TORONTO, Feb. 25, 2020 /PRNewswire/ -- Thomson Reuters
(TSX/NYSE: TRI) today reported results for the fourth quarter and
full year ended December 31,
2019.
- The company achieved its full-year 2019 Outlook and updated its
2020 Outlook
- The Thomson Reuters Board of Directors approved an $0.08 per share annualized increase in the
dividend to $1.52 per common share.
This represents the 27th consecutive year of dividend
increases
- Appointment of new CEO and CFO separately announced today
"It is gratifying to see the continued progress in our
business," said Thomson Reuters CEO Jim
Smith. "We achieved our guidance targets for the eighth
consecutive year, and I believe the organization is on its firmest
footing in many years. With our reorganization behind us and a
clear focus on the future of our core business, this is the perfect
time to put in place the next generation of leadership, as detailed
in our accompanying announcement."
Consolidated Financial Highlights - Three Months Ended
December 31
Three Months Ended
December 31,
(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
|
$1,583
|
$1,527
|
4%
|
|
Operating
profit
|
$216
|
$135
|
60%
|
|
Diluted earnings per
share (EPS) (includes discontinued operations)
|
$2.64
|
$6.13
|
-57%
|
|
Cash flow from
operations (includes discontinued operations)
|
$355
|
$(10)
|
n/m
|
|
Non-IFRS Financial
Measures (1)
|
|
|
|
|
Revenues
|
$1,583
|
$1,527
|
4%
|
4%
|
Adjusted
EBITDA
|
$396
|
$274
|
44%
|
44%
|
Adjusted EBITDA
margin
|
25.0%
|
17.9%
|
710bp
|
680bp
|
Adjusted
EPS
|
$0.37
|
$0.19
|
95%
|
89%
|
Free cash flow
(includes discontinued operations)
|
$209
|
$(167)
|
n/m
|
|
|
|
|
|
|
n/m: not
meaningful
(1) In addition
to results reported in accordance with International Financial
Reporting Standards (IFRS), the company uses certain non-IFRS
financial
measures as supplemental indicators of its operating performance
and financial position. These and other non-IFRS financial measures
are defined and
reconciled to the most directly comparable IFRS measures in the
tables appended to this news release.
(2) 2018
results have 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 4%, primarily due to higher recurring
revenues. Foreign currency had no impact on revenue growth in the
quarter.
- Organic revenue growth was 4%, driven by 6% growth in recurring
revenues, which comprised 78% of total revenues.
Operating profit increased due to higher revenues and
lower costs and investments to reposition Thomson Reuters following
the separation of Financial & Risk (F&R) from the company.
- Adjusted EBITDA increased 44% due to the same factors.
The related margin increased to 25.0% compared to 17.9% in the
prior-year period.
Diluted EPS was $2.64,
reflecting a non-cash deferred tax benefit associated with the
reorganization of certain foreign operations. Diluted EPS of
$6.13 in the prior-year period
included a gain on the sale of a 55% interest in the F&R
business.
- Adjusted EPS, which excludes the items above and
reflects other adjustments, increased to $0.37 from $0.19 in
the prior-year period, primarily due to higher adjusted
EBITDA.
Cash flow from operations increased primarily due to
higher operating profit and lower tax payments.
- Free cash flow increased primarily for the same
reasons.
Highlights by Customer Segment - Three Months Ended
December 31
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
|
Three Months
Ended
|
|
|
|
|
December
31,
|
|
Change
|
|
|
2019
|
2018
(1)
|
|
Total
|
Constant
Currency
|
Organic
(2)
|
Revenues
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$617
|
$600
|
|
3%
|
4%
|
4%
|
Corporates
|
|
331
|
315
|
|
5%
|
5%
|
5%
|
Tax & Accounting
Professionals
|
|
274
|
252
|
|
9%
|
11%
|
12%
|
Reuters
News
|
|
164
|
155
|
|
5%
|
5%
|
-1%
|
Global
Print
|
|
196
|
206
|
|
-5%
|
-4%
|
-4%
|
Eliminations/Rounding
|
|
1
|
(1)
|
|
|
|
|
Revenues
|
|
$1,583
|
$1,527
|
|
4%
|
4%
|
4%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$215
|
$221
|
|
-3%
|
-2%
|
|
Corporates
|
|
103
|
84
|
|
23%
|
18%
|
|
Tax & Accounting
Professionals
|
|
135
|
120
|
|
13%
|
14%
|
|
Reuters
News
|
|
4
|
6
|
|
-23%
|
-86%
|
|
Global
Print
|
|
77
|
87
|
|
-12%
|
-13%
|
|
Corporate
costs
|
|
(138)
|
(244)
|
|
n/a
|
n/a
|
|
Adjusted
EBITDA
|
|
$396
|
$274
|
|
44%
|
44%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
34.9%
|
36.8%
|
|
-190bp
|
-200bp
|
|
Corporates
|
|
31.1%
|
26.5%
|
|
460bp
|
340bp
|
|
Tax & Accounting
Professionals
|
|
49.1%
|
47.4%
|
|
170bp
|
120bp
|
|
Reuters
News
|
|
2.4%
|
3.3%
|
|
-90bp
|
-230bp
|
|
Global
Print
|
|
39.5%
|
42.6%
|
|
-310bp
|
-380bp
|
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
|
Adjusted EBITDA
margin
|
|
25.0%
|
17.9%
|
|
710bp
|
680bp
|
|
|
n/a: not
applicable
(1) 2018
results have been revised to correct certain immaterial
misstatements. For additional information, see the "Revision of
Prior-Period Financial Statements" section of the news
release.
