Thomson Reuters Reports Q2 2017 Results
OREANDA-NEWS. 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.
“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% |
1 In addition to results reported in accordance with International Financial Reporting Standards (IFRS), the company uses certain non-IFRS financial measures as supplemental indicators of its operating performance and financial position. These and other non-IFRS financial measures are defined and reconciled to the most directly comparable IFRS measures in the tables appended to this news release.
Revenues 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%.
- 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.
- Adjusted EPS was $0.60, an increase of 28%, or $0.13 per share, primarily due to higher adjusted EBITDA.
- 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.
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 Currency | Constant 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.
- 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.
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)
- 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)
- 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%.
- 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.
- Adjusted EPS was $1.23, an increase of 32%, or $0.30 per share, primarily due to higher adjusted EBITDA.
- 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 Currency | Constant 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 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).
Комментарии