- Outlook raised for revenue growth and adjusted
EBITDA
- Agreement signed to sell Refinitiv business to London Stock
Exchange Group
TORONTO, Aug. 1, 2019 /CNW/ -- Thomson Reuters
(TSX/NYSE: TRI) today reported results for the second quarter ended
June 30, 2019 and raised its
full-year Outlook for revenue growth and adjusted EBITDA for 2019
and 2020. The company also announced that it and private
equity funds affiliated with Blackstone have agreed to sell
Refinitiv to the London Stock Exchange Group plc ("LSEG") in an all
share transaction for a total enterprise value of approximately
$27 billion. The transaction will
result in Blackstone's consortium and Thomson Reuters ultimately
holding a combined 37% economic interest in LSEG, approximately 15%
of which would be attributed to Thomson Reuters. The proposed
transaction is subject to LSEG shareholder approval, regulatory
clearances and other customary closing conditions and is expected
to close in the second half of 2020.
"The second quarter was another eventful period for our
organization," said Jim Smith,
president and CEO of Thomson Reuters. "Organic revenue growth
was the best since 2008 and came in ahead of our expectations at 4%
as a result of solid performance across the business. Importantly,
we launched new AI-powered products that were developed in-house,
and we recently completed two acquisitions that will help us
deliver world-class platforms for our customers. We believe we are
well positioned for future growth, and now expect 2019 and 2020
revenue growth and adjusted EBITDA to each be at the upper end of
the guidance ranges previously provided."
"We are pleased with today's announcement as it affirms the
value we have always believed to exist in Refinitiv. There is a
trend toward consolidation of the global financial markets
infrastructure and data segments and this transaction will
establish a world-class markets infrastructure leader. The combined
LSEG/Refinitiv business will be well positioned for future
growth."
Mr. Smith continued, "As a future investor, we are encouraged by
LSEG's strong track record of integrating acquisitions, realizing
synergies and driving growth and profitability, and we expect LSEG
to create further value going forward. The value creation at
Refinitiv since our partnership with Blackstone has largely been
driven by operational enhancements, cost savings and the IPO of
Tradeweb. This transaction with LSEG will double down on
operational enhancements with significant additional synergies
expected. And finally, the transaction will provide Thomson
Reuters shareholders with a more certain path and timetable to
liquidity."
Consolidated Financial Highlights - Three Months Ended
June 30
Three Months Ended
June 30,
(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
|
$1,423
|
$1,311
|
9%
|
|
Operating
profit
|
$447
|
$204
|
119%
|
|
Diluted earnings per
share (EPS) (includes discontinued operations)
|
$0.37
|
$0.88
|
-58%
|
|
Cash flow from
operations (includes discontinued operations)
|
$141
|
$803
|
-83%
|
|
Non-IFRS Financial
Measures (1)
|
|
|
|
|
Revenues
|
$1,423
|
$1,311
|
9%
|
10%
|
Adjusted
EBITDA
|
$355
|
$348
|
2%
|
0%
|
Adjusted EBITDA
margin
|
25.0%
|
26.6%
|
-160bp
|
-240bp
|
Adjusted
EPS
|
$0.29
|
$0.17
|
71%
|
65%
|
Free cash flow
(includes discontinued operations)
|
$1
|
$555
|
-100%
|
|
(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 9% 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
$21 million (approximately 2%)
negative impact during the quarter.
- Organic revenue growth was 4%, driven by a 5% increase in
recurring revenues, which comprised 78% of total revenues.
Operating profit increased significantly due to a benefit
from the revaluation of warrants that the company holds in
Refinitiv, related to the proposed transaction with the
LSEG.
- Adjusted EBITDA, which excludes the benefit of the
warrant revaluation among other items, increased 2% and the margin
declined to 25.0% as higher revenues were offset by higher expenses
that included costs and investments to reposition the company
following the separation of the Financial & Risk (F&R)
business to create Refinitiv.
Diluted EPS decreased to $0.37 from $0.88 in
the prior-year period, primarily due to the loss of net earnings
from the F&R business that was included in discontinued
operations in 2018.
- Adjusted EPS, which excludes discontinued operations
among other items, increased to $0.29
from $0.17 in the prior-year period,
primarily reflecting fewer common shares outstanding and lower
interest expense.
Cash flow from operations decreased primarily due to 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
June 30
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Revenues
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$603
|
$593
|
|
2%
|
-1%
|
3%
|
Corporates
|
|
318
|
296
|
|
8%
|
-1%
|
9%
|
Tax & Accounting
Professionals
|
|
182
|
176
|
|
3%
|
-3%
|
6%
|
Reuters
News
|
|
156
|
72
|
|
116%
|
-2%
|
118%
|
Global
Print
|
|
164
|
174
|
|
-6%
|
-2%
|
-3%
|
Eliminations
|
|
-
|
-
|
|
|
|
|
Revenues
|
|
$1,423
|
$1,311
|
|
9%
|
-2%
|
10%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$232
|
$198
|
|
17%
|
1%
|
16%
|
Corporates
|
|
102
|
95
|
|
8%
|
2%
|
7%
|
Tax & Accounting
Professionals
|
|
60
|
41
|
|
47%
|
2%
|
45%
|
Reuters
News
|
|
10
|
8
|
|
36%
|
36%
|
0%
|
Global
Print
|
|
73
|
76
|
|
-5%
|
-1%
|
-4%
|
Corporate
costs
|
|
(122)
|
(70)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
|
$355
|
$348
|
|
2%
|
2%
|
0%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
38.5%
|
33.5%
|
|
500bp
|
70bp
|
430bp
|
Corporates
|
|
32.2%
|
32.0%
|
|
20bp
|
90bp
|
-70bp
|
Tax & Accounting
Professionals
|
|
33.0%
|
23.2%
|
|
980bp
|
100bp
|
880bp
|
Reuters
News
|
|
6.6%
|
10.5%
|
|
-390bp
|
190bp
|
-580bp
|
Global
Print
|
|
44.2%
|
43.8%
|
|
40bp
|
70bp
|
-30bp
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
|
25.0%
|
26.6%
|
|
-160bp
|
80bp
|
-240bp
|
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% (4% organic) to $603 million.
