NCIB expires later
this month and the company plans to renew its NCIB for a new 12
month period. Any repurchases under the NCIB prior to the closing
of the proposed Financial & Risk transaction will reduce the
size of a contemplated post-closing substantial issuer bid/tender
offer made to all shareholders, which may be at a premium to the
then-current market price of the company's shares. The company
currently expects to use between $9
billion and $10 billion of the
estimated $17 billion of gross
proceeds of the transaction to return capital to its shareholders
through a substantial issuer bid/tender offer. The company's
principal shareholder (Woodbridge)
is expected to participate pro rata in the substantial issuer
bid/tender offer.
The price that Thomson Reuters will pay for shares in open market
transactions under its NCIB will be the market price at the time of
purchase or such other price as may be permitted by the Toronto
Stock Exchange. The amount of shares that Thomson Reuters buys back
under the new repurchase program will be dependent on the timing of
the closing of the transaction and other factors, such as market
conditions, share price and other opportunities to invest capital
for growth. Thomson Reuters may elect to suspend or discontinue
share repurchases at any time, in accordance with applicable
laws.
The company now expects to use between $3.0
billion and $4.0 billion of
the proceeds from the proposed Financial & Risk transaction to
repay debt. Therefore, the company does not anticipate the need to
establish a dividend reinvestment plan (DRIP).
As previously disclosed, the company intends to utilize the
remaining $1.0 billion to
$3.0 billion of proceeds to fund
strategic, targeted acquisitions to bolster its positions in key
growth segments of its Legal and Tax businesses.
The company also expects to use between $1.5
billion and $2.5 billion for:
cash taxes, pension contributions, bond redemption costs, and other
fees and outflows related to the transaction. These funds
include $500 million to $600 million of spend that the company views as
necessary to eliminate stranded costs as well as investments to
re-position the company following the separation of the
businesses.
Business Outlook 2018 (At Constant
Currency)
Thomson Reuters today provided its Outlook for 2018. The
company's 2018 Outlook assumes constant currency rates compared to
2017 and does not factor in the impact of acquisitions or
divestitures that may occur, except for the company's planned sale
of a 55% interest in the F&R business. F&R is considered a
discontinued operation for the full-year 2018 and is excluded from
the company's 2018 Outlook.
For the full-year 2018, the company expects:
- Low single-digit revenue growth (excludes 2018 payment to
Reuters News from F&R following the closing of the
transaction)
- Adjusted EBITDA to range between $1.2
billion - $1.3 billion
(including the costs referred to below)
- Total Corporate costs between $500
million and $600 million
(including stranded costs and investments to reposition the company
following the separation of the businesses)
- Depreciation and Amortization of computer software between
$500 million and $525 million
- Capital expenditures of approximately 10% of revenues
- Interest expense of approximately $165
million for the first half of the year. The company plans to
provide an outlook for its second half interest expense at a later
date as those expenses are based on the closing date of the F&R
transaction
- Effective tax rate on adjusted earnings between 14% - 16%
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
http://www.thomsonreuters.com/.
NON-IFRS FINANCIAL MEASURES
Thomson Reuters prepares its
financial statements in accordance with International Financial
Reporting Standards (IFRS), as issued by the International
Accounting Standards Board (IASB).
This news release includes certain
non-IFRS financial measures, such as 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 2018 impact of changes in foreign
exchange rates which impact (i) the translation of its results
reported at average foreign currency rates for the year, and (ii)
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 2018 (At Constant Currency)" section, Mr. Smith's comments
and statements regarding the proposed strategic partnership with
Blackstone involving the Financial & Risk business and the new
share repurchase program are forward-looking. As a result,
forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results or events to differ
materially from current expectations. There is no assurance that a
transaction involving all or part of the F&R business will be
completed or that the events described in any other forward-looking
statement will materialize. A business outlook is provided for the
purpose of presenting information about current expectations for
2018. 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 2018 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; downgrading of credit ratings and adverse conditions in
the credit markets; failure to derive fully the anticipated
benefits from existing or future acquisitions, joint ventures,
investments or dispositions; the effect of factors outside of the
control of Thomson Reuters on funding obligations in respect of
pension and post-retirement benefit arrangements, risk of
antitrust/competition-related claims or investigations; impairment
of goodwill and other identifiable intangible assets; actions or
potential actions that could be taken by the company's principal
shareholder, The Woodbridge Company Limited; failure to complete
the proposed Financial & Risk transaction; difficulties
separating Financial & Risk from the company; and failure to
realize the benefits of the strategic Financial & Risk
partnership. These and other factors are discussed in materials
that Thomson Reuters from time to time files with, or furnishes to,
the Canadian securities regulatory authorities and the U.S.
