TRI
$43.78
Thomson Reuters
$.15
.34%
Earnings Details
4th Quarter December 2016
Thursday, February 09, 2017 6:30:00 AM
Tweet Share Watch
Summary

Thomson Reuters Reports In-line

Thomson Reuters (TRI) reported 4th Quarter December 2016 earnings of $0.60 per share on revenue of $2.9 billion. The consensus earnings estimate was $0.58 per share on revenue of $2.9 billion. The Earnings Whisper number was $0.60 per share. Revenue fell 9.1% compared to the same quarter a year ago.

The company said it expects 2017 earnings of approximately $2.35 per share. The current consensus earnings estimate is $2.34 per share for the year ending December 31, 2017.

Thomson Reuters Corp provides information for businesses and professionals. The company allows market participants to connect, access content, and trade in a secure environment.

Results
Reported Earnings
$0.60
Earnings Whisper
$0.60
Consensus Estimate
$0.58
Reported Revenue
$2.86 Bil
Revenue Estimate
$2.90 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Thomson Reuters Reports Fourth-Quarter and Full-Year 2016 Results

Thomson Reuters (TSX /NYSE: TRI) today reported results for the full year and fourth quarter ended December 31, 2016.

--
The company achieved its full-year 2016 Outlook.
--
Fourth-quarter diluted earnings per share (EPS) was $3.03,
reflecting the gain on the sale of IP & Science.
o Fourth-quarter adjusted EPS was $0.31, a decrease of $0.24
per share.
o Excluding fourth-quarter charges, adjusted EPS was $0.60, an
increase of 9%.
--
Full-year diluted EPS was $4.13, reflecting the gain on the
sale of IP & Science.
o Full-year adjusted EPS was $1.79, an increase of $0.01 per
share.
o Excluding fourth-quarter charges, adjusted EPS was $2.07, up
16% from the prior year.
--
Full-year cash flow from operations increased 5% to $3.0
billion.
o Full-year free cash flow increased 12% to $2.0 billion.
--
The company’s board of directors approved an additional $1
billion share buyback program and also approved a $0.02 per
share annualized increase in the dividend to $1.38.

"2016 was a year of continued progress. I am encouraged by the momentum and the foundation we have built heading into 2017, and we are well positioned to deliver on our commitments," said Jim Smith, president and chief executive officer of Thomson Reuters. "Today's results reflect the clear progress we are making against the objectives we set out three years ago. 2017 is the year we work to accelerate revenue growth. In these uncertain times, customers lean more heavily on trusted partners like Thomson Reuters to help navigate a changing environment - and we are ready to help them."

Consolidated Financial Highlights - Fourth-Quarter 2016

Unless otherwise indicated, all amounts for the fourth quarter and full year are from continuing operations and exclude the results of the IP & Science business, which was sold in October 2016. IP & Science was classified as a discontinued operation for 2016 reporting purposes. 2015 amounts (except cash flow measures) are restated to conform to the 2016 presentation.