- Recurring revenues grew 4% - all organic (92% of total).
- Transactions revenues declined 9% due to the sale of several
small businesses, but grew 6% organically (8% of total).
Adjusted EBITDA increased 17% to $232 million.
- The margin increased from 33.5% to 38.5% primarily due to
higher revenues, productivity savings and the favorable timing of
expenses.
Corporates
Revenues increased 9% (7% organic) to $318 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% (85% of total), driven by organic
revenue growth of 9% and revenues from the acquisition of
Integration Point.
- Transactions revenues (15% of total), declined 6% due in part
to lower revenues from the Pangea3/Legal Managed Services (LMS)
business, which was sold on May 31,
2019. Transactions revenues declined 2% organically.
Adjusted EBITDA increased 8% to $102 million.
- The margin increased from 32.0% to 32.2%, as higher revenues
were offset by the dilutive impact of the Integration Point
acquisition.
Tax & Accounting Professionals
Revenues increased 6% (all organic) to $182 million.
- Recurring revenues grew 9% - all organic (81% of total).
- Transactions revenues declined 4% (19% of total).
Adjusted EBITDA grew 47% to $60 million.
- The margin increased from 23.2% to 33.0% due to higher
revenues, the favorable timing of expenses and efficiency
savings.
Reuters News
Revenues increased 118% to $156
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 2%, mostly attributable to a price
increase related to the Refinitiv agreement.
Adjusted EBITDA was $10
million, an increase of $2
million.
Global Print
Revenues decreased 3% to $164
million.
Adjusted EBITDA decreased 5% to $73 million.
- The margin increased from 43.8% to 44.2%.
Corporate Costs
Corporate costs at the adjusted EBITDA level were
$122 million compared to $70 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.
Consolidated Financial Highlights – Six Months Ended
June 30
Six Months Ended
June 30,
(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
|
$2,910
|
$2,690
|
8%
|
|
Operating
profit
|
$721
|
$472
|
53%
|
|
Diluted earnings per
share (EPS) (includes discontinued operations)
|
$0.60
|
$0.40
|
50%
|
|
Cash flow from
operations (includes discontinued operations)
|
$83
|
$1,222
|
-93%
|
|
Non-IFRS Financial
Measures (1)
|
|
|
|
|
Revenues
|
$2,910
|
$2,690
|
8%
|
10%
|
Adjusted
EBITDA
|
$752
|
$778
|
-3%
|
-4%
|
Adjusted EBITDA
margin
|
25.8%
|
28.9%
|
-310bp
|
-380bp
|
Adjusted
EPS
|
$0.65
|
$0.44
|
48%
|
43%
|
Free cash flow
(includes discontinued operations)
|
$(176)
|
$675
|
n/m
|
|
n/m: not
meaningful
(1) 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 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
$46 million (approximately 2%)
negative impact.
- Organic revenue growth was 4%, driven by a 5% increase in
recurring revenues, which comprised 77% of total revenues.
Operating profit increased significantly due to a benefit
from the revaluation of warrants that the company holds in
Refinitiv, relating to the proposed transaction with the LSEG.
- Adjusted EBITDA, which excludes the benefit of the
warrant revaluation among other items, decreased 3% and the margin
decreased to 25.8%, as higher revenues were more than offset by
higher expenses that included costs and investments relating to the
repositioning of the company following the separation of the
F&R business to create Refinitiv.
Diluted EPS also increased to $0.60 from $0.40
due to the benefit from the revaluation of warrants that the
company holds in Refinitiv, relating to the proposed transaction
with LSEG.
- Adjusted EPS, which excludes the warrant revaluation
among other items, increased to $0.65
from $0.44 in the prior-year period,
primarily reflecting a benefit from fewer common shares outstanding
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 – Six Months Ended
June 30
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
Six Months
Ended
June
30,
|
|
Change
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Revenues
|
|
|
|
|
|
|
Legal
Professionals
|
$1,197
|
$1,178
|
|
2%
|
-1%
|
3%
|
Corporates
|
670
|
625
|
|
7%
|
-1%
|
9%
|
Tax & Accounting
Professionals
|
404
|
393
|
|
3%
|
-3%
|
6%
|
Reuters
News
|
311
|
144
|
|
116%
|
-4%
|
120%
|
Global
Print
|
329
|
351
|
|
-6%
|
-2%
|
-4%
|
Eliminations
|
(1)
|
(1)
|
|
|
|
|
Revenues
|
$2,910
|
$2,690
|
|
8%
|
-2%
|
10%
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
Legal
Professionals
|
$459
|
$389
|
|
18%
|
0%
|
18%
|
Corporates
|
220
|
206
|
|
7%
|
1%
|
6%
|
Tax & Accounting
Professionals
|
153
|
121
|
|
26%
|
-3%
|
29%
|
Reuters
News
|
26
|
16
|
|
67%
|
25%
|
42%
|
Global
Print
|
147
|
157
|
|
-7%
|
-1%
|
-6%
|
Corporate
costs
|
(253)
|
(111)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
$752
|
$778
|
|
-3%
|
1%
|
-4%
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
Legal
Professionals
|
38.4%
|
33.1%
|
|
530bp
|
60bp
|
470bp
|
Corporates
|
32.9%
|
32.9%
|
|
0bp
|
80bp
|
-80bp
|
Tax & Accounting
Professionals
|
37.9%
|
30.9%
|
|
700bp
|
10bp
|
690bp
|
Reuters
News
|
8.4%
|
10.9%
|
|
-250bp
|
150bp
|
-400bp
|
Global
Print
|
44.5%
|
44.7%
|
|
-20bp
|
80bp
|
-100bp
|
Corporate
costs
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
25.8%
|
28.9%
|
|
-310bp
|
70bp
|
-380bp
|
n/a: not
applicable
Growth percentages
and adjusted EBITDA margins are computed using whole dollars.