Securities and Exchange Commission. Thomson Reuters annual and
quarterly reports are also available in the "Investor Relations"
section of http://www.thomsonreuters.com/.
CONTACTS |
|
|
|
MEDIA
David Crundwell
Senior Vice President, Corporate Affairs
+1 416 649 9904
david.crundwell@tr.com |
INVESTORS
Frank J. Golden
Senior Vice President, Investor Relations
+1 646 223 5288
frank.golden@tr.com |
Thomson Reuters will webcast a discussion of its
first-quarter 2018 results today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You
can access the webcast by visiting
ir.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 |
|
March 31, |
|
2018 |
2017 |
CONTINUING OPERATIONS |
|
|
Revenues |
$1,379 |
$1,331 |
Operating expenses |
(952) |
(911) |
Depreciation |
(30) |
(28) |
Amortization of computer software |
(98) |
(96) |
Amortization of other identifiable intangible
assets |
(29) |
(35) |
Other operating (losses) gains, net |
(2) |
13 |
Operating profit |
268 |
274 |
Finance costs, net: |
|
|
Net interest expense |
(78) |
(92) |
Other finance income
(costs) |
7 |
(28) |
Income before tax and equity method
investments |
197 |
154 |
Share of post-tax earnings in equity method
investments |
2 |
2 |
Tax expense |
(27) |
(11) |
Earnings from continuing operations |
172 |
145 |
(Loss) earnings from discontinued operations, net
of tax |
(483) |
169 |
Net (loss) earnings |
$(311) |
$314 |
|
|
|
(Loss) earnings attributable to: |
|
|
Common shareholders |
(339) |
297 |
Non-controlling interests |
28 |
17 |
|
|
|
(Loss) earnings per share: |
|
|
Basic and diluted (loss) earnings per share: |
|
|
From continuing operations |
$0.24 |
$0.20 |
From discontinued operations |
(0.72)* |
0.21 |
Basic and diluted (loss) earnings per share |
$(0.48) |
$0.41 |
|
|
|
Basic weighted-average common shares |
710,763,749 |
727,200,617 |
Diluted weighted-average common shares |
711,498,620 |
729,194,404 |
|
*
Basic and diluted loss per share from discontinued operations
reflects an $844 million deferred tax charge associated
with
the proposed sale of a 55% interest in our Financial & Risk
business. The tax charge is required to be recorded
when
a business is first considered held for sale, rather than when the
sale is completed. The company estimates that
a
cash tax payment of approximately $300 million will arise in 2018
in connection with the closing of the transaction
and
the remainder deferred until such time as the company disposes
of its 45% interest in the new partnership. |
Thomson Reuters
Corporation |
Consolidated
Statement of Financial Position |
(millions of U.S.
