TIDM0Q89
Thomson Reuters Reports First-Quarter 2021 Results
TORONTO, May 4, 2021 /PRNewswire/ -- Thomson Reuters (TSX/NYSE: TRI) today
reported results for the first quarter ended March 31, 2021, updated its
revenue outlook for the full year and provided an outlook for the second
quarter 2021.
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"Our first-quarter performance reflects a strong start to the year, and we are
encouraged by the momentum we see building. Our customers are more confident in
an improving economic environment and those positive prevailing tailwinds were
reflected in strong sales across our businesses. Despite the improving outlook,
risks remain as the pandemic is still significantly impacting many parts of the
world. However, we are encouraged by the first quarter's results and our
increasing confidence is reflected in our new outlook for the second quarter
and the increase to the low end of our revenue outlook for the full year," said
Steve Hasker, president and CEO of Thomson Reuters.
Consolidated Financial Highlights - Three Months Ended March 31
Three Months Ended March 31,
(Millions of U.S. dollars, except for adjusted EBITDA margin and EPS)
(unaudited)
IFRS Financial Measures(1) 2021 2020 Change Change at
Constant
Currency
Revenues $1,580 $1,520 4%
Operating profit $387 $290 34%
Diluted earnings per share (EPS) $10.13 $0.39 n/m
Cash flow from operations $380 $176 115%
Non-IFRS Financial Measures(1)
Revenues $1,580 $1,520 4% 3%
Adjusted EBITDA $558 $480 16% 15%
Adjusted EBITDA margin 35.3% 31.6% 370bp 360bp
Adjusted EPS $0.58 $0.48 21% 19%
Free cash flow $239 $35 570%
(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.
n/m: not meaningful
Revenues increased 4% due to growth in recurring revenues and a 1% favorable
impact from foreign currency.
* Organic revenues increased 3%, driven by 3% growth in recurring revenues,
which comprised 77% of total revenues.
* The company's "Big 3" segments (Legal Professionals, Corporates and Tax &
Accounting Professionals), which collectively comprised 81% of total
revenues, reported organic revenue growth of 5%.
Operating profit increased 34% due to higher revenues and a favorable impact
from the revaluation of warrants that the company held in Refinitiv until they
were exercised in connection with the closing of the sale to London Stock
Exchange Group (LSEG) on January 29, 2021.
* Adjusted EBITDA, which excludes the impact of the warrant revaluation,
among other items, increased 16% due to higher revenues and lower costs,
which reflected the impact from cost-reduction initiatives in 2020. The
related margin increased to 35.3% from 31.6% in the prior-year period.
Diluted EPS increased to $10.13 per share from $0.39 per share in the
prior-year period due to the gain on the sale of the company's investment in
Refinitiv to LSEG.
* Adjusted EPS, which excludes the gain from the sale of the company's
investment in Refinitiv, as well as other adjustments, increased to $0.58
per share from $0.48 per share in the prior-year period, primarily due to
higher adjusted EBITDA.
Cash flow from operations increased due to favorable movements in working
capital (including lower bonus payments which were due to the impact of
COVID-19 in 2020), higher revenues and cash savings from 2020 cost-reduction
initiatives.
* Free cash flow increased due to the same factors as cash flow from
operations.
Highlights by Customer Segment - Three Months Ended March 31
(Millions of U.S. dollars, except for adjusted EBITDA margins)
(unaudited)
Three Months
Ended
March 31, Change
2021 2020 Total Constant Organic(1)
Currency
Revenues
Legal Professionals $668 $626 7% 5% 5%
Corporates 384 367 5% 4% 4%
Tax & Accounting Professionals 225 218 3% 5% 5%
"Big 3" Segments Combined 1,277 1,211 5% 5% 5%
Reuters News 160 155 3% 2% 2%
Global Print 143 155 -7% -9% -9%
Eliminations/Rounding - (1)
Revenues $1,580 $1,520 4% 3% 3%
Adjusted EBITDA
Legal Professionals $279 $230 21% 18%
Corporates 146 117 25% 25%
Tax & Accounting Professionals 98 84 17% 17%
"Big 3" Segments Combined 523 431 21% 20%
Reuters News 28 19 45% 65%
Global Print 57 63 -9% -11%
Corporate costs (50) (33) n/a n/a
Adjusted EBITDA $558 $480 16% 15%
Adjusted EBITDA Margin
Legal Professionals 41.8% 36.7% 510bp 460bp
Corporates 38.1% 31.9% 620bp 630bp
Tax & Accounting Professionals 43.7% 38.7% 500bp 470bp
"Big 3" Segments Combined 41.0% 35.6% 540bp 510bp
Reuters News 17.6% 12.6% 500bp 750bp
Global Print 39.9% 40.5% -60bp -80bp
Corporate costs n/a n/a n/a n/a
Adjusted EBITDA margin 35.3% 31.6% 370bp 360bp
n/a: not applicable
(1) 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 5% (all organic) to $668 million.