(2) Computed for
revenue growth only.
|
|
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 4% (all of which was organic) to
$617 million.
- Recurring revenues grew 5% (92% of total), driven by organic
revenue growth of 4% and revenues contributed by HighQ, which was
acquired in July 2019.
- Transactions revenues declined 13% (8% of total) and were flat
organically due to the sale of several small businesses.
Adjusted EBITDA declined 3% to $215 million.
- The margin decreased to 34.9% from 36.8%, primarily due to the
dilutive impact of the HighQ acquisition and the unfavorable timing
of expenses.
Corporates
Revenues increased 5% (all organic) to $331 million, primarily due to strong recurring
revenue growth. Growth of 3% from the acquisitions of Integration
Point (November 2018), Confirmation
(July 2019) and HighQ (July 2019) was offset by a loss of revenues
following the sale of the Pangea3/Legal Managed Services business
(May 2019).
- Recurring revenues grew 7% (85% of total), driven by organic
revenue growth of 5% and revenues from the acquisitions of
Integration Point and HighQ.
- Transactions revenues declined 4% (15% of total), primarily due
to the loss of revenues following the sale of the Pangea3/Legal
Managed Services business. Transactions revenues grew 6%
organically.
Adjusted EBITDA increased 23% to $103 million.
- The margin increased from 26.5% to 31.1% due to higher
revenues, productivity savings and the impact of foreign currency,
despite the dilutive impact of the Integration Point, Confirmation
and HighQ acquisitions.
Tax & Accounting Professionals
Revenues increased 11% (12% organic) to $274 million, partly due to the shift of some
UltraTax U.S. state tax software releases from January to December
to more closely align with the traditional December release of U.S.
federal tax software.
- Recurring revenues grew 10% (89% of total), driven by organic
revenue growth of 13%, partly due to the same timing reason.
- Transactions revenues grew 19% (11% of total), primarily due to
revenues contributed by Confirmation. Transactions revenues grew 9%
organically.
Adjusted EBITDA grew 13% to $135 million.
- The margin increased from 47.4% to 49.1% due to higher
revenues.
- 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 5% to $164
million due to the acquisition in October 2019 of FC Business Intelligence, which
is now rebranded as Reuters Events.
- Organic revenues decreased 1% due to timing.
Adjusted EBITDA was $4
million, down $2 million from
the prior-year period due to higher costs and investments.
Global Print
Revenues decreased 4% to $196
million.
Adjusted EBITDA decreased 12% to $77 million.
- The margin decreased from 42.6% to 39.5% due to the decline in
revenues.
Corporate Costs
Corporate costs at the adjusted EBITDA level were
$138 million compared to $244 million in the prior-year period. The
decline reflects lower costs and investments to reposition Thomson
Reuters following the separation of F&R. These cash costs and
investments are now fully completed.
Consolidated Financial Highlights - Year Ended December 31
Year Ended
December 31,
(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
|
$5,906
|
$5,501
|
7%
|
|
Operating
profit
|
$1,199
|
$780
|
54%
|
|
Diluted earnings per
share (EPS) (includes discontinued operations)
|
$3.11
|
$5.88
|
-47%
|
|
Cash flow from
operations (includes discontinued operations)
|
$702
|
$2,062
|
-66%
|
|
Non-IFRS Financial
Measures (1)
|
|
|
|
|
Revenues
|
$5,906
|
$5,501
|
7%
|
8%
|
Adjusted
EBITDA
|
$1,493
|
$1,365
|
9%
|
8%
|
Adjusted EBITDA
margin
|
25.3%
|
24.8%
|
50bp
|
-10bp
|
Adjusted
EPS
|
$1.29
|
$0.75
|
72%
|
65%
|
Free cash flow
(includes discontinued operations)
|
$159
|
$1,107
|
-86%
|
|
(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) 2018
results have 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 7%, primarily 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 8%. Foreign currency
had a $62 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 due to a benefit from the
revaluation of warrants that the company holds in Refinitiv,
relating to the proposed sale of Refinitiv to London Stock Exchange
Group plc (LSEG). For additional information about the proposed
LSEG transaction, see the "Agreement to Sell Refinitiv to LSEG"
section of this news release.
- Adjusted EBITDA, which excludes the benefit of the
warrant revaluation among other items, increased 9% and the margin
improved to 25.3% as higher revenues more than offset 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 was $3.11
reflecting a non-cash deferred tax benefit associated with the
reorganization of certain foreign operations. Diluted EPS of
$5.88 in the prior year included a
gain on the sale of a 55% interest in the F&R
business.
- Adjusted EPS, which excludes the above items and
reflects other adjustments, increased to $1.29 from $0.75 in
the prior year primarily reflecting higher adjusted EBITDA and a
benefit from fewer common shares outstanding.