dollars) |
(unaudited) |
|
|
March 31, |
|
December 31, |
2018 |
|
2017 |
Assets |
|
|
|
Cash and cash equivalents |
$502 |
|
$874 |
Trade and other receivables |
839 |
|
1,457 |
Other financial assets |
53 |
|
98 |
Prepaid expenses and other current assets |
397 |
|
548 |
Current assets excluding assets held
for sale |
1,791 |
|
2,977 |
Assets held for sale |
14,687 |
|
- |
Current assets |
16,478 |
|
2,977 |
|
|
|
|
Computer hardware and other property, net |
528 |
|
921 |
Computer software, net |
892 |
|
1,458 |
Other identifiable intangible assets, net |
3,335 |
|
5,315 |
Goodwill |
5,061 |
|
15,042 |
Other financial assets |
39 |
|
83 |
Other non-current assets |
575 |
|
605 |
Deferred tax |
50 |
|
79 |
Total assets |
$26,958 |
|
$26,480 |
|
|
|
|
Liabilities and equity |
|
|
|
Liabilities |
|
|
|
Current indebtedness |
$1,760 |
|
$1,644 |
Payables, accruals and provisions |
1,022 |
|
2,086 |
Deferred revenue |
695 |
|
937 |
Other financial liabilities |
66 |
|
129 |
Current liabilities excluding
liabilities associated with assets held for sale |
3,543 |
|
4,796 |
Liabilities associated with assets held for
sale |
1,813 |
|
- |
Current liabilities |
5,356 |
|
4,796 |
|
|
|
|
Long-term indebtedness |
5,343 |
|
5,382 |
Provisions and other non-current liabilities |
1,263 |
|
1,740 |
Other financial liabilities |
278 |
|
279 |
Deferred tax |
1,334 |
|
708 |
Total liabilities |
13,574 |
|
12,905 |
|
|
|
|
Equity |
|
|
|
Capital |
9,541 |
|
9,549 |
Retained earnings |
6,829 |
|
7,201 |
Accumulated other comprehensive loss |
(3,502) |
|
(3,673) |
Total shareholders' equity |
12,868 |
|
13,077 |
Non-controlling interests |
516 |
|
498 |
Total equity |
13,384 |
|
13,575 |
Total liabilities and equity |
$26,958 |
|
$26,480 |
Thomson Reuters
Corporation |
Consolidated
Statement of Cash Flow |
(millions of U.S.
dollars) |
(unaudited) |
|
|
Three Months
Ended |
|
March 31, |
|
2018 |
2017 |
Cash provided by (used in): |
|
|
Operating activities |
|
|
Earnings from continuing operations |
$172 |
$145 |
Adjustments for: |
|
|
Depreciation |
30 |
28 |
Amortization of computer software |
98 |
96 |
Amortization of other identifiable intangible
assets |
29 |
35 |
Deferred tax |
5 |
4 |
Other |
47 |
60 |
Pension contribution |
- |
(500) |
Changes in working capital and other
items |
(172) |
(265) |
Operating cash flows from continuing
operations |
209 |
(397) |
Operating cash flows from discontinued
operations |
210 |
29 |
Net cash provided by (used in) operating
activities |
419 |
(368) |
|
|
|
Investing activities |
|
|
Acquisitions, net of cash acquired |
(27) |
- |
Proceeds from disposals of businesses and
investments |
- |
10 |
Capital expenditures, less proceeds from
disposals |
(179) |
(108) |
Other investing activities |
- |
6 |
Investing cash flows from continuing
operations |
(206) |
(92) |
Investing cash flows from discontinued
operations |
(108) |
(283) |
Net cash used in investing activities |
(314) |
(375) |
|
|
|
Financing activities |
|
|
Proceeds from debt |
1,370 |
- |
Repayments of debt |
- |
(550) |
Net (repayments) borrowings under short-term loan
facilities |
(1,252) |
255 |
Repurchases of common shares |
- |
(284) |
Dividends paid on preference shares |
(1) |
(1) |
Dividends paid on common shares |
(236) |
(242) |
Other financing activities |
- |
5 |
Financing cash flows from continuing
operations |
(119) |
(817) |
Financing cash flows from discontinued
operations |
(11) |
(9) |
Net cash used in financing activities |
(130) |
(826) |
Decrease in cash and bank overdrafts |
(25) |
(1,569) |
Translation adjustments |
1 |
2 |
Cash and bank overdrafts at beginning of
period |
868 |
2,367 |
Cash and bank overdrafts at end of period |
$844 |
$800 |
Cash and bank overdrafts at end of period
comprised of: |
|
|
Cash and cash equivalents |
$502 |
$812 |
Cash and cash equivalents in assets held for
sale |
346 |
- |
Bank overdrafts |
(4) |
(12) |
|
$844 |
$800 |
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 |
|
March 31, |
|
|
2018 |
2017 |
Change |
Earnings from continuing operations |
$172 |
$145 |
19% |
Adjustments to remove: |
|
|
|
Tax expense |
27 |
11 |
|
Other finance (income) costs |
(7) |
28 |
|
Net interest expense |
78 |
92 |
|
Amortization of other identifiable intangible
assets |
29 |
35 |
|
Amortization of computer software |
98 |
96 |
|
Depreciation |
30 |
28 |
|
EBITDA |
$427 |
$435 |
|
Adjustments to remove: |
|
|
|
Share of post-tax earnings in equity method
investments |
(2) |
(2) |
|
Other operating losses (gains), net |
2 |
(13) |
|
Fair value adjustments |
3 |
(5) |
|
Adjusted EBITDA |
$430 |
$415 |
4% |
Adjusted EBITDA margin (1) |
31.2% |
31.2% |
0bp |
Reconciliation of
Net Earnings to Adjusted Earnings(2) |
(millions of U.S.