* Recurring revenues grew 4% (93% of total, all organic), primarily due to
strong performances from Practical Law, Westlaw Edge and the Government
business.
* Transactions revenues grew 17% (7% of total, all organic), primarily due to
the Elite and Government businesses.
Adjusted EBITDA increased 21% to $279 million.
* The margin increased to 41.8% from 36.7%, primarily due to higher revenues
and benefits from 2020 cost-savings initiatives.
Corporates
Revenues increased 4% (all organic) to $384 million, despite a 2% reduction in
revenue growth due to a loss of revenues related to the impact of the U.S.
federal Affordable Care Act that was recorded in the prior-year period.
* Recurring revenues grew 4% (77% of total, all organic).
* Transactions revenues grew 4% (23% of total, all organic), primarily
related to increasing demand for solutions provided by the Confirmation
business, which provides audit confirmation services.
Adjusted EBITDA increased 25% to $146 million.
* The margin increased to 38.1% from 31.9%, primarily due to higher revenues
and benefits from 2020 cost-savings initiatives.
Tax & Accounting Professionals
Revenues increased 5% (all organic) to $225 million, reflecting strong
transactions revenue growth of 7%, despite the extension of the U.S. tax filing
deadline to May from April that resulted in lower transactional tax filing
revenues in the first quarter. Additionally, revenue growth was negatively
impacted due to the acceleration of the release of some UltraTax U.S. state tax
software from January 2021 to December 2020 to align with the traditional
December release of the segment's U.S. Federal tax software. If the UltraTax
software had been released in January 2021, organic revenue growth for the
segment would have been 8%.
* Recurring revenues grew 4% (71% of total, all organic).
* Transactions revenues grew 7% (29% of total, all organic), primarily due to
audit products.
Adjusted EBITDA increased 17% to $98 million.
* The margin increased to 43.7% from 38.7%, primarily due to higher revenues
and benefits from 2020 cost-savings initiatives.
* The Tax & Accounting Professionals segment is the company's most seasonal
business with approximately 60% of full-year revenues typically generated
in the first and fourth quarters. As a result, the margin performance of
this segment has been generally higher in the first and fourth quarters as
costs are typically incurred in a more linear fashion throughout the year.
Reuters News
Revenues of $160 million increased 2%, all organic, primarily due to the
segment's professional business.
* Reuters Events is currently holding all events virtually. Reuters Events
continue to assess when in-person events can resume based on local health
guidelines and feedback from customers.
Adjusted EBITDA increased 45% to $28 million, primarily due to revenue growth
and benefits from 2020 cost-savings initiatives.
Global Print
Revenues decreased 9% to $143 million, a better than expected performance,
driven by higher third-party revenues for printing services.
* Global Print's full-year 2021 revenues are forecast to decline between 4%
and 7%.
* Global Print's second-quarter revenues are forecast to increase between 1%
and 3%, as the prior-year period was negatively impacted by delayed
shipments at the beginning of the COVID-19 pandemic.
Adjusted EBITDA decreased 9% to $57 million.
* The margin decreased from 40.5% to 39.9% due to the decline in revenues.
Corporate Costs
Corporate costs at the adjusted EBITDA level were $50 million, including $11
million of Change Program costs, compared to $33 million of Corporate costs in
the prior-year period. Additional information on the Change Program is provided
below.
Thomson Reuters Change Program and Outlook
In February 2021, the company announced a two-year Change Program to transition
from a holding company to an operating company, and from a content provider to
a content-driven technology company. The program is expected to take 24 months
(2021-2022) to largely complete and is projected to require an investment of
between $500 million and $600 million during the course of that time. In 2023,
the company is forecast to:
* Achieve organic revenue growth of 5% - 6%, including additional annual
revenues of $100 million;
* Achieve an Adjusted EBITDA margin of 38% - 40%;
* Achieve free cash flow of $1.8 billion - $2.0 billion;
* Achieve annual operating expense savings of $600 million, of which $200
million is expected to be reinvested in growth initiatives; and
* Reduce capital expenditures as a percentage of revenue to between 6.0% and
6.5%.