Accordingly, percentages and margins calculated from reported
amounts may differ from those presented, and components of growth
may not total due to rounding.
|
Business Outlook for 2019 and 2020 (At Constant Currency and
Excluding Future Acquisitions/Dispositions)
Thomson Reuters today raised its Outlook for 2019 and 2020
revenue growth and adjusted EBITDA. The company's Outlook for 2019
and 2020 assumes constant currency rates compared to 2018 and
excludes the impact of any future acquisitions or dispositions that
may occur in 2019 or 2020. Thomson Reuters believes that this type
of guidance provides useful insight into the performance of our
businesses.
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.
|
Original 2019
Outlook
|
Updated 2019
Outlook
|
Original 2020
Outlook
|
Updated 2020
Outlook
|
|
Before currency
and excluding the impact of future
acquisitions/dispositions
|
Revenue
Growth
|
7% - 8.5%
3.0% - 3.5%
Organic(1)
|
7% - 8.5%
3.5% - 4.0%
Organic(1)
|
3.5% - 4.5%
Organic
|
4.0% - 4.5%
Organic
|
Adjusted
EBITDA
|
$1.4 - $1.5
billion(2)
|
$1.45 -
$1.5
billion(2)
|
30.0% -
31.0%(2)
|
~31%(2)
|
Corporate
Costs
|
~$570
million
|
Unchanged
|
$140 - $190
million
|
$140 - $150
million
|
Free Cash
Flow
|
$0 - $300
million
|
Unchanged
|
$1.0 - $1.2
billion
|
Unchanged
|
Capital Expenditures
- % of
Revenue
|
~9%
|
Unchanged
|
7.5% -
8.0%
|
Unchanged
|
Depreciation &
Amortization
of Computer Software
|
$600 - $625
million(2)
|
Unchanged
|
TBD
|
TBD
|
Interest Expense
(P&L)
|
$150 - $175
million
|
Unchanged
|
TBD
|
TBD
|
Effective Tax Rate
on
Adjusted Earnings
|
16% - 19%
|
Unchanged
|
~20%
|
Unchanged
|
|
|
|
|
(1)
|
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.
|
|
(2)
|
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.
|
The information in this section is
forward-looking. Actual results, which include the
impact of currency and acquisitions and dispositions completed
during 2019 and 2020, may differ materially from the company's
Outlook. 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 should also be read in conjunction
with the section below entitled "Special Note Regarding
Forward-Looking Statements, Material Risks and Material
Assumptions."
Recent Developments
Agreement to Sell Refinitiv to LSEG
Thomson Reuters announced today that it and private equity funds
affiliated with Blackstone have agreed to sell Refinitiv to
LSEG in an all share transaction for a total enterprise value
of approximately $27 billion.
Refinitiv is currently owned 55% by Blackstone and 45% by Thomson
Reuters. Based on LSEG's issued share capital as of July 31, 2019, the transaction will result in
Blackstone and Thomson Reuters ultimately holding a combined 37%
economic interest in LSEG (approximately 15% of which would be
attributed to Thomson Reuters) and a combined voting interest in
LSEG of less than 30%. Thomson Reuters' interest in the LSEG shares
will be held in an entity jointly owned by Blackstone and Thomson
Reuters (the "Blackstone/Thomson Reuters Entity"). Upon the closing
of this transaction, Thomson Reuters is projected to indirectly
own approximately 82.5 million LSEG shares, which would have a
market value of approximately $6.7
billion based on LSEG's closing share price on July 31, 2019. Thomson Reuters' estimated
ownership interest above reflects its expected acquisition of an
additional interest in Refinitiv pursuant to a warrant agreement
entered into with Blackstone, which will be exercised in connection
with the transaction closing.
Ownership interests
At closing, LSEG will acquire the Refinitiv business and in
exchange, the Blackstone/Thomson Reuters Entity will receive
ordinary voting LSEG shares and exchangeable shares in a subsidiary
of LSEG. The exchangeable shares will be exchangeable for ordinary
shares on a one-for-one basis and will carry the same dividend per
share as paid on the ordinary shares. In connection with the
closing, Blackstone's consortium will separately receive additional
LSEG securities in respect of their Refinitiv preferred stock.
