TRI
$46.35
Thomson Reuters
$.05
.11%
Earnings Details
2nd Quarter June 2017
Tuesday, August 01, 2017 6:30:00 AM
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Summary

Thomson Reuters Raises Guidance

Thomson Reuters (TRI) reported 2nd Quarter June 2017 earnings of $0.60 per share on revenue of $2.8 billion. The consensus earnings estimate was $0.51 per share on revenue of $2.8 billion. Revenue grew 0.5% on a year-over-year basis.

The company said it expects 2017 earnings of $2.40 to $2.45 per share. The company's previous guidance was earnings of approximately $2.35 per share and the current consensus earnings estimate is $2.35 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
-
Consensus Estimate
$0.51
Reported Revenue
$2.78 Bil
Revenue Estimate
$2.78 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Thomson Reuters Reports Second-Quarter 2017 Results

Thomson Reuters (TSX/NYSE: TRI) today reported results for the second quarter ended June 30, 2017. Based on its first-half results, the company raised its full-year 2017 outlook for several metrics, as reflected on page 5.

https://mma.prnewswire.com/media/13199/THOMSON_REUTERS_LOGO.jpg

"It is encouraging to see the continued improvement in underlying operating performance," said Jim Smith, president and chief executive officer of Thomson Reuters. "Based on the solid start to the year, we are increasing full-year EPS guidance. Our execution focus is paying off, and we believe efforts to improve customer experience will keep the trend lines moving in the right direction."

Consolidated Financial Highlights Three Months Ended June 30

(Millions of U.S. dollars, except for adjusted EBITDA margin and earnings per share (EPS)
(unaudited)
IFRS Financial Measures(1)
2017
2016
Change
Change at Constant
Currency
Revenues
$2,782
$2,769
0%
Operating profit
$399
$401
0%
Diluted EPS (includes discontinued operations)
$0.27
$0.45
-40%
Cash flow from operations (includes discontinued operations) $834
$770
8%
Non-IFRS Financial Measures(1)
Revenues
$2,782
$2,769
0%
2%
Adjusted EBITDA
$838
$757
11%
11%
Adjusted EBITDA margin
30.1%
27.3%
280bp
230bp
Adjusted EPS
$0.60
$0.47
28%
28%
Free cash flow (includes discontinued operations)
$580
$525
10%

Revenues were slightly higher compared to the prior-year period as higher recurring revenues and contributions from acquisitions were mostly offset by the impact of foreign currency.

-- At constant currency, revenues increased 2%.

Operating profit was essentially unchanged as slightly higher revenues and lower expenses, which reflected savings from the company’s simplification initiatives, were offset by the unfavorable impact of fair value adjustments associated with foreign currency derivatives embedded in certain customer contracts.

Adjusted EBITDA increased 11% to $838 million and the margin increased 280 basis points to 30.1% from 27.3% primarily due to higher revenues and simplification initiatives which resulted in lower expenses.

Diluted EPS, which includes discontinued operations, decreased 40% to $0.27 due to the same factors that impacted operating profit, as well as non-cash foreign currency fluctuations on intercompany loans and the loss of earnings from IP & Science following its sale in the fourth quarter of 2016.

Adjusted EPS was $0.60, an increase of 28%, or $0.13 per share, primarily due to higher adjusted EBITDA.

Cash flow from operations increased 8%, despite the loss of cash flow from IP & Science following its sale, due to higher operating profit before the impact of non-cash items, such as fair value adjustments.

Free cash flow increased 10% to $580 million, primarily reflecting stronger adjusted EBITDA performance, partly offset by the loss of cash flow from IP & Science following its sale.

The company repurchased 6.7 million shares during the second quarter at a cost of $294 million and repurchased 13.5 million shares during the first six months of the year at a cost of $578 million under its $1.0 billion share buyback program.

(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.