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 through September
30, 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 - Year Ended December 31
(Millions of U.S.
dollars, except for adjusted EBITDA margins)
(unaudited)
|
|
|
Year
Ended
|
|
|
|
|
|
|
December
31,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Constant
Currency
|
Organic
(1)
|
Revenues
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$2,419
|
$2,373
|
|
2%
|
3%
|
4%
|
Corporates
|
|
1,321
|
1,238
|
|
7%
|
8%
|
6%
|
Tax & Accounting
Professionals
|
|
844
|
794
|
|
6%
|
8%
|
8%
|
Reuters
News
|
|
630
|
370
|
|
70%
|
72%
|
2%
|
Global
Print
|
|
693
|
728
|
|
-5%
|
-3%
|
-3%
|
Eliminations/
Rounding
|
|
(1)
|
(2)
|
|
|
|
|
Revenues
|
|
$5,906
|
$5,501
|
|
7%
|
8%
|
4%
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$901
|
$816
|
|
10%
|
10%
|
|
Corporates
|
|
433
|
395
|
|
10%
|
9%
|
|
Tax & Accounting
Professionals
|
|
323
|
273
|
|
18%
|
19%
|
|
Reuters
News
|
|
35
|
27
|
|
32%
|
-6%
|
|
Global
Print
|
|
295
|
320
|
|
-8%
|
-7%
|
|
Corporate
costs
|
|
(494)
|
(466)
|
|
n/a
|
n/a
|
|
Adjusted
EBITDA
|
|
$1,493
|
$1,365
|
|
9%
|
8%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
37.2%
|
34.4%
|
|
280bp
|
240bp
|
|
Corporates
|
|
32.8%
|
31.9%
|
|
90bp
|
30bp
|
|
Tax & Accounting
Professionals
|
|
38.2%
|
34.3%
|
|
390bp
|
340bp
|
|
Reuters
News
|
|
5.6%
|
7.2%
|
|
-160bp
|
-300bp
|
|
Global
Print
|
|
42.6%
|
44.0%
|
|
-140bp
|
-180bp
|
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
|
Adjusted EBITDA
margin
|
|
25.3%
|
24.8%
|
|
50bp
|
-10bp
|
|
|
n/a: not
applicable
|
(1) Computed
for revenue growth only.
|
|
Business Outlook for 2020
Thomson Reuters today updated its Outlook for 2020.
The company's Outlook for 2020 assumes constant currency rates
compared to 2019 and excludes the impact of any future acquisitions
or dispositions that may occur in 2020. Thomson Reuters believes
that this type of guidance provides useful insight into the
performance of its businesses.
|
2019
Actual
|
2020
Outlook
(Communicated
on
October 31, 2019)
|
2020
Outlook
(Updated)
|
|
|
Before currency
and excluding the impact of
future acquisitions/dispositions
|
Total Revenue
Growth
|
7.4%
|
Not
provided
|
4.5% -
5.5%
|
Organic Revenue
Growth
|
3.7%
|
4.0% -
4.5%
|
4.0% -
4.5%
|
Adjusted EBITDA
Margin
|
25.3%
|
Approx.
31%
|
31.5% –
32.0%
|
Corporate
Costs
|
$564 million
(1)
|
$140 - $150
million
|
$140 - $150
million
|
Free Cash
Flow
|
$159
million
|
$1.0- $1.2
billion
|
$1.2+
billion
|
Capital Expenditures
- %
of Revenue
|
8.6%
|
7.5% -
8.0%
|
7.5% -
8.0%
|
Depreciation
&
Amortization of
Computer Software
|
$603
million
|
Not
provided
|
$625 - $650
million
|
Interest Expense
(P&L)
|
$163
million
|
Not
provided
|
$175 - $200
million
|
Effective Tax Rate
on
Adjusted Earnings
|
10.7%
|
Approx.
20%
|
Approx. 17% -
19%
|
(1)
|
Includes $70
million of capital expenditures related to the repositioning of the
company following the separation from F&R.
|
The information in this section is
forward-looking. Actual results, which include the
impact of currency and acquisitions and dispositions completed
during 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."
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 in an all share transaction for a total
enterprise value of approximately $27
billion (as of the announcement date). The company expects
that 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%. The
proposed transaction is subject to 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
$8.9 billion based on LSEG's
closing share price on February 24,
2020.
Refinitiv achieved run-rate savings of $520 million as of the end of 2019. Refinitiv
believes it is on track to achieve its full annual cost savings
run-rate target of $650 million by
the end of 2020.
Dividend and Share Repurchases
The company also announced today that its Board of Directors
approved a $0.08 per share annualized
increase in the dividend to $1.52 per
common share (representing the 27th consecutive year of
dividend increases). A quarterly dividend of $0.38 per share is payable on March 18, 2020 to common shareholders of record
as of March 6, 2020.
The company repurchased $200
million of its common shares in the fourth quarter of 2019
under its normal course issuer bid. In October 2019, the company announced that it
planned to repurchase up to an additional $200 million of its common shares under its
normal course issuer bid in 2020. These repurchases were completed
in February 2020.
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.
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
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
that the company does 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. As initially disclosed by the company on October 31, 2019, a misstatement was identified
in the third quarter of 2019 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 revised
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 previously 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 revised 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. The impacts of the revised
prior-period financial information posted on the Thomson Reuters
website was also 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 2020" section,
Mr. Smith's comments, 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
Refinitiv's belief regarding achieving its full annual cost savings
run-rate target by the end of 2020, 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 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 (79% of the
company's 2019 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 completely separate its business from
Refinitiv, and the successful execution of a number of efficiency
initiatives that are expected to generate cost savings, such as
reducing 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 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 Corporate
Affairs
+44 7909 898
605
david.crundwell@tr.com
|
|
INVESTORS
Frank J.