The company's outlook for 2021, 2022 and 2023 incorporates the forecasted
impacts associated with the Change Program, assumes constant currency rates,
and excludes the impact of any future acquisitions or dispositions that may
occur during those periods. Thomson Reuters believes that this type of guidance
provides useful insight into the performance of its businesses.
While the company's first-quarter 2021 performance provides it with increasing
confidence about its outlook, the global economy continues to experience
substantial disruption due to concerns regarding the spread of COVID-19, as
well as from the measures intended to mitigate its impact. Any worsening of the
global economic or business environment could impact the company's ability to
achieve its outlook.
Today, the company updated its revenue outlook for 2021 and reaffirmed its
outlook for 2022 and 2023. The full updated outlook is appended to this news
release.
Second-Quarter 2021 Outlook
The company provided a new outlook today for the second quarter of 2021:
* Total company revenues and total organic revenues are expected to increase
between 5.5% and 6.5%. Second-quarter revenue growth is forecast to be the
high point for the year given the impact of COVID-19 in the second quarter
of 2020.
* "Big 3" total revenue growth and organic revenue growth is forecast to
range between 6.0% and 7.0%.
* Tax & Accounting Professionals revenues are expected to increase between
10% and 15%.
* Reuters News revenues are expected to increase between 2.0% and 3.0%.
* Global Print revenues are expected to increase between 1.0% and 3.0%.
Second-Quarter and Update to Full-Year 2021 Revenue Outlook
Total Thomson Reuters Q2 2021 Original FY 2021
Outlook FY 2021 Outlook
Outlook Update
(February 23,
2021)
Total Revenue Growth 5.5% - 3.0% - 4.0% 3.5% -
6.5% 4.0%
Organic Revenue Growth 5.5% - 3.0% - 4.0% 3.5% -
6.5% 4.0%
Adjusted EBITDA Margin - 30% - 31% Unchanged
Corporate Costs - $305 - $340 Unchanged
Core Corporate Costs million
Change Program Operating Expenses $130 - $140
million
$175 - $200
million
Free Cash Flow - $1.0 - $1.1 Unchanged
billion
Capital Expenditures - % of Revenue - 9.0% - 9.5% Unchanged
Change Program Capital $125 - $150
Expenditures million
Depreciation & Amortization of - $650 - $675 Unchanged
Computer Software million
Interest Expense (P&L) - $190 - $210 Unchanged
million
Effective Tax Rate on Adjusted - 16% - 18% Unchanged
Earnings
Big 3 Q2 2021 Original FY 2021
Outlook FY 2021 Outlook
Outlook Update
(February 23,
2021)
Total Revenue Growth 6.0% - 4.5% - 5.5% 5.0% -
7.0% 5.5%
Organic Revenue Growth 6.0% - 4.5% - 5.5% 5.0% -
7.0% 5.5%
Adjusted EBITDA Margin 38% - 39% Unchanged
The information in this section is forward-looking. Actual results, which
include the impact of currency and future acquisitions and dispositions
completed during 2021, 2022 and 2023, 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."
Dividends and Share Repurchases
In February 2021, the company announced its Board of Directors approved a $0.10
per share annualized increase in the dividend to $1.62 per common share,
representing the 28th consecutive year of dividend increases. A quarterly
dividend of $0.405 per share is payable on June 15, 2021 to common shareholders
of record as of May 20, 2021.
The company also announced in February 2021 that it completed the repurchase of
$200 million of its common shares under its normal course issuer bid (NCIB),
which began in January 2021. Thomson Reuters does not currently intend to
repurchase additional shares in 2021. Thomson Reuters has set a target to
maintain approximately 500 million common shares outstanding by using share
repurchases to offset dilution associated with its dividend reinvestment and
equity incentive plans. As of May 3, 2021, Thomson Reuters had approximately
496 million common shares outstanding.
