TORONTO, Oct. 31, 2019 /CNW/ -- Thomson Reuters
(TSX/NYSE: TRI) today reported results for the third quarter ended
September 30, 2019.
"Organic revenue growth of 4% this quarter once again
demonstrates our improving trajectory and reflects the success of
new AI-powered solutions and solid sales execution from our
customer-facing front lines," said Jim
Smith, president and CEO of Thomson Reuters. "New products
are resonating with customers and helping us improve retention
rates, in some cases at historically high levels."
"We are encouraged by our nine-month performance, which
positions us to achieve our full-year 2019 and 2020 targets. And,
the stronger and more stable characteristics of our overall
business model should enable the company to sustain an attractive
value creation model for shareholders, one that is driven both by
growth and returns."
Consolidated Financial Highlights - Three Months Ended
September 30
Three Months Ended
September 30,
(Millions of U.S.
dollars, except for adjusted EBITDA margin and EPS)
(unaudited)
|
IFRS Financial
Measures (1)
|
2019
|
2018(2)
|
Change
|
Change at
Constant Currency
|
Revenues
|
$1,413
|
$1,284
|
10%
|
|
Operating
profit
|
$262
|
$173
|
51%
|
|
Diluted (loss)
earnings per share (EPS) (includes discontinued
operations)
|
$(0.09)
|
$0.39
|
n/m
|
|
Cash flow from
operations (includes discontinued operations)
|
$264
|
$850
|
-68%
|
|
Non-IFRS Financial
Measures (1)
|
|
|
|
|
Revenues
|
$1,413
|
$1,284
|
10%
|
10%
|
Adjusted
EBITDA
|
$345
|
$313
|
10%
|
9%
|
Adjusted EBITDA
margin
|
24.4%
|
24.4%
|
0bp
|
-30bp
|
Adjusted
EPS
|
$0.27
|
$0.12
|
125%
|
108%
|
Free cash flow
(includes discontinued operations)
|
$126
|
$599
|
-79%
|
|
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.
(2) The 2018
period has been revised to correct certain immaterial
misstatements. For additional information, see the "Revision of
Prior-Period Financial Statements" section of the news
release.
|
Revenues increased 10% due to the inclusion of revenues
paid by Refinitiv to Reuters News for providing news and editorial
content, and to higher recurring revenues across all other customer
segments. Foreign currency had no impact on revenue growth in the
quarter.
- Organic revenue growth was 4%, driven by a 5% increase in
recurring revenues, which comprised 79% of total revenues.
Operating profit increased significantly due to a benefit
from the revaluation of warrants that the company holds in
Refinitiv, related to its proposed transaction with London Stock
Exchange Group plc (LSEG). For additional information about
the proposed LSEG transaction, see the "Recent Developments"
section of this news release.
- Adjusted EBITDA, which excludes the benefit of the
warrant revaluation among other items, increased 10% and the margin
was unchanged from the prior-year period at 24.4% as higher
revenues were partly offset by higher expenses that included costs
associated with newly acquired businesses.
Diluted loss per share reflects the company's share of
losses from its 45% equity interest in Refinitiv. Diluted earnings
per share of $0.39 in the prior-year
period included net earnings from the Financial & Risk
(F&R) business that was included in discontinued operations for
the first nine months of 2018.
- Adjusted EPS, which excludes the above items, increased
to $0.27 from $0.12 in the prior-year period, primarily
reflecting fewer common shares outstanding and lower interest
expense.
Cash flow from operations decreased due to the loss of
cash flows from the company's former F&R business, which were
included in the prior-year period, but no longer included as of
October 1, 2018.
- Free cash flow decreased for the same reason.
Highlights by Customer Segment - Three Months Ended
September 30
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
Change
|
|
|
2019
|
2018
(2)
|
|
Total
|
Constant
Currency
|
Organic
(1)
|
Revenues
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$605
|
$595
|
|
2%
|
2%
|
3%
|
Corporates
|
|
320
|
298
|
|
7%
|
8%
|
6%
|
Tax & Accounting
Professionals
|
|
166
|
149
|
|
11%
|
10%
|
8%
|
Reuters
News
|
|
155
|
71
|
|
120%
|
121%
|
3%
|
Global
Print
|
|
168
|
171
|
|
-2%
|
-2%
|
-2%
|
Eliminations
|
|
(1)
|
-
|
|
|
|
|
Revenues
|
|
$1,413
|
$1,284
|
|
10%
|
10%
|
4%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$227
|
$206
|
|
10%
|
9%
|
|
Corporates
|
|
110
|
105
|
|
4%
|
6%
|
|
Tax & Accounting
Professionals
|
|
35
|
32
|
|
9%
|
-2%
|
|
Reuters
News
|
|
5
|
5
|
|
-14%
|
-97%
|
|
Global
Print
|
|
71
|
76
|
|
-5%
|
-4%
|
|
Corporate
costs
|
|
(103)
|
(111)
|
|
n/a
|
n/a
|
|
Adjusted
EBITDA
|
|
$345
|
$313
|
|
10%
|
9%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
37.4%
|
34.6%
|
|
280bp
|
240bp
|
|
Corporates
|
|
34.3%
|
35.4%
|
|
-110bp
|
-50bp
|
|
Tax & Accounting
Professionals
|
|
21.1%
|
21.4%
|
|
-30bp
|
-240bp
|
|
Reuters
News
|
|
3.2%
|
8.2%
|
|
-500bp
|
-670bp
|
|
Global
Print
|
|
42.5%
|
44.2%
|
|
-170bp
|
-110bp
|
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
|
Adjusted EBITDA
margin
|
|
24.4%
|
24.4%
|
|
0bp
|
-30bp
|
|
|
|
|
|
|
|
|
|
n/a: not
applicable
(1) Computed
for revenue growth only.