Transaction rationale
The transaction will bring together two highly complementary
businesses to create a leading, UK headquartered, global financial
markets infrastructure provider with a leading data and analytics
business, significant capital markets capabilities across multiple
asset classes, and a broad post-trade offering, well positioned for
future growth in a fast evolving landscape. The combined
LSEG/Refinitiv business will be well positioned in all key
geographies and will offer significant customer benefits across the
full range of LSEG's businesses by extending its trading
capabilities across asset classes; expanding its data content,
management and distribution capabilities; increasing its global
footprint and range of customer offerings; and enabling LSEG,
Refinitiv and their customers to benefit from future data and
technology-enabled innovation and growth opportunities. Together,
LSEG and Refinitiv generated combined annual revenues of over £6
billion in 2018, which would have made the combined business the
largest listed global financial markets infrastructure provider by
revenue last year.
Governance
The Blackstone/Thomson Reuters Entity will be entitled to
nominate three non-executive LSEG directors for as long as they
hold at least 25% of LSEG, two LSEG directors for as long as they
hold at least 17.5% but less than 25% of LSEG and one LSEG director
for as long as they hold at least 10% but less than 17.5% of LSEG
(with all percentages calculated based on the assumed exchange of
the exchangeable shares). For so long as the Blackstone/Thomson
Reuters Entity is entitled to nominate three directors, one nominee
will be a Thomson Reuters representative.
Subject to certain exceptions, the Blackstone/Thomson Reuters
Entity has agreed to be subject to a lock-up for their LSEG shares
for the first two years following closing of the transaction. In
each of years three and four following closing, the
Blackstone/Thomson Reuters Entity will become entitled to sell in
aggregate one-third of the LSEG shares issued to them. The lock-up
arrangement will terminate on the fourth anniversary of closing.
Once the Blackstone/Thomson Reuters Entity is released from the
lock-up, any disposals of LSEG shares will be subject to orderly
marketing restrictions. A standstill restriction will also apply to
the Blackstone/Thomson Reuters Entity under which it (and the
underlying investors) will agree not to, among other matters,
acquire further LSEG shares, or make a takeover offer for the LSEG
for designated time periods. The Blackstone/Thomson Reuters Entity
has also committed to vote its LSEG shares in line with the LSEG
Board's recommendation on resolutions to be voted on by the LSEG
shareholders, subject to certain exceptions.
Dividends
After the transaction closes, Thomson Reuters free cash flow
will benefit from any future dividends paid by LSEG to its
shareholders.
Expected synergies
The following information regarding expected cost and revenue
synergies has been provided to Thomson Reuters by LSEG and is
forward-looking information. Readers are encouraged to consult
LSEG's public disclosures (including its announcement today
regarding the proposed transaction) for additional
information.
LSEG is targeting annual run-rate cost synergies in excess of
£350 million by the end of year five following closing. These
synergies are separate from and in addition to Refinitiv's
previously announced and ongoing $650
million target cost savings program. LSEG is also
targeting annual run-rate revenue synergies in excess of £225
million by the end of year five following closing.
Reuters News Agreement
Reuters News' 30-year agreement with Refinitiv signed last year
will continue after the closing of the transaction within the
combined LSEG/Refinitiv business.
Advisors and Legal Counsel
Guggenheim Securities, LLC, TD Securities Inc. and Centerview
Partners LLC are serving as advisors to Thomson Reuters. Wachtell,
Lipton, Rosen & Katz is
serving as legal counsel to Thomson Reuters.
Other Transactions
Consistent with Thomson Reuters strategy of seeking to acquire
cloud-based software businesses and capabilities that support its
legal, tax and accounting and corporates businesses, the company
recently acquired Confirmation, a leading provider of audit
confirmation services, and HighQ, a leading collaboration platform
for the legal and regulatory market segment.
The company also sold its Pangea3/LMS business in the second
quarter of 2019.
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 September 16, 2019 to common shareholders of
record as of August 22, 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
six-month period (approximately $40
million of which were repurchased using part of the
remaining proceeds of the F&R transaction, as announced in
2018). The company did not repurchase any shares in the second
quarter.
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
and additional information about the proposed LSEG/Refinitiv
transaction is provided earlier in this news release in the "Recent
Developments" section.
Refinitiv cost savings program update
Refinitiv achieved run-rate savings of $380 million as of the end of the second quarter
and expects to achieve over two-thirds of its total cost savings
run-rate target by the end of 2019. Refinitiv believes it is
on track to achieve its full cost savings run-rate target of
$650 million by the end of 2020.
Thomson Reuters
Thomson Reuters is a leading provider of business information
services. Our products include highly specialized
information-enabled software and tools for legal, tax, accounting
and compliance professionals combined with the world's most global
news service – Reuters. 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 include fair
value adjustments relating to the warrants the company holds in
Refinitiv as well as gains or losses that generally arise from
business transactions we do 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 and Excluding Future
Acquisitions/Dispositions)" section, Mr. Smith's comments,
expectations for Corporate costs, the parties' expectations for a
combined LSEG/Refinitiv business, the number of LSEG shares that
Thomson Reuters is projected to indirectly own upon closing of the
transaction, LSEG's expectations for cost and revenue synergies
from the proposed LSEG/Refinitiv combination, potential dividends
to be paid by LSEG to its shareholders and the company's current
expectations regarding the timing for closing of the proposed
LSEG/Refinitiv transaction, are forward-looking. There is no
assurance that a transaction involving all or part of the Refinitiv
business will be completed. 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 proposed LSEG/Refinitiv transaction
will be completed or that any of the other 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 eliminate stranded
costs related to the F&R transaction and the separation of the
two businesses by the end of 2019; 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. Forward-looking information with respect to the
proposed LSEG/Refinitiv business has been prepared by LSEG and
Thomson Reuters assumes no obligation to update or revise
it.
