TORONTO, May 8, 2019 /CNW/ -- Thomson Reuters
(TSX/NYSE: TRI) today reported results for the first quarter ended
March 31, 2019 and reaffirmed its
full-year Outlook for 2019 and 2020.
"The year is off to a solid start," said Jim Smith, president and CEO of Thomson
Reuters. "The trajectory of the business continued to
improve on the progress made last year. Revenue growth is tracking
to our outlook. Recurring revenue growth is the strongest we
have seen in several years. Net sales are strong and our book of
business continues to grow. Our transformation initiatives
are on track and we are seeing good underlying margin improvement.
We remain confident in our ability to achieve our 2019 and 2020
targets."
Consolidated Financial Highlights - Three Months Ended
March 31
Three Months Ended
March 31,
(Millions of U.S.
dollars, except for adjusted EBITDA margin and EPS)
(unaudited)
|
IFRS Financial
Measures (1)
|
2019
|
2018
|
Change
|
Change at
Constant
Currency
|
Revenues
|
$1,487
|
$1,379
|
8%
|
|
Operating
profit
|
$274
|
$268
|
2%
|
|
Diluted earnings per
share (EPS) (includes discontinued operations)
|
$0.23
|
$(0.48)
|
n/m
|
|
Cash flow from
operations (includes discontinued operations)
|
$(58)
|
$419
|
n/m
|
|
Non-IFRS Financial
Measures (1)
|
|
|
|
|
Revenues
|
$1,487
|
$1,379
|
8%
|
10%
|
Adjusted
EBITDA
|
$397
|
$430
|
-8%
|
-8%
|
Adjusted EBITDA
margin
|
26.7%
|
31.1%
|
-440bp
|
-520bp
|
Adjusted
EPS
|
$0.36
|
$0.28
|
29%
|
25%
|
Free cash flow
(includes discontinued operations)
|
$(177)
|
$120
|
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 8%, due to the inclusion of revenues
paid by Refinitiv to Reuters News for providing news and editorial
content, and also to higher recurring revenues across all other
customer segments.
- At constant currency, revenues increased 10%; currency had a
$26 million (2%) negative impact
during the quarter.
- Organic revenue growth was 3%, driven by a 6% increase in
recurring revenues, which comprised 76% of total revenues. The 6%
increase in recurring revenues was partially offset by a 3% decline
in transactions revenues (13% of total revenues) and a 4% decline
in Global Print revenues (11% of total revenues).
Operating profit increased 2% due to benefits from other
operating gains, which included gains from the sales of several
small businesses.
- Adjusted EBITDA, which excludes other operating gains,
decreased 8% and the margin decreased to 26.7%, primarily due to
costs and investments to reposition the company following the
separation of the Financial & Risk (F&R) business to create
Refinitiv.
Diluted EPS was $0.23
compared to a loss of $0.48 in the
prior-year period, which included an $844
million deferred tax charge associated with the sale of the
company's F&R business, which was recorded in discontinued
operations.
- Adjusted EPS, which excludes discontinued operations,
was $0.36 compared to $0.28 in the prior-year period, primarily
reflecting a benefit from lower common shares and lower interest
expense.
Cash flow from operations decreased reflecting a
contribution to a pension plan, the loss of cash flows from the
company's former F&R business (which were included in the
prior-year period, but are no longer included as of October 1, 2018), and investments to reposition
Thomson Reuters following the separation of F&R from the
company.
- Free cash flow decreased for the same reasons.