(2) The 2018
period has been revised to correct certain immaterial
misstatements. For additional information, see the "Revision of
Prior-Period Financial Statements" section of the news
release.
|
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.
Legal Professionals
Revenues increased 2% (3% organic) to $605 million. Organic revenue growth was
negatively impacted by approximately 100 basis points due to a
difficult prior-year period comparison, which included a one-time
transactional sale.
- Recurring revenues grew 4% - all organic (93% of total).
- Transactions revenues declined 18% (6% organic) due to the sale
of several small businesses and a strong performance in the
prior-year period resulting from the one-time sale (7% of
total).
Adjusted EBITDA increased 10% to $227 million.
- The margin increased to 37.4% from 34.6%, primarily due to
higher revenues and productivity savings.
Corporates
Revenues increased 8% (6% organic) to $320 million, primarily due to strong recurring
revenue growth and the impact of recent acquisitions.
- Recurring revenues grew 12% (86% of total), driven by organic
revenue growth of 8% and revenues from the acquisitions of
Integration Point and HighQ.
- Transactions revenues declined 11% (14% of total), primarily
due to the loss of revenues following the sale of the Pangea3/Legal
Managed Services (LMS) business in May
2019. Transactions revenues declined 3% organically.
Adjusted EBITDA increased 4% to $110 million.
- The margin decreased from 35.4% to 34.3%, as higher revenues
were offset by the dilutive impact of the Integration Point,
Confirmation and HighQ acquisitions.
Tax & Accounting Professionals
Revenues increased 10% (8% organic) to $166 million.
- Recurring revenues grew 8% - all organic (84% of total).
- Transactions revenues grew 22% (16% of total) primarily due to
the Confirmation acquisition. Transactions revenues grew 7%
organically driven by growth in the Government business.
Adjusted EBITDA grew 9% to $35 million.
- The margin decreased slightly from 21.4% to 21.1%, primarily
due to the dilutive impact of the Confirmation acquisition.
- The Tax & Accounting Professionals segment is the company's
most seasonal business with nearly 60% of full-year revenues
typically generated in the first and fourth quarters. Because of
this, the margin performance in this segment is generally higher in
the first and fourth quarters as costs are incurred in a more
linear fashion throughout the year.
Reuters News
Revenues increased 121% to $155
million due to the inclusion of 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%, mostly attributable to a price
increase related to the Refinitiv agreement and growth in Reuters
News' Agency business.
Adjusted EBITDA was unchanged at $5 million, as the impact of higher costs and
investments were offset by a benefit from foreign currency.
Global Print
Revenues decreased 2% to $168
million.
Adjusted EBITDA decreased 5% to $71 million.
- The margin decreased from 44.2% to 42.5%.
Corporate Costs
Corporate costs at the adjusted EBITDA level were
$103 million compared to $111 million in the prior-year period. As
previously disclosed, adjusted EBITDA includes significant costs
and investments to reposition Thomson Reuters following the
separation of F&R. These cash costs and investments are
expected to continue in the fourth quarter of 2019.
Consolidated Financial Highlights - Nine Months Ended
September 30
Nine Months Ended
September 30,
(Millions of U.S.
dollars, except for adjusted EBITDA margin and EPS)
(unaudited)
|
IFRS Financial
Measures (1)
|
2019
|
2018
(2)
|
Change
|
Change at
Constant
Currency
|
Revenues
|
$4,323
|
$3,974
|
9%
|
|
Operating
profit
|
$983
|
$645
|
52%
|
|
Diluted earnings per
share (EPS) (includes discontinued operations)
|
$0.47
|
$0.79
|
-41%
|
|
Cash flow from
operations (includes discontinued operations)
|
$347
|
$2,072
|
-83%
|
|
Non-IFRS Financial
Measures (1)
|
|
|
|
|
Revenues
|
$4,323
|
$3,974
|
9%
|
10%
|
Adjusted
EBITDA
|
$1,097
|
$1,091
|
1%
|
-1%
|
Adjusted EBITDA
margin
|
25.4%
|
27.4%
|
-200bp
|
-270bp
|
Adjusted
EPS
|
$0.92
|
$0.57
|
61%
|
56%
|
Free cash flow
(includes discontinued operations)
|
$(50)
|
$1,274
|
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.
(2) The 2018
period has been revised to correct certain immaterial
misstatements. For additional information, see the "Revision of
Prior-Period Financial Statements" section of the news
release.
|
|
|
|
|
|
|
Revenues increased 9% due to the inclusion of revenues
paid by Refinitiv to Reuters News for providing news and editorial
content, and to higher recurring revenues across all other customer
segments.
- At constant currency, revenues increased 10%. Currency had a
$51 million (approximately 1%)
negative impact.
- 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 its proposed transaction with LSEG. For
additional information about the proposed LSEG transaction, see the
"Recent Developments" section of this news release.
- Adjusted EBITDA, which excludes the benefit of the
warrant revaluation, among other items, increased slightly and the
margin decreased to 25.4% as higher revenues were 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 decreased to $0.47 from $0.79,
primarily due to the loss of net earnings from the F&R business
that was included in discontinued operations in the first nine
months of 2018.
- Adjusted EPS, which excludes discontinued operations,
among other items, increased to $0.92
from $0.57 in the prior-year period,
primarily reflecting a benefit from fewer common shares outstanding
and lower interest expense.
Cash flow from operations decreased, reflecting the loss
of cash flows from the company's former F&R business (which
were included in the prior-year period, but no longer included as
of October 1, 2018), investments to
reposition Thomson Reuters following the separation of F&R from
the company and a pension plan contribution.