Golden
Head of Investor
Relations
+1 646 223
5288
frank.golden@tr.com
|
Thomson Reuters will webcast a discussion of its
fourth-quarter and full-year 2019 results and business outlook for
2020 today beginning at 8:30 a.m. Eastern
Standard Time (EST). 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
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2019
|
2018
|
|
2019
|
2018
|
CONTINUING
OPERATIONS
|
|
|
|
|
|
Revenues
|
$1,583
|
$1,527
|
|
$5,906
|
$5,501
|
Operating
expenses
|
(1,193)
|
(1,249)
|
|
(4,413)
|
(4,131)
|
Depreciation
|
(44)
|
(27)
|
|
(154)
|
(110)
|
Amortization of
computer software
|
(123)
|
(106)
|
|
(449)
|
(400)
|
Amortization of other
identifiable intangible assets
|
(34)
|
(26)
|
|
(114)
|
(109)
|
Other operating
gains, net
|
27
|
16
|
|
423
|
29
|
Operating
profit
|
216
|
135
|
|
1,199
|
780
|
Finance costs,
net:
|
|
|
|
|
|
Net interest
expense
|
(51)
|
(19)
|
|
(163)
|
(260)
|
Other finance (costs)
income
|
(33)
|
3
|
|
(65)
|
13
|
Income before tax and
equity method investments
|
132
|
119
|
|
971
|
533
|
Share of post-tax
losses in equity method
investments
|
(44)
|
(238)
|
|
(599)
|
(233)
|
Tax benefit
(expense)
|
1,233
|
16
|
|
1,198
|
(136)
|
Earnings (loss)
from continuing operations
|
1,321
|
(103)
|
|
1,570
|
164
|
Earnings (loss) from
discontinued operations, net of tax
|
3
|
3,478
|
|
(6)
|
3,859
|
Net
earnings
|
$1,324
|
$3,375
|
|
$1,564
|
$4,023
|
|
|
|
|
|
|
Earnings attributable
to:
|
|
|
|
|
|
Common
shareholders
|
1,324
|
3,375
|
|
1,564
|
3,933
|
Non-controlling
interests
|
-
|
-
|
|
-
|
90
|
|
|
|
|
|
|
Earnings (loss)
per share:
|
|
|
|
|
|
Basic earnings (loss)
per share:
|
|
|
|
|
|
From
continuing operations
|
$2.64
|
$(0.19)
|
|
$3.13
|
$0.25
|
From
discontinued operations
|
0.01
|
6.32
|
|
(0.01)
|
5.64
|
Basic earnings per
share
|
$2.65
|
$6.13
|
|
$3.12
|
$5.89
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
From
continuing operations
|
$2.63
|
$(0.19)
|
|
$3.12
|
$0.24
|
From
discontinued operations
|
0.01
|
6.32
|
|
(0.01)
|
5.64
|
Diluted earnings per
share
|
$2.64
|
$6.13
|
|
$3.11
|
$5.88
|
|
|
|
|
|
|
Basic
weighted-average common shares
|
499,180,148
|
550,091,316
|
|
500,829,753
|
667,586,385
|
Diluted
weighted-average common shares
|
501,134,127
|
550,091,316
|
|
502,521,200
|
668,210,717
|
Thomson Reuters
Corporation
Consolidated
Statement of Financial Position
(millions of U.S.
dollars)
(unaudited)
|
|
|
December 31,
|
|
December
31,
|
2019
|
|
2018
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$825
|
|
$2,706
|
Trade and other
receivables
|
1,167
|
|
1,313
|
Other financial
assets
|
533
|
|
76
|
Prepaid expenses and
other current assets
|
546
|
|
426
|
Current
assets
|
3,071
|
|
4,521
|
|
|
|
|
Property and
equipment, net
|
615
|
|
473
|
Computer software,
net
|
900
|
|
908
|
Other identifiable
intangible assets, net
|
3,518
|
|
3,324
|
Goodwill
|
5,853
|
|
5,076
|
Equity method
investments
|
1,551
|
|
2,186
|
Other non-current
assets
|
611
|
|
499
|
Deferred
tax
|
1,176
|
|
31
|
Total
assets
|
$17,295
|
|
$17,018
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Liabilities
|
|
|
|
Current
indebtedness
|
$579
|
|
$3
|
Payables, accruals
and provisions
|
1,373
|
|
1,778
|
Deferred
revenue
|
833
|
|
815
|
Other financial
liabilities
|
434
|
|
95
|
Current
liabilities
|
3,219
|
|
2,691
|
|
|
|
|
Long-term
indebtedness
|
2,676
|
|
3,213
|
Provisions and other
non-current liabilities
|
1,264
|
|
1,124
|
Deferred
tax
|
576
|
|
780
|
Total
liabilities
|
7,735
|
|
7,808
|
|
|
|
|
Equity
|
|
|
|
Capital
|
5,377
|
|
5,348
|
Retained
earnings
|
4,965
|
|
4,739
|
Accumulated other
comprehensive loss
|
(782)
|
|
(877)
|
Total
equity
|
9,560
|
|
9,210
|
Total liabilities
and equity
|
$17,295
|
|
$17,018
|
Thomson Reuters
Corporation
Consolidated
Statement of Cash Flow
(millions of U.S.