CONTACTS
MEDIA
David
Crundwell
Head of
Communications
+44 7909 898
605
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
second-quarter 2019 results today beginning at 9:00 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
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2019
|
2018
|
|
2019
|
2018
|
CONTINUING
OPERATIONS
|
|
|
|
|
|
Revenues
|
$1,423
|
$1,311
|
|
$2,910
|
$2,690
|
Operating
expenses
|
(1,070)
|
(964)
|
|
(2,161)
|
(1,916)
|
Depreciation
|
(38)
|
(29)
|
|
(72)
|
(59)
|
Amortization of
computer software
|
(104)
|
(100)
|
|
(209)
|
(198)
|
Amortization of other
identifiable intangible assets
|
(25)
|
(28)
|
|
(52)
|
(57)
|
Other
operating gains, net
|
261
|
14
|
|
305
|
12
|
Operating
profit
|
447
|
204
|
|
721
|
472
|
Finance costs,
net:
|
|
|
|
|
|
Net interest
expense
|
(37)
|
(81)
|
|
(72)
|
(159)
|
Other finance (costs)
income
|
(18)
|
14
|
|
(29)
|
21
|
Income before tax and
equity method investments
|
392
|
137
|
|
620
|
334
|
Share of post-tax
(losses) earnings in equity method
investments
|
(126)
|
2
|
|
(223)
|
4
|
Tax (expense)
benefit
|
(50)
|
3
|
|
(55)
|
(24)
|
Earnings from
continuing operations
|
216
|
142
|
|
342
|
314
|
(Loss) earnings from
discontinued operations, net of tax
|
(27)
|
515
|
|
(37)
|
32
|
Net
earnings
|
$189
|
$657
|
|
$305
|
$346
|
|
|
|
|
|
|
Earnings attributable
to:
|
|
|
|
|
|
Common
shareholders
|
189
|
625
|
|
305
|
286
|
Non-controlling
interests
|
-
|
32
|
|
-
|
60
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic earnings (loss)
per share:
|
|
|
|
|
|
From continuing operations
|
$0.43
|
$0.20
|
|
$0.68
|
$0.44
|
From
discontinued operations
|
(0.05)
|
0.68
|
|
(0.08)
|
(0.04)
|
Basic earnings per
share
|
$0.38
|
$0.88
|
|
$0.60
|
$0.40
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
From
continuing operations
|
$0.43
|
$0.20
|
|
$0.68
|
$0.44
|
From
discontinued operations
|
(0.06)
|
0.68
|
|
(0.08)
|
(0.04)
|
Diluted earnings per
share
|
$0.37
|
$0.88
|
|
$0.60
|
$0.40
|
|
|
|
|
|
|
Basic
weighted-average common shares
|
501,231,212
|
709,674,170
|
|
501,558,134
|
710,215,950
|
Diluted
weighted-average common shares
|
503,040,736
|
710,095,394
|
|
503,152,488
|
710,797,432
|
Thomson Reuters
Corporation
Consolidated
Statement of Financial Position
(millions of U.S.
dollars)
(unaudited)
|
|
|
June 30,
|
|
December
31,
|
2019
|
|
2018
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$2,108
|
|
$2,706
|
Trade and other
receivables
|
1,178
|
|
1,313
|
Other financial
assets
|
48
|
|
76
|
Prepaid expenses and
other current assets
|
527
|
|
434
|
Current
assets
|
3,861
|
|
4,529
|
|
|
|
|
Computer hardware and
other property, net
|
470
|
|
473
|
Computer software,
net
|
881
|
|
908
|
Other identifiable
intangible assets, net
|
3,272
|
|
3,324
|
Goodwill
|
5,078
|
|
5,076
|
Equity method
investments
|
1,969
|
|
2,207
|
Other financial
assets
|
363
|
|
53
|
Other non-current
assets
|
528
|
|
446
|
Deferred
tax
|
31
|
|
31
|
Total
assets
|
$16,453
|
|
$17,047
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Liabilities
|
|
|
|
Current
indebtedness
|
-
|
|
$3
|
Payables, accruals
and provisions
|
$1,063
|
|
1,549
|
Deferred
revenue
|
845
|
|
815
|
Other financial
liabilities
|
92
|
|
95
|
Current
liabilities
|
2,000
|
|
2,462
|
|
|
|
|
Long-term
indebtedness
|
3,233
|
|
3,213
|
Provisions and other
non-current liabilities
|
1,178
|
|
1,268
|
Other financial
liabilities
|
232
|
|
79
|
Deferred
tax
|
712
|
|
799
|
Total
liabilities
|
7,355
|
|
7,821
|
|
|
|
|
Equity
|
|
|
|
Capital
|
5,381
|
|
5,348
|
Retained
earnings
|
4,577
|
|
4,755
|
Accumulated other
comprehensive loss
|
(860)
|
|
(877)
|
Total
equity
|
9,098
|
|
9,226
|
Total liabilities
and equity
|
$16,453
|
|
$17,047
|
Thomson Reuters
Corporation
Consolidated
Statement of Cash Flow
(millions of U.S.