Highlights by Business Unit - Three Months Ended June 30

(Millions of U.S. dollars, except for adjusted EBITDA margins)
(unaudited)
Three Months Ended
June 30,
Change
2017
2016
Total
Foreign
Constant
Currency Currency
Revenues
Financial & Risk
$1,517
$1,524
0%
-2%
2%
Legal
842
846
0%
-1%
1%
Tax & Accounting
350
324
8%
0%
8%
Corporate & Other (Reuters News)
74
79
-6%
-1%
-5%
Eliminations
(1)
(4)
Revenues
$2,782
$2,769
0%
-2%
2%
Adjusted EBITDA
Financial & Risk
$477
$443
8%
0%
8%
Legal
320
310
3%
-1%
4%
Tax & Accounting
103
82
26%
2%
24%
Corporate & Other (includes Reuters News)
(62)
(78)
n/a
n/a
n/a
Adjusted EBITDA
$838
$757
11%
0%
11%
Adjusted EBITDA Margin
Financial & Risk
31.4%
29.1%
230bp
50bp
180bp
Legal
38.0%
36.6%
140bp
30bp
110bp
Tax & Accounting
29.4%
25.3%
410bp
20bp
390bp
Corporate & Other (includes Reuters News)
n/a
n/a
n/a
n/a
n/a
Adjusted EBITDA margin
30.1%
27.3%
280bp
50bp
230bp
n/a - not applicable

Unless otherwise noted, all revenue growth comparisons by business unit 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.

Financial & Risk

Revenues increased 2% to $1.5 billion. Organic revenues grew 1% and acquisitions contributed 1%.

-- Revenues by type:

-- Recurring revenues grew 1% (77% of total)

-- The increase was primarily due to an annual price increase and positive net sales.

-- Transactions revenues grew 8% (15% of total)

Growth was due to increased revenue from Tradeweb and the BETA brokerage processing business, as well as contributions from acquisitions. These increases were partially offset by the impact of lower foreign exchange trading revenues.

Recoveries revenues decreased 5% (8% of total). The company does not expect recoveries to have a significant impact on Financial & Risk’s revenue growth in the second half of the year.

-- Revenues by geography:

Revenues were up 3% in the Americas, up 1% in Europe, Middle East and Africa (EMEA) and were up slightly in Asia Pacific, despite the impact of lower recoveries revenues in each region.

Adjusted EBITDA increased 8% to $477 million.

The margin increased to 31.4% from 29.1%. In constant currency, the margin increased 180 basis points primarily due to savings from the company’s simplification initiatives, including the 2016 severance charges, and higher revenues.

Net sales were positive in the quarter.

Legal

Revenues increased 1% to $842 million.

-- Recurring revenues grew 4% (76% of total)

-- US Print revenues declined 8% (14% of total)

-- Transactions revenues declined 8% (10% of total)

Adjusted EBITDA increased 3% to $320 million.

The margin increased to 38.0% from 36.6%. In constant currency, the margin increased 110 basis points due to higher revenues, savings related to the fourth-quarter 2016 severance charges and ongoing simplification initiatives.

Tax & Accounting

Revenues increased 8% to $350 million primarily due to higher recurring revenues and improved transactions revenues. Revenue growth also benefited from a favorable year-over-year comparison, as the Government business reported lower revenues in the prior-year period due to delays on certain contracts.

-- Recurring revenues grew 4% (84% of total)

-- Transactions revenues grew 36% (16% of total)

Adjusted EBITDA increased 26% to $103 million.

The margin increased to 29.4% from 25.3%. In constant currency, the margin increased 390 basis points due to higher revenues and savings related to the fourth-quarter 2016 severance charges.

Corporate & Other (Including Reuters News)

Reuters News revenues were $74 million, down 5%.

Corporate & Other costs at the adjusted EBITDA level were $62 million compared to $78 million in the prior-year period.

The reduction was driven by savings generated by the company’s simplification initiatives and the elimination of certain costs following the sale of IP & Science.

Including depreciation and amortization of software, Corporate & Other costs were $74 million compared to $94 million in the prior-year period. On this basis, the company expects full-year Corporate & Other costs to be approximately $280 million.

Consolidated Financial Highlights - Six Months Ended June 30

(Millions of U.S. dollars, except for adjusted EBITDA margin and EPS)
(unaudited)
IFRS Financial Measures
2017
2016
Change
Change At
Constant Currency
Revenues
$5,597
$5,562
1%
Operating profit
$843
$711
19%
Diluted EPS (includes discontinued operations)
$0.67
$0.79
-15%
Cash flow from operations (includes discontinued operations) $466
$1,228
-62%
Non-IFRS Financial Measures
Revenues
$5,597
$5,562
1%
2%
Adjusted EBITDA
$1,714
$1,505
14%
14%
Adjusted EBITDA margin
30.6%
27.1%
350bp
310bp
Adjusted EPS
$1.23
$0.93
32%
32%
Free cash flow (includes discontinued operations)
($5)
$748
n/m
n/m - not meaningful

Revenues increased 1% as higher recurring revenues and contributions from acquisitions were partly offset by the impact of foreign currency and a decline in Financial & Risk’s recoveries revenues.