dollars)
(unaudited)
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2019
|
2018
|
|
2019
|
2018
|
Cash provided by
(used in):
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
$1,321
|
$(103)
|
|
$1,570
|
$164
|
Adjustments
for:
|
|
|
|
|
|
Depreciation
|
44
|
27
|
|
154
|
110
|
Amortization of
computer software
|
123
|
106
|
|
449
|
400
|
Amortization of other
identifiable intangible assets
|
34
|
26
|
|
114
|
109
|
Net losses on
disposals of businesses and investments
|
23
|
-
|
|
3
|
-
|
Deferred
tax
|
(1,250)
|
(229)
|
|
(1,395)
|
(172)
|
Other
|
65
|
269
|
|
385
|
365
|
Pension
contribution
|
-
|
-
|
|
(167)
|
-
|
Changes in working
capital and other items
|
1
|
(32)
|
|
(247)
|
(84)
|
Operating cash flows
from continuing operations
|
361
|
64
|
|
866
|
892
|
Operating cash flows
from discontinued operations
|
(6)
|
(74)
|
|
(164)
|
1,170
|
Net cash provided by
(used in) operating activities
|
355
|
(10)
|
|
702
|
2,062
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisitions, net of
cash acquired
|
(177)
|
(418)
|
|
(998)
|
(478)
|
Proceeds from
disposals of businesses and investments,
net of taxes paid
|
12
|
-
|
|
74
|
6
|
Capital
expenditures
|
(140)
|
(156)
|
|
(505)
|
(576)
|
Proceeds from
disposals of property and equipment
|
7
|
-
|
|
7
|
27
|
Other investing
activities
|
4
|
(1)
|
|
9
|
18
|
Investing cash flows
from continuing operations
|
(294)
|
(575)
|
|
(1,413)
|
(1,003)
|
Investing cash flows
from discontinued operations
|
-
|
16,088
|
|
29
|
15,732
|
Net cash (used in)
provided by investing activities
|
(294)
|
15,513
|
|
(1,384)
|
14,729
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Proceeds from
debt
|
-
|
-
|
|
-
|
1,370
|
Repayments of
debt
|
-
|
(2,349)
|
|
-
|
(3,719)
|
Net repayments under
short-term loan facilities
|
-
|
(1,739)
|
|
-
|
(1,661)
|
Payments of lease
principal
|
(16)
|
-
|
|
(51)
|
-
|
Payments for
substantial issuer bid/tender offer on common share
|
-
|
(6,485)
|
|
-
|
(6,485)
|
Payments of return of
capital on common shares
|
-
|
(2,303)
|
|
-
|
(2,303)
|
Repurchases of common
shares
|
(200)
|
(686)
|
|
(488)
|
(1,174)
|
Dividends paid on
preference shares
|
(1)
|
(1)
|
|
(3)
|
(3)
|
Dividends paid on
common shares
|
(174)
|
(193)
|
|
(698)
|
(900)
|
Other financing
activities
|
1
|
(11)
|
|
39
|
(1)
|
Financing cash flows
from continuing operations
|
(390)
|
(13,767)
|
|
(1,201)
|
(14,876)
|
Financing cash flows
from discontinued operations
|
-
|
-
|
|
-
|
(60)
|
Net cash used in
financing activities
|
(390)
|
(13,767)
|
|
(1,201)
|
(14,936)
|
(Decrease) increase
in cash and bank overdrafts
|
(329)
|
1,736
|
|
(1,883)
|
1,855
|
Translation
adjustments
|
7
|
1
|
|
5
|
(20)
|
Cash and bank
overdrafts at beginning of period
|
1,147
|
966
|
|
2,703
|
868
|
Cash and bank
overdrafts at end of period
|
$825
|
$2,703
|
|
$825
|
$2,703
|
|
|
|
|
|
|
Cash and bank
overdrafts at end of period comprised of:
|
|
|
|
|
|
Cash and cash
equivalents
|
$825
|
$2,706
|
|
$825
|
$2,706
|
Bank
overdrafts
|
-
|
(3)
|
|
-
|
(3)
|
|
$825
|
$2,703
|
|
$825
|
$2,703
|
Thomson Reuters
Corporation
|
Reconciliation of
Earnings (Loss) from Continuing Operations to Adjusted
EBITDA(1)
|
(millions of U.S.
dollars, except for margins)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
December
31,
|
|
|
December
31,
|
|
2019
|
2018
|
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Earnings (loss)
from continuing operations
|
$1,321
|
$(103)
|
|
|
$1,570
|
$164
|
Adjustments to
remove:
|
|
|
|
|
|
|
Tax (benefit)
expense
|
(1,233)
|
(16)
|
|
|
(1,198)
|
136
|
Other finance costs
(income)
|
33
|
(3)
|
|
|
65
|
(13)
|
Net interest
expense
|
51
|
19
|
|
|
163
|
260
|
Amortization of other
identifiable intangible assets
|
34
|
26
|
|
|
114
|
109
|
Amortization of
computer software
|
123
|
106
|
|
|
449
|
400
|
Depreciation
|
44
|
27
|
|
|
154
|
110
|
EBITDA
|
$373
|
$56
|
|
|
$1,317
|
$1,166
|
Adjustments to
remove:
|
|
|
|
|
|
|
Share of post-tax
losses in equity
method
investments