dollars, except for share and per share data) |
(unaudited) |
|
|
Three Months
Ended |
|
|
March 31, |
|
|
2018 |
2017 |
Change |
|
Net (loss) earnings |
$(311) |
$314 |
n/m |
|
Adjustments to remove: |
|
|
|
|
Fair value adjustments |
3 |
(5) |
|
|
Amortization of other identifiable assets |
29 |
35 |
|
|
Other operating losses (gains), net |
2 |
(13) |
|
|
Other finance (income) costs |
(7) |
28 |
|
|
Share of post-tax earnings in equity method
investments |
(2) |
(2) |
|
|
Tax on above items |
(5) |
(2) |
|
|
Tax items impacting comparability |
2 |
- |
|
|
Loss (earnings) from discontinued operations, net
of tax |
483 |
(169) |
|
|
Interim period effective tax rate
normalization(3) |
4 |
(5) |
|
|
Dividends declared on preference shares |
(1) |
(1) |
|
|
Adjusted earnings |
$197 |
$180 |
9% |
|
Adjusted EPS |
$0.28 |
$0.25 |
12% |
|
Foreign currency(4) |
|
|
0% |
|
Before currency (4) |
|
|
12% |
|
|
|
|
|
|
Diluted weighted-average common shares
(millions) |
711.5 |
729.2 |
|
|
|
n/m: not meaningful |
|
Refer to page 12 for footnotes. |
Thomson Reuters
Corporation |
Reconciliation of
Earnings from Discontinued Operations to Financial & Risk
Adjusted EBITDA(1) |
(millions of U.S.
dollars, except for margins) |
(unaudited) |
|
|
Three Months
Ended |
|
March 31, |
|
|
2018 |
2017 |
Change |
(Loss) earnings from discontinued
operations |
$(483) |
$169 |
n/m |
Adjustments to remove: |
|
|
|
Tax expense (benefit) |
868 |
(2) |
|
Other finance costs (income) |
5 |
(1) |
|
Net interest expense |
4 |
1 |
|
Amortization of other identifiable intangible
assets |
28 |
84 |
|
Amortization of computer software |
30 |
84 |
|
Depreciation |
14 |
44 |
|
EBITDA |
$466 |
$379 |
|
Adjustments to remove: |
|
|
|
Other operating losses, net |
41 |
9 |
|
Fair value adjustments |
18 |
70 |
|
IP & Science discontinued operations |
1 |
3 |
|
Financial & Risk discontinued operations
adjusted EBITDA |
$526 |
$461 |
14% |
Adjusted EBITDA margin (1) |
33.2% |
31.0% |
220bp |
|
n/m: not meaningful |
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 |
March 31, |
|
2018 |
2017 |
Net cash provided by operating activities |
$419 |
$(368) |
Capital expenditures, less proceeds from
disposals |
(179) |
(108) |
Capital expenditures from discontinued
operations |
(108) |
(105) |
Other investing activities |
- |
6 |
Dividends paid on preference shares |
(1) |
(1) |
Dividends paid to non-controlling interests from
discontinued operations |
(11) |
(9) |
Free cash flow |
$120 |
$(585) |
Thomson Reuters
Corporation |
Reconciliation of
Operating Cash Flows from Discontinued Operations to Financial
& Risk Free Cash Flow(5) |
(millions of U.S.