Highlights by
Customer Segment – Three Months Ended March 31
|
|
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
March
31,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Revenues
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$594
|
$585
|
|
2%
|
-1%
|
3%
|
Corporates
|
|
352
|
329
|
|
7%
|
-2%
|
8%
|
Tax
Professionals
|
|
222
|
217
|
|
2%
|
-3%
|
5%
|
Reuters
News
|
|
155
|
72
|
|
115%
|
-6%
|
121%
|
Global
Print
|
|
165
|
177
|
|
-7%
|
-3%
|
-4%
|
Eliminations
|
|
(1)
|
(1)
|
|
|
|
|
Revenues
|
|
$1,487
|
$1,379
|
|
8%
|
-2%
|
10%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$227
|
$191
|
|
19%
|
0%
|
19%
|
Corporates
|
|
118
|
111
|
|
6%
|
1%
|
5%
|
Tax
Professionals
|
|
93
|
80
|
|
16%
|
-5%
|
21%
|
Reuters
News
|
|
16
|
8
|
|
97%
|
15%
|
82%
|
Global
Print
|
|
74
|
81
|
|
-9%
|
-1%
|
-8%
|
Corporate
costs
|
|
(131)
|
(41)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
|
$397
|
$430
|
|
-8%
|
1%
|
-8%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
38.2%
|
32.6%
|
|
560bp
|
40bp
|
520bp
|
Corporates
|
|
33.6%
|
33.8%
|
|
-20bp
|
70bp
|
-90bp
|
Tax
Professionals
|
|
41.9%
|
37.1%
|
|
480bp
|
-50bp
|
530bp
|
Reuters
News
|
|
10.3%
|
11.3%
|
|
-100bp
|
110bp
|
-210bp
|
Global
Print
|
|
44.8%
|
45.7%
|
|
-90bp
|
90bp
|
-180bp
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
|
26.7%
|
31.1%
|
|
-440bp
|
80bp
|
-520bp
|
|
|
|
|
|
|
|
|
n/a; not
applicable
|
Unless otherwise noted, all revenue growth comparisons by
customer segment 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. Other than EPS, the company reports its
results in millions of U.S. dollars, but computes percentage
changes and margins using whole-dollars to be more precise. As a
result, percentages and margins calculated from reported amounts
may differ from those presented, and growth components may not
total due to rounding.
Legal Professionals
Revenues increased 3% to $594
million.
- Recurring revenues grew 4% and grew 5% organically (93% of
total).
- Transactions revenues declined 13% and declined 9% organically
(7% of total).
Adjusted EBITDA increased 19% to $227 million.
- The margin increased from 32.6% to 38.2% primarily due to
higher revenues, savings from efficiency initiatives and the
favorable timing of expenses.
Corporates
Revenues increased 8% to $352
million, primarily due to strong recurring revenue growth.
The acquisition of Integration Point (a global trade management
business) in the fourth quarter of 2018 contributed approximately
3% to the growth rate.
- Recurring revenues grew 12% (76% of total), driven by organic
revenue growth of 9% and revenues from the acquisition of
Integration Point.
- Transactions revenues declined 2% and declined 4% organically
(24% of total), due in part to lower revenues from the
Pangea3/Legal Managed Services (LMS) business. In April 2019, the company signed a definitive
agreement to sell the Pangea3/LMS business to EY and the sale is
expected to close later in the second quarter.
Adjusted EBITDA increased 6% to $118 million.
- The margin decreased from 33.8% to 33.6% as higher revenues
mostly offset the dilutive impact of the Integration Point
acquisition.
Tax Professionals
Revenues increased 5% to $222
million.
- Recurring revenues grew 7% - all organic (78% of total).
- Transactions revenues were consistent with the prior-year
period (22% of total).
Adjusted EBITDA grew 16% to $93 million.
- The margin increased from 37.1% to 41.9% due to higher
revenues, the favorable timing of expenses and efficiency
savings.
Reuters News
Revenues increased 121% to $155
million due to revenue from the 30-year agreement for
Reuters News to supply news and editorial content to Refinitiv,
which began in the fourth quarter of 2018.
- Organic revenues increased 3%, partly attributable to a price
increase related to the Refinitiv agreement.
Adjusted EBITDA was $16
million, an increase of $8
million primarily due to timing of expenses.
Global Print
Revenues decreased 4% to $165
million.
Adjusted EBITDA decreased 9% to $74 million.
- The margin decreased from 45.7% to 44.8%.
Corporate Costs
Corporate costs at the adjusted EBITDA level were
$131 million compared to $41 million in the prior-year period. As
previously disclosed, the increase was due to costs and investments
to reposition Thomson Reuters following the separation of F&R.
These cash costs and investments are expected to continue
throughout 2019.
Business Outlook for 2019 and 2020 (At Constant
Currency)
Thomson Reuters today reaffirmed its Outlook for 2019 and 2020.