dollars)
(unaudited)
|
|
|
|
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Cash provided by
(used in):
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Earnings from
continuing operations
|
$216
|
$142
|
|
$342
|
$314
|
Adjustments
for:
|
|
|
|
|
|
Depreciation
|
38
|
29
|
|
72
|
59
|
Amortization of
computer software
|
104
|
100
|
|
209
|
198
|
Amortization of other
identifiable intangible assets
|
25
|
28
|
|
52
|
57
|
Net losses (gains) on
disposals of businesses and investments
|
3
|
-
|
|
(21)
|
-
|
Deferred
tax
|
(9)
|
(30)
|
|
(73)
|
(25)
|
Other
|
(77)
|
11
|
|
53
|
58
|
Pension
contribution
|
-
|
-
|
|
(167)
|
-
|
Changes in working
capital and other items
|
(94)
|
72
|
|
(262)
|
(100)
|
Operating cash flows
from continuing operations
|
206
|
352
|
|
205
|
561
|
Operating cash flows
from discontinued operations
|
(65)
|
451
|
|
(122)
|
661
|
Net cash provided by
operating activities
|
141
|
803
|
|
83
|
1,222
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisitions, net of
cash acquired
|
(1)
|
(1)
|
|
(5)
|
(28)
|
Proceeds from
disposals of businesses and investments,
net of taxes paid
|
23
|
-
|
|
57
|
-
|
Capital
expenditures
|
(130)
|
(131)
|
|
(240)
|
(310)
|
Proceeds from
disposals of property and equipment
|
2
|
27
|
|
2
|
27
|
Other investing
activities
|
1
|
18
|
|
4
|
18
|
Investing cash flows
from continuing operations
|
(105)
|
(87)
|
|
(182)
|
(293)
|
Investing cash flows
from discontinued operations
|
-
|
(138)
|
|
29
|
(246)
|
Net cash used in
investing activities
|
(105)
|
(225)
|
|
(153)
|
(539)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Proceeds from
debt
|
-
|
-
|
|
-
|
1,370
|
Repayments of
debt
|
-
|
(870)
|
|
-
|
(870)
|
Net borrowings under
short-term loan facilities
|
-
|
1,313
|
|
-
|
61
|
Payments of lease
principal
|
(12)
|
-
|
|
(23)
|
-
|
Repurchases of common
shares
|
-
|
(359)
|
|
(190)
|
(359)
|
Dividends paid on
preference shares
|
(1)
|
-
|
|
(2)
|
(1)
|
Dividends paid on
common shares
|
(175)
|
(239)
|
|
(349)
|
(475)
|
Other financing
activities
|
2
|
1
|
|
37
|
1
|
Financing cash flows
from continuing operations
|
(186)
|
(154)
|
|
(527)
|
(273)
|
Financing cash flows
from discontinued operations
|
-
|
(24)
|
|
-
|
(35)
|
Net cash used in
financing activities
|
(186)
|
(178)
|
|
(527)
|
(308)
|
(Decrease) increase
in cash and bank overdrafts
|
(150)
|
400
|
|
(597)
|
375
|
Translation
adjustments
|
-
|
(13)
|
|
2
|
(12)
|
Cash and bank
overdrafts at beginning of period
|
2,258
|
844
|
|
2,703
|
868
|
Cash and bank
overdrafts at end of period
|
$2,108
|
$1,231
|
|
$2,108
|
$1,231
|
|
|
|
|
|
|
Cash and bank
overdrafts at end of period comprised of:
|
|
|
|
|
|
Cash and cash
equivalents
|
$2,108
|
$879
|
|
$2,108
|
$879
|
Cash and cash
equivalents in assets held for sale
|
-
|
356
|
|
-
|
356
|
Bank
overdrafts
|
-
|
(4)
|
|
-
|
(4)
|
|
$2,108
|
$1,231
|
|
$2,108
|
$1,231
|
Thomson Reuters
Corporation
|
Reconciliation of
Earnings from Continuing Operations to Adjusted
EBITDA(1)
|
(millions of U.S.
dollars, except for margins)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
June
30,
|
|
|
June
30,
|
|
2019
|
2018
|
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$216
|
$142
|
|
|
$342
|
$314
|
Adjustments to
remove:
|
|
|
|
|
|
|
Tax expense
(benefit)
|
50
|
(3)
|
|
|
55
|
24
|
Other finance costs
(income)
|
18
|
(14)
|
|
|
29
|
(21)
|
Net interest
expense
|
37
|
81
|
|
|
72
|
159
|
Amortization of other
identifiable intangible assets
|
25
|
28
|
|
|
52
|
57
|
Amortization of
computer software
|
104
|
100
|
|
|
209
|
198
|
Depreciation
|
38
|
29
|
|
|
72
|
59
|
EBITDA
|
$488
|
$363
|
|
|
$831
|
$790
|
Adjustments to
remove:
|
|
|
|
|
|
|
Share of post-tax
losses (earnings)in equity
method investments
|
126
|
(2)
|
|
|
223
|
(4)
|
Other operating gains,
net
|
(261)
|
(14)
|
|
|
(305)
|
(12)
|
Fair value
adjustments
|
2
|
1
|
|
|
3
|
4
|
Adjusted
EBITDA
|
$355
|
$348
|
|
|
$752
|
$778
|
Adjusted EBITDA
margin(1)
|
25.0%
|
26.6%
|
|
|
25.8%
|
28.9%
|
Thomson Reuters
Corporation
|
Reconciliation of
Net Earnings to Adjusted
Earnings(2)
|
(millions of U.S.