Sale of Refinitiv to London Stock Exchange Group (LSEG)
On January 29, 2021, Thomson Reuters and private equity funds affiliated with
Blackstone closed the sale of Refinitiv to LSEG in an all-share
transaction. Thomson Reuters now indirectly owns LSEG shares through an entity
that it jointly owns with Blackstone's consortium and a group of current and
former Refinitiv senior management. On March 19, 2021, as permitted under a
lock-up exception, Thomson Reuters sold approximately 10.1 million LSEG shares
for pre-tax net proceeds of $994 million. Over the course of 2021, Thomson
Reuters will pay approximately $225 million of tax on the sale of these shares
and will use the after-tax proceeds to pay the approximately $640 million of
taxes that became payable when the Refinitiv sale closed. As of May 3, 2021,
Thomson Reuters indirectly owned approximately 72.4 million LSEG shares which
had a market value of approximately $7.4 billion based on LSEG's closing share
price on that day.
Subject to certain exceptions, Thomson Reuters and Blackstone's
consortium have otherwise agreed to be subject to a lock-up for their LSEG
shares until January 29, 2023. In each of the three and four years following
the closing (starting on January 30, 2023 and January 30, 2024, respectively),
Thomson Reuters and Blackstone's consortium will become entitled to sell in
aggregate one-third of the LSEG shares issued to them. The lock-up arrangement
will terminate on January 29, 2025. The ability of current and former members?
of Refinitiv senior management to sell shares held by them is also subject to
certain restrictions.
Reuters News' 30-year agreement to supply news and editorial content to
Refinitiv/LSEG continues under the same terms and conditions and is scheduled
to run to 2048.
Thomson Reuters financial results for the first quarter included a gain on the
sale of Refinitiv to LSEG of $8.1 billion within "Share of post-tax earnings
(losses) of equity investments". The proceeds from Thomson Reuters March 2021
sale of LSEG shares were distributed to Thomson Reuters as a dividend that
reduced the value of the investment. The proceeds from the sale of the LSEG
shares were presented in "Net cash provided by investing activities" within the
consolidated statement of cash flow. Thomson Reuters removed these amounts from
its non-IFRS calculation of adjusted EPS and free cash flow. The company
accounts for its indirect investment in LSEG at fair value, based on the share
price of LSEG, within "Share of post-tax earnings (losses) in equity method
investments" within the consolidated income statement.
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), net debt to adjusted EBITDA leverage ratio, 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 2021, 2022 and 2023 impacts
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 (i) our share of post-tax
earnings (losses) in equity method investments, which is subject to changes in
the stock price of LSEG or (ii) the occurrence or amount of other operating
gains and 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.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL RISKS AND MATERIAL
ASSUMPTIONS
Certain statements in this news release, including, but not limited to,
statements in Mr. Hasker's comments, the "Thomson Reuters Change Program and
Outlook" section, and the company's expectations regarding Reuters Events,
Global Print and share repurchases, are forward-looking. The words "will",
"expect", "believe", "target", "estimate", "could", "should", "intend",
"predict", "project" 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 any
of the other events described in any forward-looking statement will
materialize. Forward-looking statements, including those related to the
COVID-19 pandemic, 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 the company's control and the effects of them can be difficult to
predict. In particular, the full extent of the impact of the COVID-19 pandemic
on the company's business, operations and financial results will depend on
numerous evolving factors that it may not be able to accurately 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, uncertainty,
downturns and changes in the markets that the company serves, the ongoing
impact of the COVID-19 pandemic on the company's business and risks that the
pandemic could have a longer duration or a more significant impact on Thomson
Reuters than the company currently expects; fraudulent or unpermitted data
access or other cyber-security or privacy breaches; failures or disruptions of
data centers, network systems, telecommunications, or the Internet; failure to
keep pace with technological developments to provide 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; inadequate protection of intellectual property
rights; actions of competitors; failure to adapt to organizational changes and
effectively implement strategic initiatives; failure to attract, motivate and
retain high quality, talented and diverse management and key employees; failure
to derive fully the anticipated benefits from existing or future acquisitions,
joint ventures, investments or dispositions; 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; failure to protect the brands and reputation of
Thomson Reuters; impairment of goodwill and other identifiable intangible
assets; changes to law and regulations related to privacy, data security, data
protection and other areas; tax matters, including changes to tax laws,
regulations and treaties; threat of legal actions and claims; risk of antitrust
/competition-related claims or investigations; fluctuations in foreign currency
exchange and interest rates; 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; actions or potential actions that could
be taken by the company's principal shareholder, The Woodbridge Company
Limited; and the ability of Thomson Reuters Founders Share Company to affect
the company's governance and management. Many of the foregoing risks are, and
could be, exacerbated by the COVID-19 pandemic and any worsening of the global
business and economic environment as a result. These and other risk 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 tr.com.