|
44
|
238
|
|
|
599
|
233
|
Other operating gains,
net
|
(27)
|
(16)
|
|
|
(423)
|
(29)
|
Fair value
adjustments
|
6
|
(4)
|
|
|
-
|
(5)
|
Adjusted
EBITDA
|
$396
|
$274
|
|
|
$1,493
|
$1,365
|
Adjusted EBITDA
margin(1)
|
25.0%
|
17.9%
|
|
|
25.3%
|
24.8%
|
Thomson Reuters
Corporation
|
Reconciliation of
Net 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
December
31,
|
|
Year
Ended
December
31,
|
|
|
|
2019
|
2018
|
Change
|
|
2019
|
2018
|
Change
|
Net
earnings
|
$1,324
|
$3,375
|
|
|
$1,564
|
$4,023
|
|
Adjustments to
remove:
|
|
|
|
|
|
|
|
Fair value
adjustments
|
6
|
(4)
|
|
|
-
|
(5)
|
|
Amortization of other
identifiable intangible assets
|
34
|
26
|
|
|
114
|
109
|
|
Other operating gains,
net
|
(27)
|
(16)
|
|
|
(423)
|
(29)
|
|
Other finance costs
(income)
|
33
|
(3)
|
|
|
65
|
(13)
|
|
Share of post-tax
losses in equity method
investments
|
44
|
238
|
|
|
599
|
233
|
|
Tax on above
items
|
(15)
|
(61)
|
|
|
(72)
|
(79)
|
|
Tax items impacting
comparability
|
(1,211)
|
26
|
|
|
(1,204)
|
126
|
|
(Earnings) loss from
discontinued operations, net of tax
|
(3)
|
(3,478)
|
|
|
6
|
(3,859)
|
|
Interim period
effective tax rate normalization(3)
|
1
|
-
|
|
|
-
|
-
|
|
Dividends declared on
preference shares
|
(1)
|
(1)
|
|
|
(3)
|
(3)
|
|
Adjusted
earnings(2)
|
$185
|
$102
|
|
|
$646
|
$503
|
|
Adjusted
EPS(2)
|
$0.37
|
$0.19
|
95%
|
|
$1.29
|
$0.75
|
72%
|
Foreign
currency(4)
|
|
|
5%
|
|
|
|
7%
|
Constant
currency(4)
|
|
|
89%
|
|
|
|
65%
|
|
|
|
|
|
|
|
|
Diluted
weighted-average common shares (millions)
|
501.1
|
551.3
|
|
|
502.5
|
668.2
|
|
Refer to page 17 for
footnotes.
|
Thomson Reuters
Corporation
|
Reconciliation of
Net Cash Provided by (Used in) Operating Activities to Free Cash
Flow(5)
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
December
31,
|
|
December
31,
|
|
2019
|
2018
|
|
2019
|
2018
|
Net cash provided
by (used in) operating activities
|
$355
|
$(10)
|
|
$702
|
$2,062
|
Capital
expenditures
|
(140)
|
(156)
|
|
(505)
|
(576)
|
Proceeds from
disposals of property and equipment
|
7
|
-
|
|
7
|
27
|
Capital expenditures
from discontinued operations
|
-
|
-
|
|
-
|
(362)
|
Other investing
activities
|
4
|
(1)
|
|
9
|
18
|
Other investing
activities from discontinued operations
|
-
|
1
|
|
-
|
1
|
Payments of lease
principal
|
(16)
|
-
|
|
(51)
|
-
|
Dividends paid on
preference shares
|
(1)
|
(1)
|
|
(3)
|
(3)
|
Dividends paid to
non-controlling interests from discontinued operations
|
-
|
-
|
|
-
|
(60)
|
Free cash
flow
|
$209
|
$(167)
|
|
$159
|
$1,107
|
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
|
|
|
|
|
December
31,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
SUBTOTAL
Constant
Currency
|
Acquisitions/
(Divestitures)
|
Organic
|
Total
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$617
|
$600
|
|
3%
|
-1%
|
4%
|
0%
|
4%
|
Corporates
|
|
331
|
315
|
|
5%
|
0%
|
5%
|
0%
|
5%
|
Tax & Accounting
Professionals
|
|
274
|
252
|
|
9%
|
-2%
|
11%
|
-1%
|
12%
|
Reuters
News
|
|
164
|
155
|
|
5%
|
0%
|
5%
|
7%
|
-1%
|
Global
Print
|
|
196
|
206
|
|
-5%
|
0%
|
-4%
|
0%
|
-4%
|
Eliminations/
Rounding
|
|
1
|
(1)
|
|
|
|
|
|
|
Revenues
|
|
$1,583
|
$1,527
|
|
4%
|
-1%
|
4%
|
0%
|
4%
|
|
|
|
|
|
|
|
|
|
|
Recurring
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$570
|
$546
|
|
4%
|
-1%
|
5%
|
1%
|
4%
|
Corporates
|
|
280
|
261
|
|
7%
|
0%
|
7%
|
2%
|
5%
|
Tax & Accounting
Professionals
|
|
243
|
224
|
|
9%
|
-1%
|
10%
|
-2%
|
13%
|
Reuters
News
|
|
143
|
142
|
|
0%
|
0%
|
1%
|
0%
|
1%
|
Total Recurring
Revenues
|
|
$1,236
|
$1,173
|
|
5%
|
-1%
|
6%
|
1%
|
6%
|
|
|
|
|
|
|
|
|
|
|
Transactions
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$47
|
$54
|
|
-12%
|
1%
|
-13%
|
-13%
|
0%
|
Corporates
|
|
51
|
54
|
|
-5%
|
-2%
|
-4%
|
-9%
|
6%
|
Tax & Accounting
Professionals
|
|
31
|
28
|
|
10%
|
-9%
|
19%
|
10%
|
9%
|
Reuters
News
|
|
21
|
13
|
|
63%
|
5%
|
58%
|
68%
|
-11%
|
Total Transactions
Revenues
|
|
$150
|
$149
|
|
1%
|
-1%
|
3%
|
1%
|
2%
|