The company's Outlook for 2019 and 2020 assumes constant currency
rates compared to 2018 and does not factor in the impact of
acquisitions or divestitures that may occur. The company has
provided a full-year Outlook for two years because 2019 will be
materially impacted by costs to separate the business from
Refinitiv and reposition it for growth, while 2020 should represent
the first year that the company's financial performance will
reflect the benefits from its actions, without material costs
related to the actions.
|
2018
Actual
|
2019
Outlook
Before
Currency
|
2020
Outlook
Before
Currency
|
Revenue
Growth
|
4%(1)
|
7% -
8.5%(2)
|
3.5% -
4.5%
|
Adjusted
EBITDA
|
$1.4
billion
($1.3 billion
before currency)
|
$1.4 - $1.5
billion(3)
|
30.0% -
31.0%(3)
|
Corporate
Costs
|
$499
million
|
~$570
million
|
$140 - $190
million
|
Free Cash
Flow
|
$1.1
billion
|
$0 - $300
million
|
$1.0 - $1.2
billion
|
Capital Expenditures
- % of Revenue
|
~10%
|
~9%
|
7.5% -
8.0%
|
Depreciation &
Amortization of
Computer Software
|
$510
million
|
$600 - $625
million(3)
|
TBD
|
Interest Expense
(P&L)
|
$260
million
|
$150 - $175
million
|
TBD
|
Effective Tax Rate on
Adjusted
Earnings
|
15%
|
16% - 19%
|
~20%
|
|
|
(1)
|
2018 organic
revenue growth was 2.5%.
|
(2)
|
2019 organic
revenue growth is expected to be 3% - 3.5%. For purposes of
the organic growth calculation, the initial
contract value of
the company's 30-year agreement with Refinitiv that was signed on
October 1, 2018 is treated as an
acquisition until
October 1, 2019.
|
(3)
|
The impact of the
new lease accounting standard (IFRS 16) is expected to increase
both adjusted EBITDA and
depreciation and
amortization of computer software by an estimated $40 million in
2019 and $50 million in 2020 and
is reflected in
this Outlook. IFRS 16 has no impact on free cash
flow.
|
Some of the forward-looking financial measures in the
Outlook above are provided on a non-IFRS basis. See the section
below entitled "Non-IFRS Financial Measures" for more information.
The information in this section is forward-looking and should also
be read in conjunction with the section below entitled "Special
Note Regarding Forward-Looking Statements, Material Risks and
Material Assumptions."
Dividend and Share Repurchases
In February 2019, the company
announced that its Board of Directors approved a $0.04 per share annualized increase in the
dividend to $1.44 per common share
(representing the 26th consecutive year of dividend
increases). A quarterly dividend of $0.36 per share is payable on June 17, 2019 to common shareholders of record as
of May 23, 2019.
Earlier this year, the company announced plans to repurchase up
to an additional $250 million of its
shares under its normal course issuer bid. The company repurchased
$190 million of shares in the first
quarter (approximately $40 million of
which were repurchased using part of the remaining proceeds of the
F&R transaction, as announced in 2018).
Refinitiv Ownership Interest
On October 1, 2018, Thomson
Reuters sold a 55% interest in the company's F&R business,
which is now known as Refinitiv. Except as otherwise noted, all
amounts noted in this news release are from continuing operations
and exclude the results of the company's former F&R
business. The company's IFRS earnings per share since
October 1, 2018 have included its
share of results from its 45% investment in Refinitiv, which is
removed from the company's non-IFRS calculation of adjusted EPS.
The company's results since October 1,
2018 also have included new revenues in the Reuters News
business from providing news and editorial content to Refinitiv
since that day. Additional information regarding Refinitiv's
financial results is provided in the appendix to this news
release.