The company's 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 (including those related to
the COVID-19 pandemic), as well as other factors that the company believes are
appropriate under the circumstances. Material assumptions and material risks
may cause actual performance to differ from the company's expectations
underlying its business outlook, which reflects the global economic crisis
caused by the COVID-19 pandemic. Material assumptions related to the company's
revenue outlook are that there will be improved global economic conditions
throughout 2021 to 2023, despite periods of volatility due to disruption caused
by COVID-19 and the measures intended to mitigate its impact; there will be 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 for cloud-based digital
tools that drive productivity; Thomson Reuters will have a continued ability to
deliver innovative products that meet evolving customer demands; the company
will acquire new customers through expanded and improved digital platforms,
simplification of the product portfolio and through other sales initiatives;
and the company will improve customer retention through commercial
simplification efforts and customer service improvements. Material assumptions
related to the company's adjusted EBITDA margin outlook are its ability to
achieve revenue growth targets; the company's business mix continues to shift
to higher-growth product offerings; Change Program expenses are $500 million to
$600 million during the course of 2021 and 2022; and Change Program investments
will drive higher adjusted EBITDA margin through higher revenues and
efficiencies by 2023. Material assumptions related to the company's free cash
flow outlook are its ability to achieve its revenue and adjusted EBITDA margin
targets; and capital expenditures are between the percentages of revenues in
2021, 2022 and 2023 as set forth in the company's outlook. Material assumptions
related to the company's effective tax rate on adjusted earnings outlook are
its ability to achieve its adjusted EBITDA target; the mix of taxing
jurisdictions where the company recognized pre-tax profit or losses in 2020
does not significantly change; no unexpected changes in tax laws or treaties
within the jurisdictions where the company operates; depreciation and
amortization of computer software for 2021 as set forth in the company's
outlook; and interest expense for 2021 as set forth in the company's outlook.
Material risks related to the company's revenue outlook are that business
disruptions associated with the COVID-19 pandemic, including government
enforced quarantines and stay-at-home orders, may continue longer than the
company expects or may be interrupted by future outbreaks and resurgences of
the virus, delaying the anticipated recovery of the global economy; global
economic uncertainty due to the COVID-19 pandemic as well as related regulatory
reform and changes in the political environment may lead to limited business
opportunities for the company's customers, creating significant cost pressures
for them and potentially constraining the number of professionals employed,
which could lead to lower demand for Thomson Reuters products and services;
demand for the company's products and services could be reduced by changes in
customer buying patterns or in its inability to execute on key product design
or customer support initiatives; competitive pricing actions and product
innovation could impact the company's revenues; and the company's sales,
commercial simplification and product design initiatives may be insufficient to
retain customers or generate new sales. Material risks related to the company's
adjusted EBITDA margin outlook are the same as the risks above related to the
revenue outlook; the costs to execute the Change Program may be higher than
current expectations or the expected benefits by 2023 may be lower than current
expectations; and acquisition and disposal activity may dilute the company's
adjusted EBITDA margin. Material risks related to the company's free cash flow
outlook are the same as the risks above related to the revenue and adjusted
EBITDA margin outlook; a weaker macroeconomic environment could negatively
impact working capital performance, including the ability of customers to pay
the company; capital expenditures may be higher than currently expected; and
the timing and amount of tax payments to governments may differ from the
company's expectations. Material risks related to the company's effective tax
rate on adjusted earnings outlook are the same as the risks above related to
adjusted EBITDA; a material change in the geographical mix of the company's
pre-tax profits and losses; a material change in current tax laws or treaties
to which the company is subject, and did not expect; and depreciation and
amortization of computer software as well as interest expense may be
significantly higher or lower than expected.
The company has provided an updated Outlook for the purpose of presenting
information about current expectations for the periods presented. 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, including those
related to the COVID-19 pandemic.
CONTACTS
MEDIA INVESTORS
Melissa Cassar Frank J. Golden
Head of Commercial Communications & Corporate Head of Investor
Affairs Relations
+1 437 388 3619 +1 332 219 1111
melissa.cassar@tr.com frank.golden@tr.com
Thomson Reuters will webcast a discussion of its first-quarter 2021 results and
its business outlook today beginning at 8:30 a.m. Eastern Daylight Time (EDT).