-- At constant currency, revenues increased 2%.

Operating profit increased 19% as higher revenues and lower expenses were partly offset by unfavorable fair value adjustments associated with foreign currency derivatives embedded in certain customer contracts. Lower expenses reflected continued simplification initiatives.

Adjusted EBITDA increased 14% to $1.7 billion and the margin increased to 30.6% from 27.1%, primarily reflecting higher revenues and the positive impact of the company’s simplification initiatives.

Diluted EPS, which includes discontinued operations, decreased 15% to $0.67 as higher operating profit was more than offset by non-cash foreign currency fluctuations on intercompany loans and the loss of earnings from IP & Science following its sale.

Adjusted EPS was $1.23, an increase of 32%, or $0.30 per share, primarily due to higher adjusted EBITDA.

Cash flow from operations declined 62% primarily due to a $500 million pension plan contribution, $116 million of payments related to 2016 severance charges, and the loss of cash flow from IP & Science following its sale ($243 million year-on-year variance).

-- Free cash flow was negative $5 million reflecting similar factors as noted above.

Free cash flow for the full year is expected to be between $0.9 billion and $1.2 billion, as reflected in the company’s outlook.

Highlights by Business Unit - Six Months Ended June 30

(Millions of U.S. dollars, except for adjusted EBITDA margins)
(unaudited)
Six Months Ended
June 30,
Change
2017
2016
Total
Foreign
Constant
Currency Currency
Revenues
Financial & Risk
$3,019
$3,033
0%
-1%
1%
Legal
1,666
1,668
0%
-1%
1%
Tax & Accounting
767
713
8%
1%
7%
Corporate & Other (Reuters News)
148
154
-4%
-2%
-2%
Eliminations
(3)
(6)
Revenues
$5,597
$5,562
1%
-1%
2%
Adjusted EBITDA
Financial & Risk
$940
$880
7%
0%
7%
Legal
627
608
3%
-1%
4%
Tax & Accounting
244
196
24%
0%
24%
Corporate & Other (includes Reuters News)
(97)
(179)
n/a
n/a
n/a
Adjusted EBITDA
$1,714
$1,505
14%
0%
14%
Adjusted EBITDA Margin
Financial & Risk
31.1%
29.0%
210bp
40bp
170bp
Legal
37.6%
36.5%
110bp
0bp
110bp
Tax & Accounting
31.8%
27.5%
430bp
-10bp
440bp
Corporate & Other (includes Reuters News)
n/a
n/a
n/a
n/a
n/a
Adjusted EBITDA margin
30.6%
27.1%
350bp
40bp
310bp
n/a - not applicable

Dividend

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 September 15, 2017 to common shareholders of record as of August 17, 2017.

Business Outlook 2017 (At Constant Currency)

Based on the results of the first half of the year, the company raised its full-year outlook for adjusted EBITDA margin and adjusted EPS. The company reaffirmed its full-year outlook for revenue growth and free cash flow. For the full-year 2017, the company currently expects:

-- Low single-digit revenue growth

Adjusted EBITDA margin to range between 29.3% - 30.3% - up from previous guidance of 28.8% - 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 charges, the $500 million pension plan contribution made in the first quarter of 2017 and the loss of free cash flow from the sale of the IP & Science business

-- Adjusted EPS target of $2.40 - $2.45 - up from previous guidance of $2.35

The company’s 2017 outlook does not factor in the impact of acquisitions or divestitures that may occur during the year.

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."

Thomson Reuters

Thomson Reuters is the world’s leading source of news and information for professional markets. Our customers rely on us to deliver the intelligence, technology and expertise they need to find trusted answers. The business has operated in more than 100 countries for more than 100 years. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges (symbol: TRI). For more information, visit www.thomsonreuters.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 business unit or segment level), free cash flow, adjusted EPS, and selected measures excluding the impact of foreign currency. 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 term "organic" refers to Thomson Reuters’ existing businesses before the impact of acquisitions.