Thomson Reuters
Thomson Reuters (TSX/NYSE: TRI) is the world's leading provider
of news and information-based tools to professionals. Our worldwide
network of journalists and specialist editors keep customers up to
speed on global developments, with a particular focus on legal,
regulatory and tax changes. Thomson Reuters shares are listed on
the Toronto and New York Stock
Exchanges. For more information on Thomson Reuters,
visit tr.com and for the latest world
news, reuters.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 customer segment level), free cash flow, adjusted EPS,
selected measures excluding the impact of foreign currency, and
changes in revenues computed on an organic basis. 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 company's Outlook contains various non-IFRS financial
measures. The company believes that providing reconciliations of
forward-looking non-IFRS financial measures in its Outlook would be
potentially misleading and not practical due to the difficulty of
projecting items that are not reflective of ongoing operations in
any future period. The magnitude of these items may be significant.
Consequently, 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
2019 or 2020 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 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 currently
anticipate.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL
RISKS AND MATERIAL ASSUMPTIONS
Certain statements in this news release, including, but not
limited to, statements in the "Business Outlook for 2019 and 2020
(At Constant Currency)" section, Mr. Smith's comments, statements
regarding the expected timing for the closing of the sale of the
Pangea3/LMS business, the company's plans to make future share
repurchases, and expectations for Corporate costs, are
forward-looking. The words "expect", "believe", "target" and "will"
and similar expressions identify forward-looking statements. While
the company believes that it has a reasonable basis for making
forward-looking statements in this news release, they are not a
guarantee of future performance or outcomes and there is no
assurance that the events described in any forward-looking
statement will materialize. Forward-looking statements are subject
to a number of risks, uncertainties and assumptions that could
cause actual results or events to differ materially from current
expectations. Many of these risks, uncertainties and assumptions
are beyond our company's control and the effects of them can be
difficult to predict.
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; fraudulent or unpermitted data access or
other cyber-security or privacy breaches; failures or disruptions
of telecommunications, data centers, network systems or the
Internet; 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; increased accessibility to free or
relatively inexpensive information sources; failure to derive fully
the anticipated benefits from the Refinitiv strategic partnership
with Blackstone; failure to efficiently complete the separation of
Refinitiv from Thomson Reuters; failure to adapt to organizational
changes and effectively implement strategic initiatives; 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 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; actions or potential actions that could be taken
by the company's principal shareholder, The Woodbridge Company
Limited; impairment of goodwill and other identifiable intangible
assets; and the ability of Thomson Reuters Founders Share Company
to affect the company's governance and management. 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.
The company's 2019 and 2020 business outlook is based on
information currently available to the company and is based on
various external and internal assumptions made by the company in
light of its experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors that the company believes are appropriate under the
circumstances. Economic and market assumptions include, but are not
limited to, GDP growth in the United
States (77% of the company's 2018 revenues) and secondarily,
in other countries where Thomson Reuters operates; a continued
increase in the demand and need for high quality information and
tools that help automate or manage workflow solutions and drive
productivity and efficiency; a continued need for trusted products
and services that help customers navigate evolving and complex
legal, tax, accounting, regulatory, geopolitical and commercial
changes, developments and environments; and a continued increase in
customers seeking software-as-a-service or other cloud-based
offerings. Internal financial and operational assumptions include,
but are not limited to, continued growth in the company's recurring
revenue base which offsets anticipated declines in its global print
business; acquiring new customers by enhancing the company's
digital platforms and propositions and through other sales
initiatives; improving customer retention through commercial
simplification efforts and customer service improvements; the
company's ability to continue to combine information, technology
and human expertise in offerings that meet evolving customer
demands and needs; the company's ability to reduce stranded costs
related to the F&R transaction and the separation of the two
businesses to less than $50 million
in 2020; and the successful execution of a number of efficiency
initiatives that are expected to generate cost savings, such as
reducing headcount, office locations and the number of products
offered by the company and the leveraging of fewer, shared
technology platforms.
The company has provided an Outlook for the purpose of
presenting information about current expectations for 2019 and
2020. 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.