IFRS Financial Measures
Three Months Ended December 31,
(Millions of U.S. dollars, except earnings per share
(EPS))
IFRS Financial Measures
2016
2015
Change
Revenues
$2,860
$2,887
-1%
Operating profit
$294
$433
-32%
Diluted EPS (includes discontinued operations)
$3.03
$0.53
472%
Cash flow from operations (includes discontinued operations)
$998
$963
4%
--
Revenues declined 1% due to the impact of foreign currency.
--
Operating profit declined 32% due to the fourth-quarter
severance charges of $212 million.
--
Diluted EPS, which includes discontinued operations, was $3.03
compared to $0.53 in the prior-year period due to a $2.0
billion gain on the sale of the IP & Science business.
--
Cash flow from operations, which includes discontinued
operations, increased 4%.
Non-IFRS Financial Measures (1)
Three Months Ended December 31,
(Millions of U.S. dollars, except EPS and
Excluding Q4 2016
margins)
Charges(2)
2016
2015
Change
2016
Change
Change Before
Currency
Revenues
$2,860 $2,887
-1%
$2,860
-1%
1%
Adjusted EBITDA
$635
$802
-21%
$847
6%
5%
Adjusted EBITDA margin
22.2% 27.8%
-560
bp
29.6%
180
bp
100
bp
Underlying operating profit
$368
$560
-34%
$580
4%
2%
Underlying operating profit margin
12.9% 19.4%
-650
bp
20.3%
90bp
20
bp
Adjusted EPS
$0.31
$0.55
-44%
$0.60
9%
7%
Free cash flow (includes discontinued operations)
$755
$708
7%
$794
12%
(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. Additional information
is provided in the explanatory
footnotes to the appended
tables.
(2)
Results exclude the impact of
$212 million of fourth-quarter
2016 charges from adjusted
EBITDA, underlying operating
profit and adjusted EPS. Free
cash flow excludes 2016 cash
payments of $39 million
associated with these charges.
See Appendix A for a
reconciliation of the company's
results including and excluding
the impact of the charges.
--
Revenues decreased 1% to $2.9 billion.
o Before currency, revenues increased 1%.
--
Adjusted EBITDA decreased 21% to $635 million from the
prior-year period due to the fourth-quarter charges.
o Excluding fourth-quarter charges, adjusted EBITDA increased
6% to $847 million, and the margin increased to 29.6% from
27.8%.
--
Underlying operating profit decreased 34% to $368 million from
the prior-year period due to the fourth-quarter charges.
o Excluding fourth-quarter charges, underlying operating profit
increased 4% to $580 million, and the margin increased to
20.3% from 19.4%.
--
Adjusted EPS was $0.31, a decrease of 44% or $0.24 per share.
o Excluding fourth-quarter charges, adjusted EPS was $0.60, an
increase of 9% or $0.05 per share. Currency had a $0.01
favorable impact.
Consolidated Financial Highlights - Full-Year 2016
IFRS Financial Measures
Year Ended December 31,
(Millions of U.S. dollars, except
EPS)
2016
2015
Change
Revenues
$11,166
$11,257
-1%
Operating profit
$1,390
$1,526
-9%
Diluted EPS (includes discontinued operations)
$4.13
$1.60
158%
Cash flow from operations (includes discontinued operations)
$2,984
$2,838
5%
--
Revenues declined 1% as higher subscription revenues were more
than offset by the impact of foreign currency and a decline in
both transactions and recoveries revenues.
--
Operating profit decreased 9% due to the fourth-quarter
charges.
--
Diluted EPS, which includes discontinued operations, was $4.13
compared to $1.60 in the prior year due to the $2.0 billion
gain on the sale of the IP & Science business.
--
Cash flow from operations, which includes discontinued
operations, increased 5%.
Non-IFRS Financial Measures (1)
Year Ended December 31,
Excluding Q4 2016 Charges(2)
(Millions of U.S. dollars, except EPS and
margins)
2016
2015
Change
2016
Change
Change Before
Currency
Revenues
$11,166
$11,257
-1% $11,166
-1%
1%
Adjusted EBITDA
$2,954
$3,089
-4%
$3,166
2%
2%
Adjusted EBITDA margin
26.5%
27.4%
-90bp
28.4%
100bp
20bp
Underlying operating profit
$1,930
$2,055
-6%
$2,142
4%
2%
Underlying operating profit margin
17.3%
18.3%
-100bp
19.2%
90bp
20bp
Adjusted EPS
$1.79
$1.78
1%
$2.07
16%
12%
Free cash flow (includes discontinued operations)
$2,022
$1,801
12%
$2,061
14%
(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. Additional information
is provided in the explanatory
footnotes to the appended
tables.
(2)
Results exclude the impact of
$212 million of fourth-quarter
2016 charges from adjusted
EBITDA, underlying operating
profit and adjusted EPS. Free
cash flow excludes 2016 cash
payments of $39 million
associated with these charges.
See Appendix A for a
reconciliation of the company's
results including and excluding
the impact of the charges.
--
Revenues decreased 1% to $11.2 billion.
o Before currency, revenues increased 1%.
--
Adjusted EBITDA decreased 4% to $3.0 billion from the
prior-year period due to the fourth-quarter charges.
o Excluding fourth-quarter charges, adjusted EBITDA increased
2% to $3.2 billion, and the margin increased to 28.4% from
27.4%.
--
Underlying operating profit decreased 6% to $1.9 billion from
the prior-year period due to the fourth-quarter charges.
o Excluding fourth-quarter charges, underlying operating profit
increased 4% to $2.1 billion, and the margin increased to
19.2% from 18.3%.
--
Adjusted EPS was $1.79, an increase of $0.01 per share.
o Excluding fourth-quarter charges, adjusted EPS was $2.07, a
16% increase or $0.29 per share. Currency had a $0.07
favorable impact.
--
Free cash flow increased 12% to $2.0 billion, benefiting from a
$200 million tax benefit in the fourth quarter related to a
$500 million cash contribution made to the company’s US defined
benefit pension plan in the first quarter of 2017.

Recent Developments

Fourth-Quarter 2016 Charges

In November 2016, the company announced that it planned to take between $200 million and $250 million of charges in the fourth quarter to accelerate the pace of its Transformation program by further simplifying and streamlining the business. The company subsequently incurred $212 million of charges in the quarter. Approximately 80% of the charges were taken in the Financial & Risk business with the balance incurred in Legal, Tax & Accounting and Corporate. The resulting run-rate cash savings in 2017 are estimated to be of a similar magnitude to the charges, with some of the savings to be reinvested in the business.

$500 Million Pension Contribution

The company made a contribution of $500 million to its US defined benefit pension plan in January 2017. As a result of this contribution, the overall funded status of the plan now exceeds 90% based on current market conditions. The contribution was funded from free cash flow and is expected to eliminate any material near-term contribution requirements for the US plan. The tax benefit of approximately $200 million related to the contribution is reflected in the company's fourth-quarter 2016 cash flow from operations and free cash flow.