The company’s business outlook contains various non-IFRS financial measures. 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 2017 impact of changes in foreign exchange rates which impact (i) the translation of its results reported at average foreign currency rates for the year, (ii) fair value adjustments associated with foreign currency derivatives embedded in certain customer contracts, and (iii) other finance income or expense related to foreign exchange contracts and intercompany financing arrangements. Additionally, the company cannot reasonably predict the occurrence or amount of other operating gains and losses, which generally arise from business transactions that it does not anticipate.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL ASSUMPTIONS AND MATERIAL RISKS

Certain statements in this news release, including, but not limited to, statements in the "Business Outlook 2017 (At Constant Currency)" section, Mr. Smith’s comments and statements regarding recoveries revenues and corporate costs, are forward-looking. As a result, forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. There is no assurance that the events described in any forward-looking statement will materialize. A business outlook is provided for the purpose of presenting information about current expectations for 2017. 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.

The company’s 2017 business outlook is based on various external and internal assumptions. Economic and market assumptions include, but are not limited to, GDP growth in most of the countries where Thomson Reuters operates, a continued increase in demand for high quality information and workflow solutions and a continued need for trusted products and services that help customers navigate changing geopolitical, economic and regulatory environments. Internal financial and operational assumptions include, but are not limited to, the successful execution of sales initiatives, ongoing product release programs, our globalization strategy and other growth and efficiency initiatives.

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; 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; fraudulent or unpermitted data access or other cyber-security or privacy breaches; failures or disruptions of telecommunications, data centers, network systems or the Internet; increased accessibility to free or relatively inexpensive information sources; 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 adapt to organizational changes and effectively implement strategic initiatives; 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; failure to derive fully the anticipated benefits from existing or future acquisitions, joint ventures, investments or dispositions; risk of antitrust/competition-related claims or investigations; impairment of goodwill and other identifiable intangible assets; downgrading of credit ratings and adverse conditions in the credit markets; the effect of factors outside of the control of Thomson Reuters on funding obligations in respect of pension and post-retirement benefit arrangements; and actions or potential actions that could be taken by the company’s principal shareholder, The Woodbridge Company Limited. 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.

CONTACTS

MEDIA
INVESTORS
David Crundwell
Frank J. Golden
Senior Vice President, Corporate Affairs Senior Vice President, Investor Relations
+1 416 649 9904
+1 646 223 5288
david.crundwell@tr.com
frank.golden@tr.com

Thomson Reuters will webcast a discussion of its second-quarter 2017 results today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You can access the webcast by visiting the "Investor Relations" section of www.thomsonreuters.com. An archive of the webcast will be available following the presentation.