dollars, except for share and per share data)
|
(unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
|
|
2019
|
2018
|
Change
|
|
2019
|
2018
|
Change
|
Net
earnings
|
$189
|
$657
|
|
|
$305
|
$346
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Fair value
adjustments
|
2
|
1
|
|
|
3
|
4
|
|
Amortization of other
identifiable intangible assets
|
25
|
28
|
|
|
52
|
57
|
|
Other operating gains,
net
|
(261)
|
(14)
|
|
|
(305)
|
(12)
|
|
Other finance costs
(income)
|
18
|
(14)
|
|
|
29
|
(21)
|
|
Share of post-tax
losses (earnings) in equity method investments
|
126
|
(2)
|
|
|
223
|
(4)
|
|
Tax on above
items
|
33
|
(6)
|
|
|
8
|
(11)
|
|
Tax items impacting
comparability
|
(4)
|
(14)
|
|
|
(15)
|
(12)
|
|
Loss (earnings) from
discontinued operations, net of tax
|
27
|
(515)
|
|
|
37
|
(32)
|
|
Interim period
effective tax rate normalization(3)
|
(8)
|
(2)
|
|
|
(8)
|
2
|
|
Dividends declared on
preference shares
|
(1)
|
-
|
|
|
(2)
|
(1)
|
|
Adjusted
earnings
|
$146
|
$119
|
|
|
$327
|
$316
|
|
Adjusted
EPS
|
$0.29
|
$0.17
|
71%
|
|
$0.65
|
$0.44
|
48%
|
Foreign
currency(4)
|
|
|
6%
|
|
|
|
5%
|
Constant
currency(4)
|
|
|
65%
|
|
|
|
43%
|
|
|
|
|
|
|
|
|
Diluted
weighted-average common shares (millions)
|
503.0
|
710.1
|
|
|
503.2
|
710.8
|
|
|
Refer to page 17 for
footnotes.
|
Thomson Reuters
Corporation
|
Reconciliation of
Net Cash Provided by Operating Activities to Free Cash
Flow(5)
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
June
30,
|
|
June
30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Net cash provided
by operating activities
|
$141
|
$803
|
|
$83
|
$1,222
|
Capital
expenditures
|
(130)
|
(131)
|
|
(240)
|
(310)
|
Proceeds from
disposals of property and equipment
|
2
|
27
|
|
2
|
27
|
Capital expenditures
from discontinued operations
|
-
|
(138)
|
|
-
|
(246)
|
Other investing
activities
|
1
|
18
|
|
4
|
18
|
Payments of lease
principal
|
(12)
|
-
|
|
(23)
|
-
|
Dividends paid on
preference shares
|
(1)
|
-
|
|
(2)
|
(1)
|
Dividends paid to
non-controlling interests from discontinued operations
|
-
|
(24)
|
|
-
|
(35)
|
Free cash
flow
|
$1
|
$555
|
|
$(176)
|
$675
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
June
30,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Acquisitions/
(Divestitures)
|
Organic
|
Total
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$603
|
$593
|
|
2%
|
-1%
|
-1%
|
4%
|
Corporates
|
|
318
|
296
|
|
8%
|
-1%
|
2%
|
7%
|
Tax & Accounting
Professionals
|
|
182
|
176
|
|
3%
|
-3%
|
0%
|
6%
|
Reuters
News
|
|
156
|
72
|
|
116%
|
-2%
|
116%*
|
2%
|
Global
Print
|
|
164
|
174
|
|
-6%
|
-2%
|
0%
|
-3%
|
Eliminations
|
|
-
|
-
|
|
|
|
|
|
Revenues
|
|
$1,423
|
$1,311
|
|
9%
|
-2%
|
6%
|
4%
|
|
|
|
|
|
|
|
|
|
Recurring
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$555
|
$539
|
|
3%
|
-1%
|
0%
|
4%
|
Corporates
|
|
269
|
243
|
|
11%
|
-1%
|
3%
|
9%
|
Tax & Accounting
Professionals
|
|
147
|
139
|
|
6%
|
-3%
|
0%
|
9%
|
Reuters
News
|
|
144
|
63
|
|
129%
|
-3%
|
131%*
|
1%
|
Total Recurring
Revenues
|
|
$1,115
|
$984
|
|
13%
|
-2%
|
9%
|
5%
|
|
|
|
|
|
|
|
|
|
Transactions
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$48
|
$54
|
|
-10%
|
-1%
|
-15%
|
6%
|
Corporates
|
|
49
|
53
|
|
-8%
|
-2%
|
-4%
|
-2%
|
Tax & Accounting
Professionals
|
|
35
|
37
|
|
-6%
|
-2%
|
0%
|
-4%
|
Reuters
News
|
|
12
|
9
|
|
28%
|
3%
|
0%
|
25%
|
Total Transactions
Revenues
|
|
$144
|
$153
|
|
-6%
|
-1%
|
-6%
|
2%
|
|
* 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 17 for
footnotes.