Dividend and Share Repurchases

In February 2017, the Thomson Reuters board of directors approved a $0.02 per share annualized increase in the dividend to $1.38 per common share. A quarterly dividend of $0.345 per share is payable on March 15, 2017 to common shareholders of record as of February 23, 2017.

In 2016, the company repurchased approximately 41.9 million shares at a cost of $1.7 billion. Of this amount, 10.7 million shares were repurchased in the fourth quarter at a cost of $441 million.

Today, the company announced that it plans to repurchase up to an additional $1.0 billion of its shares as it has completed its $1.5 billion program announced in February 2016.

Business Outlook 2017 (Before Currency)

Thomson Reuters today provided its Outlook for 2017. The company's 2017 Outlook assumes constant currency rates compared to 2016 and does not factor in the impact of acquisitions or divestitures that may occur during the year.

For the full year 2017, the company expects:

--
Low single-digit revenue growth
--
Adjusted EBITDA margin to range between 28.8% to 29.8%
--
Free cash flow to range between $0.9 billion and $1.2 billion
(which reflects cash payments in 2017 relating to the
fourth-quarter 2016 charge, the $500 million contribution to
the US defined benefit pension plan made earlier in the first
quarter and the loss of free cash flow from the divestiture of
the IP & Science business)
--
Adjusted EPS target of $2.35, consistent with its previously
disclosed objective

The information in this section is forward-looking and should be read in conjunction with the section below entitled "Special Note Regarding Forward-Looking Statements, Material Assumptions and Material Risks."

2016 Highlights by Business Unit

Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency (constant currency) as Thomson Reuters believes this provides the best basis to measure the performance of its business.

Financial & Risk

Fourth Quarter

--
Revenues increased 1% to $1.5 billion. Revenues grew
approximately 2% excluding the impact of lower recoveries
revenues and commercial pricing adjustments related to the
migration of certain customers to new platforms.
o Recurring revenues (77% of the segment’s revenues in the
quarter) were up 1%, primarily due to the impact of an annual
price increase and positive net sales for the year. Growth
was partly offset by lower revenues resulting from pricing
adjustments relating to the migration of certain customers to
new platforms and macro-economic conditions impacting large
European banks and banks in several emerging markets.
o Transactions revenues (15% of the segment’s revenues in the
quarter) were up 5% due to increased revenue from Tradeweb
and BETA brokerage processing. This increase was offset by
the impact of lower foreign exchange spot trading revenues.
o Low-margin recoveries revenues (8% of the segment’s revenues
in the quarter) decreased 8% as some third-party partners
continued to move to direct billing with their customers. The
decline in recoveries revenues is expected to be more modest
in 2017.
# Recoveries represent revenues for content or services
provided by third parties and distributed through Financial
& Risk’s platform. Reductions in recoveries revenue have no
impact on the unit’s EBITDA or operating profit.
--
By geography, revenues in the Americas were up 2% (up 4%,
excluding recoveries), Europe, Middle East and Africa (EMEA)
declined 1% (no change, excluding recoveries), and Asia was up
1% (up 2%, excluding recoveries).
--
EBITDA decreased 36% to $289 million and the margin decreased
to 19.2% from 29.5% due to $167 million of charges incurred in
the quarter.
o Excluding fourth-quarter charges of $167 million, EBITDA
increased 1% to $456 million and the margin increased to
30.2% from 29.5%. Currency had a 110 basis point favorable
impact on margin.
--
Operating profit decreased 56% to $139 million and the margin
decreased to 9.2% from 20.8% primarily due to the
fourth-quarter charges.
o Excluding fourth-quarter charges of $167 million, operating
profit decreased 4% to $306 million and the margin decreased
to 20.3% from 20.8%. Currency had a 120 basis point favorable
impact on the margin.
--
Net sales were positive in the Americas and Asia, but were
negative in EMEA and in aggregate in the quarter.

Full Year

--
Revenues were unchanged from the prior year at $6.1 billion.
Revenues grew approximately 2% excluding the impact of lower
recoveries revenues and commercial pricing adjustments related
to the migration of certain customers to new platforms.
o Recurring revenues (77% of the segment’s revenues in the
year) were up 1%, primarily due to the impact of an annual
price increase and positive net sales for the year, partly
offset by lower revenues resulting from the pricing
adjustments relating to the migration of certain customers to
new platforms and macro-economic conditions impacting large
European banks and banks in several emerging markets.
o Transactions revenues (15% of the segment’s revenues in the
year) were up 2% due to increased revenue from Tradeweb, BETA
brokerage processing and transactional revenues from the Risk
business. This increase was offset by the impact of lower
foreign exchange trading revenues.
o Low-margin recoveries revenues (8% of the segment’s revenues
in the year) decreased 13% as some third-party partners
continued to move to direct billing with their customers. The
decline in recoveries revenues is expected to be more modest
in 2017.

To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/February2017/09/c3419.html

SOURCE: Thomson Reuters