Thomson Reuters Corporation
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
CONTINUING OPERATIONS
Revenues
$2,782
$2,769
$5,597
$5,562
Operating expenses
(1,997)
(1,991)
(4,001)
(4,100)
Depreciation
(77)
(80)
(149)
(161)
Amortization of computer software
(168)
(172)
(348)
(341)
Amortization of other identifiable intangible assets
(120)
(132)
(239)
(260)
Other operating (losses) gains, net
(21)
7
(17)
11
Operating profit
399
401
843
711
Finance costs, net:
Net interest expense
(95)
(103)
(188)
(196)
Other finance (costs) income
(91)
9
(118)
(25)
Income before tax and equity method investments
213
307
537
490
Share of post-tax losses in equity method investments (7)
(1)
(5)
-
Tax (expense) benefit
(5)
(2)
(14)
24
Earnings from continuing operations
201
304
518
514
Earnings from discontinued operations, net of tax
5
46
2
108
Net earnings
$206
$350
$520
$622
Earnings attributable to:
Common shareholders
192
337
489
599
Non-controlling interests
14
13
31
23
Earnings per share:
Basic and diluted earnings per share:
From continuing operations
$0.26
$0.39
$0.67
$0.65
From discontinued operations
0.01
0.06
-
0.14
Basic and diluted earnings per share
$0.27
$0.45
$0.67
$0.79
Basic weighted-average common shares
721,009,957 751,598,761
724,088,186 756,163,267
Diluted weighted-average common shares
722,504,109 753,350,217
725,409,478 757,795,444
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
June 30,
December 31,
2017
2016
Assets
Cash and cash equivalents
$771
$2,368
Trade and other receivables
1,545
1,392
Other financial assets
86
188
Prepaid expenses and other current assets
735
686
Current assets
3,137
4,634
Computer hardware and other property, net
877
961
Computer software, net
1,404
1,394
Other identifiable intangible assets, net
5,539
5,655
Goodwill
14,856
14,485
Other financial assets
84
135
Other non-current assets
565
537
Deferred tax
55
51
Total assets
$26,517
$27,852
Liabilities and equity
Liabilities
Current indebtedness
$718
$1,111
Payables, accruals and provisions
2,027
2,448
Deferred revenue
1,023
901
Other financial liabilities
195
102
Current liabilities
3,963
4,562
Long-term indebtedness
6,326
6,278
Provisions and other non-current liabilities 1,687
2,258
Other financial liabilities
315
340
Deferred tax
1,093
1,158
Total liabilities
13,384
14,596
Equity
Capital
9,571
9,589
Retained earnings
6,990
7,477
Accumulated other comprehensive loss
(3,922)
(4,293)
Total shareholders’ equity
12,639
12,773
Non-controlling interests
494
483
Total equity
13,133
13,256
Total liabilities and equity
$26,517
$27,852
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Cash provided by (used in):
Operating activities
Earnings from continuing operations
$201
$304
$518
$514
Adjustments for:
Depreciation
77
80
149
161
Amortization of computer software
168
172
348
341
Amortization of other identifiable intangible assets
120
132
239
260
Net gains on disposals of businesses and investments
-
(1)
-
(2)
Deferred tax
(52)
(26)
(73)
(84)
Other
274
47
437
225
Pension contributions
-
-
(500)
-
Changes in working capital and other items
54
(10)
(603)
(381)
Operating cash flows from continuing operations
842
698
515
1,034
Operating cash flows from discontinued operations
(8)
72
(49)
194
Net cash provided by operating activities
834
770
466
1,228
Investing activities
Acquisitions, net of cash acquired
(5)
(65)
(183)
(111)
(Payments for) proceeds from disposals of businesses and
-
(1)
10
1
investments
Capital expenditures, less proceeds from disposals
(241)
(212)
(454)
(445)
Other investing activities
9
1
15
20
Investing cash flows from continuing operations
(237)
(277)
(612)
(535)
Investing cash flows from discontinued operations
17
(14)
17
(25)
Net cash used in investing activities
(220)
(291)
(595)
(560)
Financing activities
Proceeds from debt
-
498
-
498
Repayments of debt
-
(500)
(550)
(503)
Net (repayments) borrowings under short-term loan facilities (105)
(138)
150
304
Repurchases of common shares
(294)
(258)
(578)
(690)
Dividends paid on preference shares
-
-
(1)
(1)
Dividends paid on common shares
(241)
(248)
(483)
(497)
Dividends paid to non-controlling interests
(22)
(20)
(31)
(29)
Other financing activities
11
9
16
13
Net cash used in financing activities
(651)
(657)
(1,477)
(905)
Decrease in cash and bank overdrafts
(37)
(178)
(1,606)
(237)
Translation adjustments
3
(5)
5
(1)
Cash and bank overdrafts at beginning of period
800
867
2,367
922
Cash and bank overdrafts at end of period
$766
$684
$766
$684
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents
$771
$686
$771
$686
Bank overdrafts
(5)
(2)
(5)
(2)
$766
$684
$766
$684
Thomson Reuters Corporation
Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA(1)
(millions of U.S. dollars, except for margins)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
Change
2017
2016
Change
Earnings from continuing operations
$201
$304
-34%
$518
$514
1%
Adjustments to remove:
Tax expense (benefit)
5
2
14
(24)
Other finance costs (income)
91
(9)
118
25
Net interest expense
95
103
188
196
Amortization of other identifiable intangible assets
120
132
239
260
Amortization of computer software
168
172
348
341
Depreciation
77
80
149
161
EBITDA
$757
$784
$1,574
$1,473
Adjustments to remove:
Share of post-tax losses in equity method
7
1
5
-
investments
Other operating losses (gains), net
21
(7)
17
(11)
Fair value adjustments
53
(21)
118
43
Adjusted EBITDA
$838
$757
11%
$1,714
$1,505
14%
Adjusted EBITDA margin(1)
30.1%
27.3%
280bp
30.6%
27.1%
350bp
Thomson Reuters Corporation
Reconciliation of Earnings Attributable to Common Shareholders to Adjusted Earnings(2)
(millions of U.S. dollars, except for share and per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
Change
2017
2016
Change
Earnings attributable to common shareholders
$192
$337
-43%
$489
$599
-18%
Adjustments to remove:
Fair value adjustments
53
(21)
118
43
Amortization of other identifiable intangible assets
120
132
239
260
Other operating losses (gains), net
21
(7)
17
(11)
Other finance costs (income)
91
(9)
118
25
Share of post-tax losses in equity method investments 7
1
5
-
Tax on above items
(42)
(35)
(89)
(92)
Tax items impacting comparability
2
13
2
6
Earnings from discontinued operations, net of tax
(5)
(46)
(2)
(108)
Interim period effective tax rate normalization(3)
(3)
(8)
(2)
(13)
Dividends declared on preference shares
-
-
(1)
(1)
Adjusted earnings
$436
$357
22%
$894
$708
26%
Adjusted EPS
$0.60
$0.47
28%
$1.23
$0.93
32%
Foreign currency(4)
0%
0%
Constant currency(4)
28%
32%
Diluted weighted-average common shares (millions)
722.5
753.4
725.4
757.8