- Free cash flow decreased for the same reasons.
Highlights by Customer Segment - Nine Months Ended
September 30
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
Change
|
|
|
2019
|
2018
(2)
|
|
Total
|
Constant
Currency
|
Organic
(1)
|
Revenues
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$1,802
|
$1,773
|
|
2%
|
3%
|
3%
|
Corporates
|
|
990
|
923
|
|
7%
|
8%
|
6%
|
Tax & Accounting
Professionals
|
|
570
|
542
|
|
5%
|
7%
|
6%
|
Reuters
News
|
|
466
|
215
|
|
117%
|
120%
|
3%
|
Global
Print
|
|
497
|
522
|
|
-5%
|
-3%
|
-3%
|
Eliminations
|
|
(2)
|
(1)
|
|
|
|
|
Revenues
|
|
$4,323
|
$3,974
|
|
9%
|
10%
|
4%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$686
|
$595
|
|
15%
|
15%
|
|
Corporates
|
|
330
|
311
|
|
6%
|
6%
|
|
Tax & Accounting
Professionals
|
|
188
|
153
|
|
23%
|
22%
|
|
Reuters
News
|
|
31
|
21
|
|
45%
|
10%
|
|
Global
Print
|
|
218
|
233
|
|
-6%
|
-5%
|
|
Corporate
costs
|
|
(356)
|
(222)
|
|
n/a
|
n/a
|
|
Adjusted
EBITDA
|
|
$1,097
|
$1,091
|
|
1%
|
-1%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
38.1%
|
33.6%
|
|
450bp
|
400bp
|
|
Corporates
|
|
33.4%
|
33.7%
|
|
-30bp
|
-60bp
|
|
Tax & Accounting
Professionals
|
|
33.0%
|
28.3%
|
|
470bp
|
410bp
|
|
Reuters
News
|
|
6.7%
|
10.0%
|
|
-330bp
|
-480bp
|
|
Global
Print
|
|
43.8%
|
44.6%
|
|
-80bp
|
-110bp
|
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
|
Adjusted EBITDA
margin
|
|
25.4%
|
27.4%
|
|
-200bp
|
-270bp
|
|
|
|
|
|
|
|
|
|
n/a: not
applicable
|
(1) Computed
for revenue growth only.
(2) The 2018
period has been revised to correct certain immaterial
misstatements. For additional information, see the "Revision of
Prior-Period Financial Statements" section of the news
release.
|
Business Outlook for 2019 and 2020 (At Constant Currency and
Excluding Future Acquisitions/Dispositions)
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 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.
|
2019
Outlook
|
2020
Outlook
|
|
Before currency
and excluding the impact of future
acquisitions/dispositions
|
Revenue
Growth
|
7% - 8.5%
3.5% - 4.0%
Organic(1)
|
4.0% -
4.5%
Organic
|
Adjusted
EBITDA
|
$1.45 - $1.5
billion(2)
|
~31%(2)
|
Corporate
Costs
|
~$570
million
|
$140 - $150
million
|
Free Cash
Flow
|
$0 - $300
million
|
$1.0 - $1.2
billion
|
Capital Expenditures
- % of
Revenues
|
~9%
|
7.5% -
8.0%
|
Depreciation &
Amortization
of Computer Software
|
$600 - $625
million(2)
|
TBD
|
Interest Expense
(P&L)
|
$150 - $175
million
|
TBD
|
Effective Tax Rate
on
Adjusted Earnings
|
16% - 19%
|
~20%
|
(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 was 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
On August 1, 2019, Thomson Reuters
and private equity funds affiliated with Blackstone agreed to
sell Refinitiv to LSEG for a total enterprise value of
approximately $27 billion. 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. 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 $7.5 billion
based on LSEG's closing share price on October 30, 2019.
Refinitiv achieved run-rate savings of $440 million as of the end of the third quarter,
which is over two-thirds of its total annual cost savings run-rate
target. Refinitiv believes it is on track to achieve its full
annual cost savings run-rate target of $650
million by the end of 2020.
Recent Acquisitions
In October, the company closed the acquisition of FC Business
Intelligence (FCBI), a global business-to-business events
specialist. FCBI delivers high-end conferences and exhibitions to
diverse sectors including energy, insurance, pharmaceuticals,
transportation, travel, strategy and technology. The business will
be rebranded Reuters Events and will be operated as part of the
Reuters News segment.
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 December 16, 2019 to common shareholders of
record as of November 21, 2019.
Going forward, the company intends to target a dividend payout
ratio of between 50% and 60% of its free cash flow – up from the
40% to 50% range previously targeted.
The company repurchased $98
million of its common shares in the third quarter,
completing the $250 million buyback
program announced in February 2019.
In the nine months ended September 30,
2019, the company repurchased $288
million of its common shares, which included repurchases
using part of the remaining proceeds of the F&R transaction, as
announced in 2018. The company's Board has approved a new
buyback program authorizing the repurchase of up to an additional
$200 million of common shares later
this year and up to an additional $200
million of shares in 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.
ROUNDING
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.