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)
|
|
|
|
|
Year
Ended
|
|
|
|
|
|
|
|
|
December
31,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
SUBTOTAL
Constant
Currency
|
Acquisitions/
(Divestitures)
|
Organic
|
Total
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$2,419
|
$2,373
|
|
2%
|
-1%
|
3%
|
-1%
|
4%
|
Corporates
|
|
1,321
|
1,238
|
|
7%
|
-1%
|
8%
|
1%
|
6%
|
Tax & Accounting
Professionals
|
|
844
|
794
|
|
6%
|
-2%
|
8%
|
0%
|
8%
|
Reuters
News
|
|
630
|
370
|
|
70%
|
-1%
|
72%
|
70%*
|
2%
|
Global
Print
|
|
693
|
728
|
|
-5%
|
-1%
|
-3%
|
0%
|
-3%
|
Eliminations/
Rounding
|
|
(1)
|
(2)
|
|
|
|
|
|
|
Revenues
|
|
$5,906
|
$5,501
|
|
7%
|
-1%
|
8%
|
5%
|
4%
|
|
|
|
|
|
|
|
|
|
|
Recurring
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$2,235
|
$2,159
|
|
4%
|
-1%
|
5%
|
0%
|
4%
|
Corporates
|
|
1,093
|
995
|
|
10%
|
-1%
|
11%
|
3%
|
8%
|
Tax & Accounting
Professionals
|
|
703
|
658
|
|
7%
|
-2%
|
9%
|
-1%
|
10%
|
Reuters
News
|
|
573
|
326
|
|
75%
|
-2%
|
77%
|
76%*
|
2%
|
Total Recurring
Revenues
|
|
$4,604
|
$4,138
|
|
11%
|
-1%
|
12%
|
7%
|
5%
|
|
|
|
|
|
|
|
|
|
|
Transactions
Revenues
|
|
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$184
|
$214
|
|
-14%
|
-1%
|
-13%
|
-11%
|
-2%
|
Corporates
|
|
228
|
243
|
|
-6%
|
-1%
|
-5%
|
-4%
|
-1%
|
Tax & Accounting
Professionals
|
|
141
|
136
|
|
4%
|
-3%
|
6%
|
4%
|
2%
|
Reuters
News
|
|
57
|
44
|
|
30%
|
2%
|
29%
|
25%
|
3%
|
Total Transactions
Revenues
|
|
$610
|
$637
|
|
-4%
|
-1%
|
-3%
|
-3%
|
0%
|
* 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
|
|
|
|
|
|
|
December
31,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$215
|
$221
|
|
-3%
|
-1%
|
-2%
|
Corporates
|
|
103
|
84
|
|
23%
|
5%
|
18%
|
Tax & Accounting
Professionals
|
|
135
|
120
|
|
13%
|
-1%
|
14%
|
Reuters
News
|
|
4
|
6
|
|
-23%
|
63%
|
-86%
|
Global
Print
|
|
77
|
87
|
|
-12%
|
1%
|
-13%
|
Corporate
costs
|
|
(138)
|
(244)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
|
$396
|
$274
|
|
44%
|
0%
|
44%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
34.9%
|
36.8%
|
|
-190bp
|
10bp
|
-200bp
|
Corporates
|
|
31.1%
|
26.5%
|
|
460bp
|
120bp
|
340bp
|
Tax & Accounting
Professionals
|
|
49.1%
|
47.4%
|
|
170bp
|
50bp
|
120bp
|
Reuters
News
|
|
2.4%
|
3.3%
|
|
-90bp
|
140bp
|
-230bp
|
Global
Print
|
|
39.5%
|
42.6%
|
|
-310bp
|
70bp
|
-380bp
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
|
25.0%
|
17.9%
|
|
710bp
|
30bp
|
680bp
|
|
|
Year
Ended
|
|
|
|
|
December
31,
|
|
Change
|
|
|
2019
|
2018
|
|
Total
|
Foreign
Currency
|
Constant
Currency
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
$901
|
$816
|
|
10%
|
0%
|
10%
|
Corporates
|
|
433
|
395
|
|
10%
|
1%
|
9%
|
Tax & Accounting
Professionals
|
|
323
|
273
|
|
18%
|
0%
|
19%
|
Reuters
News
|
|
35
|
27
|
|
32%
|
38%
|
-6%
|
Global
Print
|
|
295
|
320
|
|
-8%
|
0%
|
-7%
|
Corporate
costs
|
|
(494)
|
(466)
|
|
n/a
|
n/a
|
n/a
|
Adjusted
EBITDA
|
|
$1,493
|
$1,365
|
|
9%
|
1%
|
8%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
|
|
|
|
|
|
Legal
Professionals
|
|
37.2%
|
34.4%
|
|
280bp
|
40bp
|
240bp
|
Corporates
|
|
32.8%
|
31.9%
|
|
90bp
|
60bp
|
30bp
|
Tax & Accounting
Professionals
|
|
38.2%
|
34.3%
|
|
390bp
|
50bp
|
340bp
|
Reuters
News
|
|
5.6%
|
7.2%
|
|
-160bp
|
140bp
|
-300bp
|
Global
Print
|
|
42.6%
|
44.0%
|
|
-140bp
|
40bp
|
-180bp
|
Corporate
costs
|
|
n/a
|
n/a
|
|
n/a
|
n/a
|
n/a
|
Adjusted EBITDA
margin
|
|
25.3%
|
24.8%
|
|
50bp
|
60bp
|
-10bp
|
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 December 31, 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
December 31, 2018
|
|
|
IFRS: Basic and
Diluted
|
550,091,316
|
Effect of stock
options and other equity incentive awards
|
1,217,214
|
Non-IFRS
Diluted
|
551,308,530
|
(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 on October 1, 2018,
which is treated as an acquisition until October 1, 2019. 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 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.