Refer to page 11 for footnotes.

Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow(5)
(millions of U.S. dollars)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Net cash provided by operating activities
$834
$770
$466
$1,228
Capital expenditures, less proceeds from disposals (241)
(212)
(454)
(445)
Capital expenditures from discontinued operations
-
(14)
-
(25)
Other investing activities
9
1
15
20
Dividends paid on preference shares
-
-
(1)
(1)
Dividends paid to non-controlling interests
(22)
(20)
(31)
(29)
Free cash flow
$580
$525
$(5)
$748
Footnotes
(1)
Thomson Reuters defines adjusted EBITDA as earnings 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) losses in equity method investments, other operating gains and losses, certain asset impairment charges, fair value adjustments and corporate related items. Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of revenues. Thomson Reuters uses adjusted EBITDA because it provides a consistent basis to evaluate operating profitability and performance trends by excluding items that the Company does not consider to be controllable activities for this purpose. Adjusted EBITDA also represents a measure commonly reported and widely used by investors as a valuation metric. Additionally, this measure is used by Thomson Reuters and investors to assess a company’s ability to incur and service debt.
(2)
Adjusted earnings and adjusted EPS include dividends declared on preference shares but exclude the post-tax impacts of fair value adjustments, amortization of other identifiable intangible assets, other operating gains and losses, certain asset impairment charges, other finance costs or income, Thomson Reuters share of post-tax (earnings) losses in equity method investments, discontinued operations and other items affecting comparability. Thomson Reuters calculates the post-tax amount of each item excluded from adjusted earnings based on the specific tax rules and tax rates associated with the nature and jurisdiction of each item. Adjusted EPS is calculated using diluted weighted-average shares and does not represent actual earnings or loss per share attributable to shareholders. Thomson Reuters uses adjusted earnings and adjusted EPS as they provide a more comparable basis to analyze earnings and they are also measures commonly used by shareholders to measure the company’s performance.
(3)
Adjustment to reflect income taxes based on estimated full-year effective tax rate. Earnings or losses for interim periods under IFRS reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which Thomson Reuters operates. The non-IFRS adjustment reallocates estimated full-year income taxes between interim periods, but has no effect on full-year income taxes.
(4)
The changes in revenues, adjusted EBITDA and the related margins, and adjusted earnings per share before currency (at constant currency or excluding the effects of currency) are determined by converting the current and prior-year period’s local currency equivalent using the same exchange rates.
(5)
Free cash flow (includes free cash flow from continuing and discontinued operations) is net cash provided by (used in) operating activities, and other investing activities less capital expenditures, dividends paid on the company’s preference shares, and dividends paid to non-controlling interests. 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.
Supplemental
Thomson Reuters Corporation
Depreciation and Amortization of Computer Software by Business Segment
(millions of U.S. dollars)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Financial & Risk
$140
$146
$287
$288
Legal
61
63
123
123
Tax & Accounting
32
27
64
58
Corporate & Other (includes Reuters News)
12
16
23
33
Total depreciation and amortization of computer software $245
$252
$497
$502

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SOURCE Thomson Reuters

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