dollars) |
(unaudited) |
|
|
Three Months
Ended |
March 31, |
|
2018 |
2017 |
Operating cash flows from discontinued
operations |
$210 |
$29 |
Remove: Operating cash flows - IP & Science
discontinued operations |
- |
41 |
Capital expenditures from discontinued
operations |
(108) |
(105) |
Dividends paid to non-controlling interests from
discontinued operations |
(11) |
(9) |
Free cash flow - Financial & Risk discontinued
operations |
$91 |
$(44) |
|
Refer to page 12 for
footnotes. |
Footnotes |
(1) |
Thomson Reuters defines adjusted EBITDA for its
business units as earnings from continuing operations, or for
F&R as (loss) earnings from discontinued operations, before tax
expense or benefit, net interest expense, other finance costs or
income, depreciation, amortization of software and other
identifiable intangible assets, Thomson Reuters share of post-tax
(earnings) losses in equity method investments, other operating
gains and losses, certain asset impairment charges, fair value
adjustments and corporate related items. Consolidated adjusted
EBITDA is comprised of adjusted EBITDA for its business units and
Corporate. 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 from
discontinued operations. 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 |
March 31, |
|
2018 |
2017 |
Legal |
$63 |
$64 |
Tax & Accounting |
37 |
32 |
Reuters News |
4 |
4 |
Corporate |
24 |
24 |
Total depreciation and amortization of computer
software |
$128 |
$124 |
Appendix A |
|
The following supplemental information
provides revised 2017 business segment information excluding the
Financial & Risk (F&R) business, which was classified as a
discontinued operation beginning in the first quarter of 2018. The
information provided illustrates the company's business on a
continuing operations basis. As it includes certain estimates, it
is subject to revision until the proposed F&R transaction is
completed. |
|
Revised Business
Segment Information |
(Excluding the F&R
Segment) |
(millions of U.S.
dollars except for per share amounts) |
(unaudited) |
|
|
Year Ended |
|
Year Ended |
|
|
December 31,
2017 |
Adjustments |
December 31, 2017 |
|
|
Previously Reported |
Remove F&R
Segment
Results |
Add Back
Retained
Businesses(3) |
Other
Adjustments(4) |
Revised
Excluding F&R |
|
Revenues |
|
|
|
|
|
|
Financial & Risk |
$6,112 |
(6,112) |
- |
- |
- |
|
Legal |
3,390 |
- |
69 |
- |
$3,459 |
|
Tax & Accounting |
1,551 |
- |
- |
- |
1,551 |
|
Reuters News(1) |
296 |
- |
- |
- |
296 |
|
Eliminations |
(16) |
7 |
- |
- |
(9) |
|
Revenues from continuing operations |
$11,333 |
(6,105) |
69 |
- |
$5,297 |
|
|
|
|
|
|
|
|
Adjusted EBITDA(2) |
|
|
|
|
|
|
Financial & Risk |
$1,916 |
(1,916) |
- |
- |
- |
|
Legal |
1,279 |
- |
28 |
- |
$1,307 |
|
Tax & Accounting |
495 |
- |
- |
- |
495 |
|
Reuters News(1) |
27 |
- |
- |
- |
27 |
|
Corporate |
(280) |
- |
- |
36 |
(244) |
|
Adjusted EBITDA |
$3,437 |
(1,916) |
28 |
36 |
$1,585 |
|
|
|
|
|
|
|
|
Adjusted earnings(2) |
|
|
|
|
|
|
Adjusted EBITDA |
$3,437 |
(1,916) |
28 |
36 |
$1,585 |
|
Depreciation and amortization of computer
software |
(995) |
581 |
(10) |
(72) |
(496) |
|
Adjustments: |
|
|
|
|
|
|
Interest |
(362) |
- |
- |
4 |
(358) |
|
Tax |
(205) |
121 |
(2) |
3 |
(83) |
|
Non-controlling interests |
(64) |
- |
- |
64 |
- |
|
Dividends declared on preference
shares |
(2) |
- |
- |
- |
(2) |
|
Adjusted earnings |
$1,809 |
(1,214) |
16 |
35 |
$646 |
|
|
|
|
|
|
|
|
Adjusted EPS(2) |
$2.51 |
(1.68) |
0.02 |
0.05 |
$0.90 |
|
|
(1)
Effective January 1, 2018, Reuters News is a reportable
segment. |
|
(2)
Refer to the explanatory footnotes on page 12 for definitions of
our non-IFRS measures. Refer to the company's 2017 Annual Report
for a
reconciliation of this non-IFRS financial measure to the most
directly comparable IFRS measure. |
|
(3)
Represents the Regulatory Intelligence and Compliance Learning
businesses that will be retained by the company's Legal
segment
following the closing of the proposed F&R transaction. |
|
(4)
Other adjustments include the following: |
- Adjusted EBITDA contains costs primarily for real estate
optimization that relate to properties to be transferred with the
Financial &
Risk business.