CONTACTS
MEDIA
David
Crundwell
Head of
Communications
+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 2019 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,
|
|
2019
|
2018
|
CONTINUING
OPERATIONS
|
|
|
Revenues
|
$1,487
|
$1,379
|
Operating
expenses
|
(1,091)
|
(952)
|
Depreciation
|
(34)
|
(30)
|
Amortization of
computer software
|
(105)
|
(98)
|
Amortization of other
identifiable intangible assets
|
(27)
|
(29)
|
Other operating gains
(losses), net
|
44
|
(2)
|
Operating
profit
|
274
|
268
|
Finance costs,
net:
|
|
|
Net interest
expense
|
(35)
|
(78)
|
Other finance (costs)
income
|
(11)
|
7
|
Income before tax and
equity method investments
|
228
|
197
|
Share of post-tax
(losses) earnings in equity method investments
|
(97)
|
2
|
Tax
expense
|
(5)
|
(27)
|
Earnings from
continuing operations
|
126
|
172
|
Loss from
discontinued operations, net of tax
|
(10)
|
(483)
|
Net earnings
(loss)
|
$116
|
$(311)
|
|
|
|
Earnings (loss)
attributable to:
|
|
|
Common
shareholders
|
116
|
(339)
|
Non-controlling
interests
|
-
|
28
|
|
|
|
Earnings (loss)
per share:
|
|
|
Basic and diluted
earnings (loss) per share:
|
|
|
From
continuing operations
|
$0.25
|
$0.24
|
From
discontinued operations
|
(0.02)
|
(0.72)
|
Basic and diluted
earnings (loss) per share
|
$0.23
|
$(0.48)
|
|
|
|
Basic
weighted-average common shares
|
501,888,688
|
710,763,749
|
Diluted
weighted-average common shares
|
503,649,290
|
711,498,620
|
Thomson Reuters
Corporation
|
Consolidated
Statement of Financial Position
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
March 31,
|
|
December
31,
|
2019
|
|
2018
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$2,258
|
|
$2,706
|
Trade and other
receivables
|
1,137
|
|
1,313
|
Other financial
assets
|
48
|
|
76
|
Prepaid expenses and
other current assets
|
553
|
|
434
|
Current
assets
|
3,996
|
|
4,529
|
|
|
|
|
Computer hardware and
other property, net
|
460
|
|
473
|
Computer software,
net
|
884
|
|
908
|
Other identifiable
intangible assets, net
|
3,298
|
|
3,324
|
Goodwill
|
5,091
|
|
5,076
|
Equity method
investments
|
2,074
|
|
2,207
|
Other financial
assets
|
109
|
|
53
|
Other non-current
assets
|
552
|
|
446
|
Deferred
tax
|
31
|
|
31
|
Total
assets
|
$16,495
|
|
$17,047
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Liabilities
|
|
|
|
Current
indebtedness
|
-
|
|
$3
|
Payables, accruals
and provisions
|
$1,245
|
|
1,549
|
Deferred
revenue
|
747
|
|
815
|
Other financial
liabilities
|
186
|
|
95
|
Current
liabilities
|
2,178
|
|
2,462
|
|
|
|
|
Long-term
indebtedness
|
3,223
|
|
3,213
|
Provisions and other
non-current liabilities
|
1,163
|
|
1,268
|
Other financial
liabilities
|
216
|
|
79
|
Deferred
tax
|
718
|
|
799
|
Total
liabilities
|
7,498
|
|
7,821
|
|
|
|
|
Equity
|
|
|
|
Capital
|
5,367
|
|
5,348
|
Retained
earnings
|
4,502
|
|
4,755
|
Accumulated other
comprehensive loss
|
(872)
|
|
(877)
|
Total
equity
|
8,997
|
|
9,226
|
Total liabilities
and equity
|
$16,495
|
|
$17,047
|
Thomson Reuters
Corporation
|
Consolidated
Statement of Cash Flow
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
2018
|
Cash (used in)
provided by:
|
|
|
Operating
activities
|
|
|
Earnings from
continuing operations
|
$126
|
$172
|
Adjustments
for:
|
|
|
Depreciation
|
34
|
30
|
Amortization of
computer software
|
105
|
98
|
Amortization of other
identifiable intangible assets
|
27
|
29
|
Net gains on disposals
of businesses and investments
|
(24)
|
-
|
Deferred
tax
|
(64)
|
5
|
Other
|
130
|
47
|
Pension
contribution
|
(167)
|
-
|
Changes in working
capital and other items
|
(168)
|
(172)
|
Operating cash flows
from continuing operations
|
(1)
|
209
|
Operating cash flows
from discontinued operations
|
(57)
|
210
|
Net cash (used in)
provided by operating activities
|
(58)
|
419
|
|
|
|
Investing
activities
|
|
|
Acquisitions, net of