|
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)
|
|
|
|
Six Months
Ended
|
|
|
|
|
June
30,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Acquisitions/
(Divestitures)
|
Organic
|
Total
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$1,197
|
$1,178
|
|
2%
|
-1%
|
-1%
|
4%
|
Corporates
|
|
670
|
625
|
|
7%
|
-1%
|
2%
|
6%
|
Tax & Accounting
Professionals
|
|
404
|
393
|
|
3%
|
-3%
|
0%
|
6%
|
Reuters
News
|
|
311
|
144
|
|
116%
|
-4%
|
117%*
|
3%
|
Global
Print
|
|
329
|
351
|
|
-6%
|
-2%
|
0%
|
-4%
|
Eliminations
|
|
(1)
|
(1)
|
|
|
|
|
|
Revenues
|
|
$2,910
|
$2,690
|
|
8%
|
-2%
|
6%
|
4%
|
|
|
|
|
|
|
|
|
|
Recurring
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$1,105
|
$1,072
|
|
3%
|
-1%
|
0%
|
4%
|
Corporates
|
|
538
|
486
|
|
11%
|
-1%
|
3%
|
9%
|
Tax & Accounting
Professionals
|
|
320
|
306
|
|
5%
|
-3%
|
0%
|
8%
|
Reuters
News
|
|
287
|
125
|
|
129%
|
-5%
|
133%*
|
1%
|
Total Recurring
Revenues
|
|
$2,250
|
$1,989
|
|
13%
|
-2%
|
9%
|
5%
|
|
|
|
|
|
|
|
|
|
Transactions
Revenues
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$92
|
$106
|
|
-12%
|
-1%
|
-9%
|
-2%
|
Corporates
|
|
132
|
139
|
|
-5%
|
-1%
|
0%
|
-3%
|
Tax & Accounting
Professionals
|
|
84
|
87
|
|
-4%
|
-2%
|
0%
|
-2%
|
Reuters
News
|
|
24
|
19
|
|
25%
|
-3%
|
0%
|
28%
|
Total Transactions
Revenues
|
|
$332
|
$351
|
|
-5%
|
-2%
|
-3%
|
-1%
|
|
|
*
|
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.
|
|
|
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)
|
Represents changes in
revenues of our existing businesses at constant currency. The
metric excludes the distortive impacts of acquisitions and
dispositions from not owning the business in both comparable
periods. Additionally, it excludes the initial contract
value of the 30-year Reuters News agreement 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 affiliated with 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 and six months ended
June 30, 2018. The table below sets
forth selected financial information for 100% of Refinitiv for the
first six months of 2019, on both an IFRS and non-IFRS basis 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 three and six months ended June 30, 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 three and
six months ended June 30, 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 excluding
businesses disposed.
(millions of U.S.
dollars, except margin)
|
|
Change
|
(unaudited)
|
Refinitiv
Actuals
2019
|
As Reported
by Thomson
Reuters
2018
|
Total
|
Before
Currency
& Excluding
Businesses
Disposed
|
Three months ended
June 30,
|
|
|
|
|
IFRS
Measures
|
|
|
|
|
Revenues
|
$1,550
|
$1,553
|
0%
|
3%
|
|
|
|
|
|
Net loss
|
$(267)
|
|
|
|
Cash flow from
operations
|
$273
|
|
|
|
Capital
expenditures
|
$106
|
|
|
|
|
|
|
|
|
Non-IFRS
Measures
|
|
|
|
|
Adjusted
EBITDA
|
$555
|
|
|
|
Adjusted EBITDA
margin
|
35.8%
|
|
|
|
Free cash
flow
|
$89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
|
|
|
|
IFRS
Measures
|
|
|
|
|
Revenues
|
$3,117
|
$3,136
|
-1%
|
3%
|
|
|
|
|
|
Net loss
|
$(477)
|
|
|
|
Cash flow from
operations
|
$73
|
|
|
|
Capital
expenditures
|
$238
|
|
|
|
Debt at June 30,
2019
|
$12,954
|
|
|
|
Preferred equity at
June 30, 2019
|
$1,111
|
|
|
|
|
|
|
|
|
Non-IFRS
Measures
|
|
|
|
|
Adjusted
EBITDA
|
$1,112
|
|
|
|
Adjusted EBITDA
margin
|
35.7%
|
|
|
|
Free cash
flow
|
$(252)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
Six Months
Ended
|
June
30,
|
|
|
June
30,
|
|
|
2019
|
|
|
|
2019
|
Net
loss
|
|
$(267)
|
|
|
|
$(477)
|
Adjustments to
remove:
|
|
|
|
|
|
|
Tax benefit
|
|
(41)
|
|
|
|
(66)
|
Finance
costs
|
|
223
|
|
|
|
426
|
Depreciation and
amortization
|
|
488
|
|
|
|
961
|
EBITDA
|
|
$403
|
|
|
|
$844
|
Adjustments to
remove:
|
|
|
|
|
|
|
Share of post-tax
earnings in equity method investments
|
|
(1)
|
|
|
|
(1)
|
Other operating
gains
|
|
(1)
|
|
|
|
-
|
Fair value
adjustments
|
|
25
|
|
|
|
46
|
Transformation-related
costs
|
|
129
|
|
|
|
223
|
Adjusted
EBITDA
|
|
$555
|
|
|
|
$1,112
|
Adjusted EBITDA
margin
|
|
35.8%
|
|
|
|
35.7%
|
|
|
Refinitiv
|
Reconciliation of
Net Cash Used In Operating Activities to Free Cash
Flow
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
June
30,
|
|
|
June
30,
|
|
|
2019
|
|
|
|
2019
|
Net cash used in
operating activities
|
|
$273
|
|
|
|
$73
|
Capital
expenditures
|
|
(106)
|
|
|
|
(238)
|
Proceeds from
disposals of property and equipment
|
|
-
|
|
|
|
1
|
Other investing
activities
|
|
1
|
|
|
|
-
|
Dividends paid to
non-controlling interests
|
|
(79)
|
|
|
|
(88)
|
Free cash
flow
|
|
$89
|
|
|
|
$(252)
|
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SOURCE Thomson Reuters