The table below sets forth selected financial information for
100% of Refinitiv for the three months and year ended December 31, 2019, and the three months ended
December 31, 2018 on both an IFRS and
non-IFRS basis. Refinitiv reports on a US GAAP basis
and provides a reconciliation to IFRS in accordance with Thomson
Reuters accounting policies. A reconciliation from these IFRS
measures to the related non-IFRS measures is also included in this
appendix. Because Refinitiv has only been in existence since
October 1, 2018, there are no
financial statements for the business for the full year ended
December 31, 2018. The information
for the 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-GAAP measures differently than Thomson Reuters
defines its non-IFRS measures. To provide a reasonable basis to
assess revenue trends for the business, Thomson Reuters has
combined the nine months ended September 30,
2018 F&R revenues, as previously reported by Thomson
Reuters on a discontinued operations basis prior to the change in
ownership, with the three months ended December 31, 2018, reported by Refinitiv, and
also provided a supplemental change before currency and excluding
businesses disposed.
(millions of U.S.
dollars, except margin)
|
|
|
|
|
Change
|
(unaudited)
|
2019
|
2018
|
Total
|
Before
Currency
&
Excluding
Businesses
Disposed
|
Three months ended
December 31,
|
|
|
|
|
IFRS
Measures
|
|
|
|
|
Revenues
|
$1,576
|
$1,550
|
2%
|
2%
|
|
|
|
|
|
Net loss
|
$(77)
|
$(522)
|
|
|
Cash flow from
operations
|
$256
|
$299
|
|
|
Capital expenditures,
less proceeds from disposals
|
$94
|
$70
|
|
|
|
|
|
|
|
Non-IFRS
Measures
|
|
|
|
|
Adjusted
EBITDA
|
$553
|
$486
|
|
|
Adjusted EBITDA
margin
|
35.1%
|
31.4%
|
|
|
Free cash
flow
|
$147
|
$210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of U.S.
dollars, except margin)
|
|
|
|
Change
|
(unaudited)
|
Refinitiv
Actuals
2019
|
Refinitiv
2018(1)
|
Total
|
Before
Currency
&
Excluding
Businesses
Disposed
|
Year ended
December 31,
|
|
|
|
|
IFRS
Measures
|
|
|
|
|
Revenues
|
$6,250
|
$6,227
|
0%
|
3%
|
|
|
|
|
|
Net loss
|
$(1,278)
|
|
|
|
Cash flow from
operations
|
$733
|
|
|
|
Capital expenditures,
less proceeds from disposals
|
$513
|
|
|
|
Debt at December 31,
2019
|
$13,877
|
|
|
|
|
|
|
|
|
Non-IFRS
Measures
|
|
|
|
|
Adjusted
EBITDA
|
$2,208
|
|
|
|
Adjusted EBITDA
margin
|
35.3%
|
|
|
|
Free cash
flow
|
$106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes revenues of
$4,677 million as previously reported by Thomson Reuters on a
discontinued operations basis prior to the change in ownership for
the nine months ended September 30, 2018 and Refinitiv actuals of
$1,550 million for the three months ended December 31,
2018.
|
The following reconciliations of IFRS measures to non-IFRS
measures is based on Refinitiv's definition of non-GAAP measures,
which is not the same as the definitions used by Thomson
Reuters.
Refinitiv
|
Reconciliation of
Net Loss to Adjusted EBITDA
|
(millions of U.S.
dollars, except for margins)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
December
31,
|
|
|
December
31,
|
|
2019
|
2018
|
|
|
2019
|
Net
loss
|
$(77)
|
$(522)
|
|
|
$(1,278)
|
Adjustments to
remove:
|
|
|
|
|
|
Tax benefit
|
(92)
|
(56)
|
|
|
(114)
|
Finance
costs
|
102
|
261
|
|
|
1,176
|
Depreciation and
amortization
|
470
|
472
|
|
|
1,901
|
EBITDA
|
$403
|
$155
|
|
|
$1,685
|
Adjustments to
remove:
|
|
|
|
|
|
Share of post-tax
earnings in equity method investments
|
(1)
|
-
|
|
|
(2)
|
Other operating
losses
|
22
|
23
|
|
|
2
|
Fair value
adjustments
|
4
|
(8)
|
|
|
49
|
Share-based
compensation
|
11
|
4
|
|
|
53
|
Transformation-related
costs
|
114
|
312
|
|
|
421
|
Adjusted
EBITDA
|
$553
|
$486
|
|
|
$2,208
|
Adjusted EBITDA
margin
|
35.1%
|
31.4%
|
|
|
35.3%
|
Refinitiv
|
Reconciliation of
Net Cash Provided By Operating Activities to Free Cash
Flow
|
(millions of U.S.
dollars)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
December
31,
|
|
|
December
31,
|
|
2019
|
2018
|
|
|
2019
|
Net cash provided
by operating activities
|
$256
|
$299
|
|
|
$733
|
Capital expenditures,
less proceeds from disposals
|
(94)
|
(70)
|
|
|
(513)
|
Other investing
activities
|
-
|
-
|
|
|
1
|
Dividends paid to
non-controlling interests
|
(15)
|
(19)
|
|
|
(115)
|
Free cash
flow
|
$147
|
$210
|
|
|
$106
|
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SOURCE Thomson Reuters