cash acquired
|
(4)
|
(27)
|
Proceeds from
disposals of businesses and investments
|
34
|
-
|
Capital
expenditures
|
(110)
|
(179)
|
Other investing
activities
|
3
|
-
|
Investing cash flows
from continuing operations
|
(77)
|
(206)
|
Investing cash flows
from discontinued operations
|
29
|
(108)
|
Net cash used in
investing activities
|
(48)
|
(314)
|
|
|
|
Financing
activities
|
|
|
Proceeds from
debt
|
-
|
1,370
|
Net repayments under
short-term loan facilities
|
-
|
(1,252)
|
Payments of lease
principal
|
(11)
|
-
|
Repurchases of common
shares
|
(190)
|
-
|
Dividends paid on
preference shares
|
(1)
|
(1)
|
Dividends paid on
common shares
|
(174)
|
(236)
|
Other financing
activities
|
35
|
-
|
Financing cash flows
from continuing operations
|
(341)
|
(119)
|
Financing cash flows
from discontinued operations
|
-
|
(11)
|
Net cash used in
financing activities
|
(341)
|
(130)
|
Decrease in cash and
bank overdrafts
|
(447)
|
(25)
|
Translation
adjustments
|
2
|
1
|
Cash and bank
overdrafts at beginning of period
|
2,703
|
868
|
Cash and bank
overdrafts at end of period
|
$2,258
|
$844
|
Cash and bank
overdrafts at end of period comprised of:
|
|
|
Cash and cash
equivalents
|
$2,258
|
$502
|
Cash and cash
equivalents in assets held for sale
|
-
|
346
|
Bank
overdrafts
|
-
|
(4)
|
|
$2,258
|
$844
|
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,
|
|
|
2019
|
2018
|
|
Earnings from
continuing operations
|
$126
|
$172
|
|
Adjustments to
remove:
|
|
|
|
Tax expense
|
5
|
27
|
|
Other finance costs
(income)
|
11
|
(7)
|
|
Net interest
expense
|
35
|
78
|
|
Amortization of other
identifiable intangible assets
|
27
|
29
|
|
Amortization of
computer software
|
105
|
98
|
|
Depreciation
|
34
|
30
|
|
EBITDA
|
$343
|
$427
|
|
Adjustments to
remove:
|
|
|
|
Share of post-tax
losses (earnings) in equity method investments
|
97
|
(2)
|
|
Other operating
(gains) losses, net
|
(44)
|
2
|
|
Fair value
adjustments
|
1
|
3
|
|
Adjusted
EBITDA
|
$397
|
$430
|
|
Adjusted EBITDA
margin(1)
|
26.7%
|
31.1%
|
|
Thomson Reuters
Corporation
|
Reconciliation of
Net Earnings (Loss) to Adjusted
Earnings(2)
|
(millions of U.S.
dollars, except for share and per share data)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2019
|
2018
|
Change
|
Net earnings
(loss)
|
$116
|
$(311)
|
|
Adjustments to
remove:
|
|
|
|
Fair value
adjustments
|
1
|
3
|
|
Amortization of other
identifiable assets
|
27
|
29
|
|
Other operating
(gains) losses, net
|
(44)
|
2
|
|
Other finance costs
(income)
|
11
|
(7)
|
|
Share of post-tax
losses (earnings) in equity method investments
|
97
|
(2)
|
|
Tax on above
items
|
(25)
|
(5)
|
|
Tax items impacting
comparability
|
(11)
|
2
|
|
Loss from discontinued
operations, net of tax
|
10
|
483
|
|
Interim period
effective tax rate normalization(3)
|
-
|
4
|
|
Dividends declared on
preference shares
|
(1)
|
(1)
|
|
Adjusted
earnings
|
$181
|
$197
|
|
Adjusted
EPS
|
$0.36
|
$0.28
|
29%
|
Foreign
currency(4)
|
|
|
4%
|
Before currency
(4)
|
|
|
25%
|
|
|
|
|
Diluted
weighted-average common shares (millions)
|
503.6
|
711.5
|
|
|
|
Refer to page 13 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
|
March
31,
|
|
2019
|
2018
|
Net cash (used in)
provided by operating activities
|
$(58)
|
$419
|
Capital
expenditures
|
(110)
|
(179)
|
Capital expenditures
from discontinued operations
|
-
|
(108)
|
Other investing
activities
|
3
|
-
|
Payments of lease
principal
|
(11)
|
-
|
Dividends paid on
preference shares
|
(1)
|
(1)
|
Dividends paid to
non-controlling interests from discontinued operations
|
-
|
(11)
|
Free cash
flow
|
$(177)
|
$120
|
Thomson Reuters
Corporation
Reconciliation of
Changes in Segment and Consolidated Revenues (for Total Revenues,
Recurring Revenues and
Transactions Revenues) to Changes in Revenues on an Organic
Basis(6)
(millions of U.S.