- Depreciation and amortization of computer software relates to
assets that will not be transferred with the Financial & Risk
business.
- Non-controlling interests relates to third party shareholdings
in Tradeweb that will be transferred with the Financial & Risk
business.
|
Appendix A |
|
The following supplemental information
provides revised 2017 business segment information excluding the
F&R business, which was classified as a discontinued operation
beginning in the first quarter of 2018. The information provided
illustrates the company's business on a continuing operations
basis. As it includes certain estimates, periods subsequent to
March 31, 2017 are subject to revision until the proposed F&R
transaction is completed. |
|
Revised Business
Segment Information |
(Excluding the F&R
Segment) |
(millions of U.S.
dollars except for per share amounts and margins) |
(unaudited) |
|
|
2017 |
|
|
First
Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year |
|
Revenues |
|
|
|
|
|
|
Legal |
$841 |
$858 |
$860 |
$900 |
$3,459 |
|
Tax & Accounting |
417 |
350 |
341 |
443 |
1,551 |
|
Reuters News |
74 |
74 |
73 |
75 |
296 |
|
Eliminations |
(1) |
(2) |
(2) |
(4) |
(9) |
|
Revenues from continuing operations |
$1,331 |
$1,280 |
$1,272 |
$1,414 |
$5,297 |
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
|
|
|
|
|
Legal |
$314 |
$325 |
$345 |
$323 |
$1,307 |
|
Tax & Accounting |
141 |
103 |
95 |
156 |
495 |
|
Reuters News |
13 |
9 |
7 |
(2) |
27 |
|
Corporate |
(53) |
(57) |
(60) |
(74) |
(244) |
|
Adjusted EBITDA |
$415 |
$380 |
$387 |
$403 |
$1,585 |
|
|
|
|
|
|
|
|
Adjusted earnings(1) |
|
|
|
|
|
|
Adjusted EBITDA |
$415 |
$380 |
$387 |
$403 |
$1,585 |
|
Depreciation and amortization of computer
software |
(124) |
(127) |
(117) |
(128) |
(496) |
|
Adjustments: |
|
|
|
|
|
|
Interest |
(92) |
(89) |
(89) |
(88) |
(358) |
|
Tax |
(18) |
(24) |
(1) |
(40) |
(83) |
|
Dividends declared on preference
shares |
(1) |
- |
(1) |
- |
(2) |
|
Adjusted earnings |
$180 |
$140 |
$179 |
$147 |
$646 |
|
Adjusted EPS(1) |
$0.25 |
$0.19 |
$0.25 |
$0.21 |
$0.90 |
|
|
|
|
|
|
|
|
Adjusted EBITDA margin(1) |
|
|
|
|
|
|
Legal |
37.3% |
37.9% |
40.1% |
35.9% |
37.8% |
|
Tax & Accounting |
33.8% |
29.4% |
27.9% |
35.2% |
31.9% |
|
Reuters News |
17.6% |
12.2% |
9.6% |
n/m |
9.1% |
|
Corporate |
n/a |
n/a |
n/a |
n/a |
n/a |
|
Adjusted EBITDA margin |
31.2% |
29.7% |
30.4% |
28.5% |
29.9% |
|
n/m – not meaningful |
|
|
|
|
|
|
n/a – not applicable |
|
|
|
|
|
|
|
(1)
Refer to the explanatory footnotes on page 12 for definitions of
our non-IFRS measures. |