REVISION OF PRIOR-PERIOD FINANCIAL STATEMENTS
Since October 1, 2018, the
company has included its share of post-tax losses from its 45%
interest in Refinitiv, an equity method investment, in its net
earnings. In the third quarter of 2019, a misstatement was
identified that understated the company's share of Refinitiv's
post-tax losses since the fourth quarter of 2018. The
misstatement related to an accounting principle difference for
preferred stock issued by Refinitiv to the Blackstone consortium
between U.S. GAAP, the basis on which Refinitiv prepares its
financial statements, and IFRS, the basis on which Thomson Reuters
prepares its financial statements. The misstatement,
which does not impact revenue, operating profit, segment
measures, adjusted EBITDA, adjusted EPS, cash flow from
operations or free cash flow, was immaterial to
the company's previously issued financial statements. As the
correction of the cumulative misstatement in the third quarter of
2019 would have been material to net earnings in the quarter, the
company will revise its previously issued financial
statements. In conjunction with correcting this misstatement,
the company corrected other unrelated misstatements in the
applicable prior periods which were also not material to the
company's previously issued financial statements. Specifically, the
company reclassified certain revenue and expenses which pertained
to the accounting for foreign currency in hyperinflationary
economies between the third and fourth quarters of 2018, but these
revisions had no impact on the company's 2018 audited financial
statements.
The company has posted revised prior-period financial
information related to the reclassification of certain
third-quarter and fourth-quarter 2018 revenues and expenses in the
"Investor Relations" section of its website, ir.thomsonreuters.com.
The company will also revise its previously issued financial
statements for the nine months ended September 30, 2018, the year ended December 31, 2018, the three months ended
March 31, 2019 and the six months
ended June 30, 2019 when it files or
furnishes its financial statements for the nine months ended
September 30, 2019, the year ending
December 31, 2019, the three months
ending March 31, 2020 and the six
months ending June 30, 2020.
Information on these revisions will also be provided within the
company's unaudited consolidated financial statements for the nine
months ended September 30, 2019,
which will be filed after the date hereof with the Canadian
securities regulatory authorities and furnished to the U.S.
Securities and Exchange Commission. The impacts of the revised
prior-period financial information posted today on the Thomson
Reuters website is also being filed with the Canadian securities
regulatory authorities and furnished to the U.S. Securities and
Exchange Commission. Information contained on Thomson Reuters
website is not a part of this news release and is intended to be an
inactive, textual reference only.
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 number of LSEG shares that
Thomson Reuters is projected to indirectly own upon closing of the
transaction, the company's current expectations regarding the
timing for closing of the proposed LSEG/Refinitiv transaction, and
the company's intention to target a dividend payout ratio of
between 50% to 60% of its free cash flow, 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 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.
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
third-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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2019
|
2018
|
|
2019
|
2018
|
CONTINUING
OPERATIONS
|
|
|
|
|
|
Revenues
|
$1,413
|
$1,284
|
|
$4,323
|
$3,974
|
Operating
expenses
|
(1,059)
|
(966)
|
|
(3,220)
|
(2,882)
|
Depreciation
|
(38)
|
(24)
|
|
(110)
|
(83)
|
Amortization of
computer software
|
(117)
|
(96)
|
|
(326)
|
(294)
|
Amortization of other
identifiable intangible assets
|
(28)
|
(26)
|
|
(80)
|
(83)
|
Other operating
gains, net
|
91
|
1
|
|
396
|
13
|
Operating
profit
|
262
|
173
|
|
983
|
645
|
Finance costs,
net:
|
|
|
|
|
|
Net interest
expense
|
(40)
|
(82)
|
|
(112)
|
(241)
|
Other finance (costs)
income
|
(3)
|
(11)
|
|
(32)
|
10
|
Income before tax and
equity method investments
|
219
|
80
|
|
839
|
414
|
Share of post-tax
(losses) earnings in equity method
investments
|
(304)
|
1
|
|
(555)
|
5
|
Tax benefit
(expense)
|
13
|
(128)
|
|
(35)
|
(152)
|
(Loss) earnings
from continuing operations
|
(72)
|
(47)
|
|
249
|
267
|
Earnings (loss) from
discontinued operations, net of tax
|
28
|
349
|
|
(9)
|
381
|
Net (loss)
earnings
|
$(44)
|
$302
|
|
$240
|
$648
|
|
|
|
|
|
|
(Loss) earnings
attributable to:
|
|
|
|
|
|
Common
shareholders
|
(44)
|
272
|
|
240
|
558
|
Non-controlling
interests
|
-
|
30
|
|
-
|
90
|
|
|
|
|
|
|
(Loss) earnings
per share:
|
|
|
|
|
|
Basic and diluted
(loss) earnings per share:
|
|
|
|
|
|
From
continuing operations
|
$(0.14)
|
$(0.06)
|
|