dollars)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Acquisitions/
(Divestitures)
|
Organic
|
Total
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$594
|
$585
|
|
2%
|
-1%
|
-
|
3%
|
Corporates
|
|
352
|
329
|
|
7%
|
-2%
|
3%
|
6%
|
Tax
Professionals
|
|
222
|
217
|
|
2%
|
-3%
|
-
|
5%
|
Reuters
News
|
|
155
|
72
|
|
115%
|
-6%
|
118%*
|
3%
|
Global
Print
|
|
165
|
177
|
|
-7%
|
-3%
|
-
|
-4%
|
Eliminations
|
|
(1)
|
(1)
|
|
-
|
-
|
-
|
-
|
Revenues
|
|
$1,487
|
$1,379
|
|
8%
|
-2%
|
7%
|
3%
|
|
|
|
|
|
|
|
|
|
Recurring
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$550
|
$533
|
|
3%
|
-1%
|
-
|
5%
|
Corporates
|
|
269
|
243
|
|
10%
|
-2%
|
3%
|
9%
|
Tax
Professionals
|
|
173
|
167
|
|
4%
|
-3%
|
-
|
7%
|
Reuters
News
|
|
145
|
62
|
|
133%
|
-3%
|
135%*
|
1%
|
Total Recurring
Revenues
|
|
$1,137
|
$1,005
|
|
13%
|
-2%
|
9%
|
6%
|
|
|
|
|
|
|
|
|
|
Transactions
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$44
|
$52
|
|
-15%
|
-1%
|
-4%
|
-9%
|
Corporates
|
|
83
|
86
|
|
-3%
|
-1%
|
3%
|
-4%
|
Tax
Professionals
|
|
49
|
50
|
|
-2%
|
-2%
|
-
|
-
|
Reuters
News
|
|
10
|
10
|
|
3%
|
-27%
|
-
|
31%
|
Total Transactions
Revenues
|
|
$186
|
$198
|
|
-5%
|
-3%
|
-
|
-3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Includes initial
contract value of revenues in Reuters News for providing news and
editorial content to Refinitiv under the 30-year
agreement that began in
the fourth quarter of
2018.
|
|
|
Growth percentages
are computed using whole dollars. Components of revenue growth may
not total due to rounding.
|
|
|
Refer to page 13 for
footnotes.
|
|
|
Footnotes
|
(1)
|
Thomson Reuters
defines adjusted EBITDA for its business segments as earnings or
losses 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 or
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 segments and corporate costs. 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 or 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 operating activities, proceeds
from disposals of
property and
equipment, and other investing activities less capital
expenditures, payments of lease principal, 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.
|
(6)
|
Changes in revenues
computed on an organic basis are revenues at constant currency
excluding the impacts from acquisitions and dispositions, as well
as the
initial contract
value of the 30-year Reuters News agreement with Refinitiv signed
in 2018. Thomson Reuters uses organic growth because it provides
further
insight into the
performance of its existing businesses by excluding distortive
impacts and serves as a better measure of the company's ability to
grow its
business over the
long term.
|
APPENDIX – INFORMATION ABOUT REFINITIV
As of October 1, 2018, Thomson
Reuters owns a 45% interest in Refinitiv, which was formerly its
wholly owned F&R business. 55% of Refinitiv is owned by private
equity funds managed by Blackstone. Beginning with the fourth
quarter of 2018, Thomson Reuters' IFRS results include the
company's 45% share of Refinitiv's results reported in a single
line item on the company's consolidated income statement titled
"Share of post-tax (losses) earnings in equity
method investments."