$0.49
|
$0.38
|
From
discontinued operations
|
0.05
|
0.45
|
|
(0.02)
|
0.41
|
Basic and diluted
(loss) earnings per share
|
$(0.09)
|
$0.39
|
|
$0.47
|
$0.79
|
|
|
|
|
|
|
Basic
weighted-average common shares
|
501,240,480
|
701,212,419
|
|
501,415,930
|
707,181,793
|
Diluted
weighted-average common shares
|
501,240,480
|
701,212,419
|
|
503,161,382
|
708,074,979
|
Thomson Reuters
Corporation
|
Consolidated
Statement of Financial Position
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
September 30,
|
|
December
31,
|
|
2019
|
|
2018
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$1,147
|
|
$2,706
|
Trade and other
receivables
|
1,112
|
|
1,313
|
Other financial
assets
|
55
|
|
76
|
Prepaid expenses and
other current assets
|
554
|
|
434
|
Current
assets
|
2,868
|
|
4,529
|
|
|
|
|
Computer hardware and
other property, net
|
527
|
|
473
|
Computer software,
net
|
952
|
|
908
|
Other identifiable
intangible assets, net
|
3,416
|
|
3,324
|
Goodwill
|
5,664
|
|
5,076
|
Equity method
investments
|
1,530
|
|
2,186
|
Other financial
assets
|
455
|
|
53
|
Other non-current
assets
|
542
|
|
446
|
Deferred
tax
|
30
|
|
31
|
Total
assets
|
$15,984
|
|
$17,026
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Liabilities
|
|
|
|
Current
indebtedness
|
-
|
|
$3
|
Payables, accruals
and provisions
|
$1,048
|
|
1,549
|
Deferred
revenue
|
818
|
|
815
|
Other financial
liabilities
|
104
|
|
95
|
Current
liabilities
|
1,970
|
|
2,462
|
|
|
|
|
Long-term
indebtedness
|
3,229
|
|
3,213
|
Provisions and other
non-current liabilities
|
1,260
|
|
1,268
|
Other financial
liabilities
|
293
|
|
79
|
Deferred
tax
|
643
|
|
794
|
Total
liabilities
|
7,395
|
|
7,816
|
|
|
|
|
Equity
|
|
|
|
Capital
|
5,396
|
|
5,348
|
Retained
earnings
|
4,177
|
|
4,739
|
Accumulated other
comprehensive loss
|
(984)
|
|
(877)
|
Total
equity
|
8,589
|
|
9,210
|
Total liabilities
and equity
|
$15,984
|
|
$17,026
|
Thomson Reuters
Corporation
|
Consolidated
Statement of Cash Flow
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Cash provided by
(used in):
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
(Loss) earnings from
continuing operations
|
$(72)
|
$(47)
|
|
$249
|
$267
|
Adjustments
for:
|
|
|
|
|
|
Depreciation
|
38
|
24
|
|
110
|
83
|
Amortization of
computer software
|
117
|
96
|
|
326
|
294
|
Amortization of other
identifiable intangible assets
|
28
|
26
|
|
80
|
83
|
Net losses (gains) on
disposals of businesses and investments
|
1
|
-
|
|
(20)
|
-
|
Deferred
tax
|
(65)
|
82
|
|
(145)
|
57
|
Other
|
233
|
49
|
|
314
|
107
|
Pension
contribution
|
-
|
-
|
|
(167)
|
-
|
Changes in working
capital and other items
|
20
|
37
|
|
(242)
|
(63)
|
Operating cash flows
from continuing operations
|
300
|
267
|
|
505
|
828
|
Operating cash flows
from discontinued operations
|
(36)
|
583
|
|
(158)
|
1,244
|
Net cash provided by
operating activities
|
264
|
850
|
|
347
|
2,072
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisitions, net of
cash acquired
|
(816)
|
(32)
|
|
(821)
|
(60)
|
Proceeds from
disposals of businesses and investments,
net of taxes paid
|
5
|
6
|
|
62
|
6
|
Capital
expenditures
|
(125)
|
(110)
|
|
(365)
|
(420)
|
(Payments) proceeds
from disposals of property and equipment
|
(2)
|
-
|
|
-
|
27
|
Other investing
activities
|
1
|
1
|
|
5
|
19
|
Investing cash flows
from continuing operations
|
(937)
|
(135)
|
|
(1,119)
|
(428)
|
Investing cash flows
from discontinued operations
|
-
|
(110)
|
|
29
|
(356)
|
Net cash used in
investing activities
|
(937)
|
(245)
|
|
(1,090)
|
(784)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Proceeds from
debt
|
-
|
-
|
|
-
|
1,370
|
Repayments of
debt
|
-
|
(500)
|
|
-
|
(1,370)
|
Net borrowings under
short-term loan facilities
|
-
|
17
|
|
-
|
78
|
Payments of lease
principal
|
(12)
|
-
|
|
(35)
|
-
|
Repurchases of common
shares
|
(98)
|
(129)
|
|
(288)
|
(488)
|
Dividends paid on
preference shares
|
-
|
(1)
|
|
(2)
|
(2)
|
Dividends paid on
common shares
|
(175)
|
(232)
|
|
(524)
|
(707)
|
Other financing
activities
|
1
|
9
|
|
38
|
10
|
Financing cash flows
from continuing operations
|
(284)
|
(836)
|
|
(811)
|
(1,109)
|
Financing cash flows
from discontinued operations
|
-
|
(25)
|
|
-
|
(60)
|
Net cash used in
financing activities
|
(284)
|
(861)
|
|
(811)
|
(1,169)
|
(Decrease) increase
in cash and bank overdrafts
|
(957)
|
(256)
|
|
(1,554)
|
119
|
Translation
adjustments
|
(4)
|
(9)
|
|
(2)
|
(21)
|
Cash and bank
overdrafts at beginning of period
|
2,108
|
1,231
|
|
2,703
|
868
|
Cash and bank
overdrafts at end of period
|
$1,147
|
$966
|
|
$1,147
|
$966
|
|
|
|
|
|
|
Cash and bank
overdrafts at end of period comprised of:
|
|
|
|
|
|
Cash and cash
equivalents
|
$1,147
|
$507
|
|
$1,147
|
$507
|
Cash and cash
equivalents in assets held for sale
|
-
|
461
|
|
-
|
461
|
Bank
overdrafts
|
-
|
(2)
|
|
-
|
(2)
|
|
$1,147
|
$966
|
|
$1,147
|
$966
|
Thomson Reuters
Corporation
|
Reconciliation of
(Loss) Earnings from Continuing Operations to Adjusted
EBITDA(1)
|
(millions of U.S.
dollars, except for margins)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
|
September
30,
|
|
|
2019
|
2018
|
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
from continuing operations
|
$(72)
|
$(47)
|
|
|
$249
|
$267
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Tax (benefit)
expense
|
(13)
|
128
|
|
|
35
|
152
|
|
Other finance costs
(income)
|
3
|
11
|
|
|
32
|
(10)
|
|
Net interest
expense
|
40
|
82
|
|
|
112
|
241
|
|
Amortization of other
identifiable intangible assets
|
28
|
26
|
|
|
80
|
83
|
|
Amortization of
computer software
|
117
|
96
|
|
|
326
|
294
|
|
Depreciation
|
38
|
24
|
|
|
110
|
83
|
|
EBITDA
|
$141
|
$320
|
|
|
$944
|
$1,110
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Share of post-tax
losses (earnings) in equity method investments
|
304
|
(1)
|
|
|
555
|
(5)
|
|
Other operating gains,
net
|
(91)
|
(1)
|
|
|
(396)
|
(13)
|
|
Fair value
adjustments
|
(9)
|
(5)
|
|
|
(6)
|
(1)
|
|
Adjusted
EBITDA
|
$345
|
$313
|
|
|
$1,097
|
$1,091
|
|
Adjusted EBITDA
margin(1)
|
24.4%
|
24.4%
|
|
|
25.4%
|
27.4%
|
|
Thomson Reuters
Corporation
|
Reconciliation of
Net (Loss) Earnings to Adjusted
Earnings(2)
|
Reconciliation of
Total Change in Adjusted EPS to Change in Constant
Currency(4)
|
(millions of U.S.
dollars, except for share and per share data)
|
(unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
|
2019
|
2018
|
Change
|
|
2019
|
2018
|
Change
|
Net (loss)
earnings
|
$(44)
|
$302
|
|
|
$240
|
$648
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Fair value
adjustments
|
(9)
|
(5)
|
|
|
(6)
|
(1)
|
|
Amortization of other
identifiable intangible assets
|
28
|
26
|
|
|
80
|
83
|
|
Other operating gains,
net
|
(91)
|
(1)
|
|
|
(396)
|
(13)
|
|
Other finance costs
(income)
|
3
|
11
|
|
|
32
|
(10)
|
|
Share of post-tax
losses (earnings) in equity method investments
|
304
|
(1)
|
|
|
555
|
(5)
|
|
Tax on above
items
|
(58)
|
(7)
|
|
|
(57)
|
(18)
|
|
Tax items impacting
comparability
|
22
|
112
|
|
|
7
|
100
|
|
(Earnings) loss from
discontinued operations, net of tax
|
(28)
|
(349)
|
|
|
9
|
(381)
|
|
Interim period
effective tax rate normalization(3)
|
7
|
(2)
|
|
|
(1)
|
-
|
|
Dividends declared on
preference shares
|
-
|
(1)
|
|
|
(2)
|
(2)
|
|
Adjusted earnings
(2)
|
$134
|
$85
|
|
|
$461
|
$401
|
|
Adjusted EPS
(2)
|
$0.27
|
$0.12
|
125%
|
|
$0.92
|
$0.57
|
61%
|
Foreign
currency(4)
|
|
|
17%
|
|
|
|
5%
|
Constant
currency(4)
|
|
|
108%
|
|
|
|
56%
|
|
|
|
|
|
|
|
|
Diluted
weighted-average common shares (millions)
|
503.3
|
702.3
|
|
|
503.2
|
708.1
|
|
|
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
|
|
Nine Months
Ended
|
September
30,
|
|
September
30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Net cash provided
by operating activities
|
$264
|
$850
|
|
$347
|
$2,072
|
Capital
expenditures
|
(125)
|
(110)
|
|
(365)
|
(420)
|
(Payments) proceeds
from disposals of property and equipment
|
(2)
|
-
|
|
-
|
27
|
Capital expenditures
from discontinued operations
|
-
|
(116)
|
|
-
|
(362)
|
Other investing
activities
|
1
|
1
|
|
5
|
19
|
Payments of lease
principal
|
(12)
|
-
|
|
(35)
|
-
|
Dividends paid on
preference shares
|
-
|
(1)
|
|
(2)
|
(2)
|
Dividends paid to
non-controlling interests from discontinued operations
|
-
|
(25)
|
|
-
|
(60)
|
Free cash
flow
|
$126
|
$599
|
|
$(50)
|
$1,274
|
Thomson Reuters
Corporation
|
Reconciliation of
Changes in Segment and Consolidated Revenues (for Total Revenues,
Recurring Revenues and
Transactions Revenues) to Changes in Revenues on a Constant
Currency (4) and Organic
Basis(6)
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
September
30,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
SUBTOTAL
Constant
Currency
|
Acquisitions/
(Divestitures)
|
Organic
|
Total
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$605
|
$595
|
|
2%
|
-1%
|
2%
|
-1%
|
3%
|
Corporates
|
|
320
|
298
|
|
7%
|
0%
|
8%
|
1%
|
6%
|
Tax & Accounting
Professionals
|
|
166
|
149
|
|
11%
|
1%
|
10%
|
2%
|
8%
|
Reuters
News
|
|
155
|
71
|
|
120%
|
-2%
|
121%
|
119%*
|
3%
|
Global
Print
|
|
168
|
171
|
|
-2%
|
0%
|
-2%
|
0%
|
-2%
|
Eliminations
|
|
(1)
|
-
|
|
|
|
|
|
|
Revenues
|
|
$1,413
|
$1,284
|
|
10%
|
0%
|
10%
|
7%
|
4%
|
|
|
|
|
|
|
|
|
|
|
Recurring
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$560
|
$541
|
|
4%
|
-1%
|
4%
|
1%
|
4%
|
Corporates
|
|
275
|
247
|
|
11%
|
0%
|
12%
|
3%
|
8%
|
Tax & Accounting
Professionals
|
|
140
|
129
|
|
9%
|
1%
|
8%
|
0%
|
8%
|
Reuters
News
|
|
143
|
59
|
|
143%
|
-2%
|
146%
|
142%*
|
3%
|
Total Recurring
Revenues
|
|
$1,118
|
$976
|
|
15%
|
0%
|
15%
|
10%
|
5%
|
|
|
|
|
|
|
|
|
|
|
Transactions