Thomson Reuters' non-IFRS measures, including
adjusted earnings, exclude its
share of post-tax results in Refinitiv and
other equity method investments.
Because Refinitiv has only been in existence since October 1, 2018, there are no financial
statements for the business for the three months ended March 31, 2018. The table below sets forth
selected financial information for 100% of Refinitiv for the first
quarter of 2019, on both an IFRS and non-IFRS basis, as well as a
reconciliation between the two bases, as provided to Thomson
Reuters from Refinitiv for inclusion in this news release. A
reconciliation from Refinitiv's IFRS measures to its non-IFRS
measures is also included in this appendix. The information for the
first quarter of 2018 that was previously reported for the F&R
business by Thomson Reuters is not fully comparable to Refinitiv's
current basis of presentation, as Refinitiv must apply accounting
rules related to the purchase of the business and because Refinitiv
defines its non-IFRS measures differently than Thomson Reuters. To
provide a reasonable basis to assess revenue trends for the
business, Thomson Reuters has noted the first quarter 2018 F&R
revenues, as previously reported by the company on a discontinued
operations basis prior to the change in ownership, and provided a
supplemental change before currency and purchase accounting
adjustments.
(millions of U.S.
dollars, except for margin)
|
Three months ended
March 31,
|
(unaudited)
|
|
|
Change
|
|
Refinitiv
Actuals 2019
|
As Reported
by Thomson
Reuters 2018
|
Total
|
Before
Currency
& Purchase
Accounting
Adjustments
|
IFRS
Measures
|
|
|
|
|
Revenues
|
$1,567
|
$1,583
|
-1%
|
3%
|
|
|
|
|
|
Net loss
|
$(201)
|
|
|
|
Cash flow from
operations
|
$(200)
|
|
|
|
Capital
expenditures
|
$132
|
|
|
|
Debt at March 31,
2019
|
$12,906
|
|
|
|
Preferred equity at
March 31, 2019
|
$1,073
|
|
|
|
|
|
|
|
|
Non-IFRS
Measures
|
|
|
|
|
Adjusted
EBITDA
|
$557
|
|
|
|
Adjusted EBITDA
margin
|
35.5%
|
|
|
|
Free cash
flow
|
$(341)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following
reconciliation of IFRS measures to non-IFRS measures was provided
by Refinitiv. The definitions of
non-IFRS measures
used by Refinitiv are not the same as those used by Thomson
Reuters.
|
|
|
|
Refinitiv
|
|
|
Reconciliation of
Net Loss to Adjusted EBITDA
|
|
|
(millions of U.S.
dollars, except for margins)
|
|
|
(unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
|
2019
|
|
|
Net
loss
|
$(201)
|
|
|
Adjustments to
remove:
|
|
|
|
Tax benefit
|
(25)
|
|
|
Finance
costs
|
196
|
|
|
Depreciation and
amortization
|
479
|
|
|
EBITDA
|
$449
|
|
|
Adjustments to
remove:
|
|
|
|
Other operating
losses
|
2
|
|
|
Fair value
adjustments
|
9
|
|
|
Transformation-related
costs
|
97
|
|
|
Adjusted
EBITDA
|
$557
|
|
|
Adjusted EBITDA
margin
|
35.5%
|
|
|
|
|
|
|
|
|
Refinitiv
|
|
|
Reconciliation of
Net Cash Used In Operating Activities to Free Cash
Flow
|
|
|
(millions of U.S.
dollars)
|
|
|
(unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
|
2019
|
|
|
Net cash used in
operating activities
|
$(200)
|
|
|
Capital
expenditures
|
(132)
|
|
|
Proceeds from
disposals of property and equipment
|
1
|
|
|
Other investing
activities
|
(1)
|
|
|
Dividends paid to
non-controlling interests
|
(9)
|
|
|
Free cash
flow
|
$(341)
|
|
|
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SOURCE Thomson Reuters