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$45
|
$54
|
|
-18%
|
0%
|
-18%
|
-12%
|
-6%
|
Corporates
|
|
45
|
51
|
|
-11%
|
0%
|
-11%
|
-7%
|
-3%
|
Tax & Accounting
Professionals
|
|
26
|
20
|
|
26%
|
4%
|
22%
|
15%
|
7%
|
Reuters
News
|
|
12
|
12
|
|
2%
|
6%
|
-5%
|
0%
|
-5%
|
Total Transactions
Revenues
|
|
$128
|
$137
|
|
-7%
|
1%
|
-8%
|
-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. As a result, percentages
calculated from reported amounts may differ from those presented,
and growth components 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 a Constant
Currency (4) and Organic
Basis(6)
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
September
30,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
SUBTOTAL
Constant
Currency
|
Acquisitions/
(Divestitures)
|
Organic
|
Total
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$1,802
|
$1,773
|
|
2%
|
-1%
|
3%
|
-1%
|
3%
|
Corporates
|
|
990
|
923
|
|
7%
|
-1%
|
8%
|
2%
|
6%
|
Tax & Accounting
Professionals
|
|
570
|
542
|
|
5%
|
-2%
|
7%
|
0%
|
6%
|
Reuters
News
|
|
466
|
215
|
|
117%
|
-3%
|
120%
|
118%*
|
3%
|
Global
Print
|
|
497
|
522
|
|
-5%
|
-2%
|
-3%
|
0%
|
-3%
|
Eliminations
|
|
(2)
|
(1)
|
|
|
|
|
|
|
Revenues
|
|
$4,323
|
$3,974
|
|
9%
|
-1%
|
10%
|
7%
|
4%
|
|
|
|
|
|
|
|
|
|
|
Recurring
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$1,665
|
$1,613
|
|
3%
|
-1%
|
4%
|
0%
|
4%
|
Corporates
|
|
813
|
734
|
|
11%
|
-1%
|
12%
|
3%
|
9%
|
Tax & Accounting
Professionals
|
|
460
|
434
|
|
6%
|
-2%
|
8%
|
0%
|
8%
|
Reuters
News
|
|
430
|
184
|
|
134%
|
-4%
|
138%
|
136%*
|
2%
|
Total Recurring
Revenues
|
|
$3,368
|
$2,965
|
|
14%
|
-1%
|
15%
|
10%
|
5%
|
|
|
|
|
|
|
|
|
|
|
Transactions
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$137
|
$160
|
|
-14%
|
-1%
|
-13%
|
-10%
|
-3%
|
Corporates
|
|
177
|
189
|
|
-6%
|
-1%
|
-5%
|
-2%
|
-3%
|
Tax & Accounting
Professionals
|
|
110
|
108
|
|
2%
|
-1%
|
3%
|
3%
|
0%
|
Reuters
News
|
|
36
|
31
|
|
16%
|
1%
|
16%
|
0%
|
16%
|
Total Transactions
Revenues
|
|
$460
|
$488
|
|
-6%
|
-1%
|
-5%
|
-4%
|
-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. As a result, percentages
calculated from reported amounts may differ from those presented,
and growth components may not total due to rounding.
|
|
Refer to page 17 for
footnotes.
|
|
Thomson Reuters
Corporation
|
|
Reconciliation of
Changes in Segment and Consolidated Adjusted EBITDA to Changes on a
Constant Currency Basis(4)
|
|
(millions of U.S.
dollars)
|
|
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
September
30,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$227
|
$206
|
|
10%
|
1%
|
9%
|
Corporates
|
|
110
|
105
|
|
4%
|
-3%
|
6%
|
Tax & Accounting
Professionals
|
|
35
|
32
|
|
9%
|
11%
|
-2%
|
Reuters
News
|
|
5
|
5
|
|
-14%
|
83%
|
-97%
|
Global
Print
|
|
71
|
76
|
|
-5%
|
-1%
|
-4%
|
Corporate
costs
|
|
(103)
|
(111)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
|
$345
|
$313
|
|
10%
|
1%
|
9%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
37.4%
|
34.6%
|
|
280bp
|
40bp
|
240bp
|
Corporates
|
|
34.3%
|
35.4%
|
|
-110bp
|
-60bp
|
-50bp
|
Tax & Accounting
Professionals
|
|
21.1%
|
21.4%
|
|
-30bp
|
210bp
|
-240bp
|
Reuters
News
|
|
3.2%
|
8.2%
|
|
-500bp
|
170bp
|
-670bp
|
Global
Print
|
|
42.5%
|
44.2%
|
|
-170bp
|
-60bp
|
-110bp
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
|
24.4%
|
24.4%
|
|
0bp
|
30bp
|
-30bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
September
30,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$686
|
$595
|
|
15%
|
1%
|
15%
|
Corporates
|
|
330
|
311
|
|
6%
|
0%
|
6%
|
Tax & Accounting
Professionals
|
|
188
|
153
|
|
23%
|
0%
|
22%
|
Reuters
News
|
|
31
|
21
|
|
45%
|
36%
|
10%
|
Global
Print
|
|
218
|
233
|
|
-6%
|
-1%
|
-5%
|
Corporate
costs
|
|
(356)
|
(222)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
|
$1,097
|
$1,091
|
|
1%
|
1%
|
-1%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
38.1%
|
33.6%
|
|
450bp
|
50bp
|
400bp
|
Corporates
|
|
33.4%
|
33.7%
|
|
-30bp
|
30bp
|
-60bp
|
Tax & Accounting
Professionals
|
|
33.0%
|
28.3%
|
|
470bp
|
60bp
|
410bp
|
Reuters
News
|
|
6.7%
|
10.0%
|
|
-330bp
|
150bp
|
-480bp
|
Global
Print
|
|
43.8%
|
44.6%
|
|
-80bp
|
30bp
|
-110bp
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
|
25.4%
|
27.4%
|
|
-200bp
|
70bp
|
-270bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a: not
applicable
|
|
Growth percentages
and margins are computed using whole dollars. As a result,
percentages and margins calculated from reported amounts may differ
from those presented, and growth components may not total due to
rounding.
|
|
|
|
|
|
Refer to page 17 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)
|
Thomson Reuters
defines adjusted earnings as net earnings or loss including
dividends declared on preference shares but excluding 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 from adjusted
earnings 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.
|
|
|
|
Because Thomson
Reuters reported a net loss for continuing operations under IFRS
for the three months ended September 30, 2019 and 2018, the
weighted-average number of common shares used for basic and diluted
loss per share is the same for all per-share calculations in the
period, as the effect of stock options and other equity incentive
awards would reduce the loss per share, and therefore be
anti-dilutive. Since the company's non-IFRS measure "adjusted
earnings" is a profit, potential common shares are included, as
they lower adjusted EPS and are therefore dilutive.
|
|
|
|
The following table
reconciles IFRS and non-IFRS common share information:
|
|
|
|
(weighted-average
common shares)
|
Three Months
Ended
September 30, 2019
|
Three Months
Ended
September 30, 2018
|
|
|
|
|
|
IFRS: Basic and
Diluted
|
501,240,480
|
701,212,419
|
|
Effect of stock
options and other equity incentive awards
|
2,043,370
|
1,132,041
|
|
Non-IFRS
Diluted
|
503,283,850
|
702,344,460
|
|
|
(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 nine months ended
September 30, 2018. The table below
sets forth selected financial information for 100% of Refinitiv for
the three and nine 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 nine months ended
September 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 nine months ended September
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
September 30,
|
|
|
|
|
IFRS
Measures
|
|
|
|
|
Revenues
|
$1,557
|
$1,541
|
1%
|
3%
|
|
|
|
|
|
Net loss
|
$(656)
|
|
|
|
Cash flow from
operations
|
$404
|
|
|
|
Capital expenditures,
less proceeds from disposals
|
$182
|
|
|
|
|
|
|
|
|
Non-IFRS
Measures
|
|
|
|
|
Adjusted
EBITDA
|
$543
|
|
|
|
Adjusted EBITDA
margin
|
34.9%
|
|
|
|
Free cash
flow
|
$211
|
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
|
|
IFRS
Measures
|
|
|
|
|
Revenues
|
$4,674
|
$4,677
|
0%
|
3%
|
|
|
|
|
|
Net
loss(1)
|
$(1,201)
|
|
|
|
Cash flow from
operations
|
$477
|
|
|
|
Capital expenditures,
less proceeds from disposals
|
$419
|
|
|
|
Debt at September 30,
2019
|
$13,907
|
|
|
|
|
|
|
|
|
Non-IFRS
Measures
|
|
|
|
|
Adjusted
EBITDA
|
$1,655
|
|
|
|
Adjusted EBITDA
margin
|
35.4%
|
|
|
|
Free cash
flow
|
$(41)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The previously
reported net loss for the six months ended June 30, 2019 of $477
million has been revised to a net loss of $545 million to correct
certain immaterial misstatements discussed in the "Revision of
Prior-Period Financial Statements" section of this news release.
The net loss for the nine months ended September 30, 2019 includes
the revised amount.
|
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
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2019
|
|
|
|
2019
|
|
Net
loss
|
|
$(656)
|
|
|
|
$(1,201)
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Tax expense
(benefit)
|
|
38
|
|
|
|
(22)
|
|
Finance
costs
|
|
570
|
|
|
|
1,074
|
|
Depreciation and
amortization
|
|
486
|
|
|
|
1,431
|
|
EBITDA
|
|
$438
|
|
|
|
$1,282
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Share of post-tax
earnings in equity method investments
|
|
-
|
|
|
|
(1)
|
|
Other operating
gains
|
|
(21)
|
|
|
|
(20)
|
|
Fair value
adjustments
|
|
7
|
|
|
|
45
|
|
Share-based
compensation
|
|
35
|
|
|
|
42
|
|
Transformation-related
costs
|
|
84
|
|
|
|
307
|
|
Adjusted
EBITDA
|
|
$543
|
|
|
|
$1,655
|
|
Adjusted EBITDA
margin
|
|
34.9%
|
|
|
|
35.4%
|
|
Refinitiv
|
Reconciliation of
Net Cash Used In Operating Activities to Free Cash
Flow
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
|
September
30,
|
|
|
|
|
2019
|
|
|
|
2019
|
|
|
Net cash used in
operating activities
|
|
$404
|
|
|
|
$477
|
|
|
Capital expenditures,
less proceeds from disposals
|
|
(182)
|
|
|
|
(419)
|
|
|
Other investing
activities
|
|
1
|
|
|
|
1
|
|
|
Dividends paid to
non-controlling interests
|
|
(12)
|
|
|
|
(100)
|
|
|
Free cash
flow
|
|
$211
|
|
|
|
$(41)
|
|
|
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SOURCE Thomson Reuters