You can access the webcast by visiting ir.tr.com. An archive of the webcast
will be available following the presentation.
Thomson Reuters Corporation
2021 - 2023 Outlook
Total Thomson Reuters 2021 2022 2023
Outlook Outlook Outlook
(Updated)
Total Revenue Growth 3.5% - 4.0% 4.0% - 5.0% 5.0% - 6.0%
Organic Revenue Growth 3.5% - 4.0% 4.0% - 5.0% 5.0% - 6.0%
Adjusted EBITDA Margin 30% - 31% 34% - 35% 38% - 40%
Corporate Costs $305 - $340 $245 - $280 $110 - $120
Core Corporate Costs million million million
Change Program Operating $130 - $140 $120 - $130 $110 - $120
Expenses million million million
$175 - $200 $125 - $150 $0
million million
Free Cash Flow $1.0 - $1.1 $1.2 - $1.3 $1.8 - $2.0
billion billion billion
Capital Expenditures - % of 9.0% - 9.5% 7.5% - 8.0% 6.0% - 6.5%
Revenue $125 - $150 $75 - $100 $0
Change Program Capital million million
Expenditures
Depreciation & Amortization of $650 - $675 $620 - $645 $580 - $605
Computer Software million million million
Interest Expense (P&L) $190 - $210 $190 - $210 $190 - $210
million million million
Effective Tax Rate on Adjusted 16% - 18% n/a n/a
Earnings
Big 3 2021 2022 2023
Outlook Outlook Outlook
(Updated)
Total Revenue Growth 5.0% - 5.5% 5.5% - 6.5% 6.0% - 7.0%
Organic Revenue Growth 5.0% - 5.5% 5.5% - 6.5% 6.0% - 7.0%
Adjusted EBITDA Margin 38% - 39% 41% - 42% 43% - 45%
The information in this section is forward-looking. Actual results, which
include the impact of currency and future acquisitions and dispositions
completed during 2021, 2022 and 2023, 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 above entitled "Non-IFRS
Financial Measures" for more information. The information in this section
should also be read in conjunction with the section above entitled "Special
Note Regarding Forward-Looking Statements, Material Risks and Material
Assumptions."
Thomson Reuters Corporation
Consolidated Income Statement
(millions of U.S. dollars, except per share data)
(unaudited)
Three Months Ended
March 31,
2021 2020
CONTINUING OPERATIONS
Revenues $1,580 $1,520
Operating expenses (1,018) (1,017)
Depreciation (46) (40)
Amortization of computer software (115) (111)
Amortization of other identifiable intangible assets (31) (30)
Other operating gains (losses), net 17 (32)
Operating profit 387 290
Finance costs, net:
Net interest expense (51) (45)
Other finance (costs) income (6) 47
Income before tax and equity method investments 330 292
Share of post-tax earnings (losses) in equity method 6,297 (54)
investments
Tax expense (1,594) (47)
Earnings from continuing operations 5,033 191
Earnings from discontinued operations, net of tax 3 2
Net earnings $5,036 $193
Earnings attributable to common shareholders $5,036 $193
Earnings per share:
Basic earnings per share:
From continuing operations $10.15 $0.38
From discontinued operations - 0.01
Basic earnings per share $10.15 $0.39
Diluted earnings per share:
From continuing operations $10.13 $0.38
From discontinued operations - 0.01
Diluted earnings per share $10.13 $0.39
Basic weighted-average common shares 495,939,970 496,205,027
Diluted weighted-average common shares 496,938,318 498,145,078
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
March 31, December 31,
2021 2020
Assets
Cash and cash equivalents $2,584 $1,787
Trade and other receivables 1,049 1,151
Other financial assets 77 612
Prepaid expenses and other current assets 448 425
Current assets 4,158 3,975
Property and equipment, net 500 545
Computer software, net 815 830
Other identifiable intangible assets, net 3,397 3,427
Goodwill 5,977 5,976
Equity method investments 6,870 1,136
Other non-current assets 884 788
Deferred tax 1,179 1,204
Total assets $23,780 $17,881
Liabilities and equity
Liabilities
Payables, accruals and provisions $1,059 $1,159
Current tax liabilities 1,130 251
Deferred revenue 832 866
Other financial liabilities 157 376
Current liabilities 3,178 2,652
Long-term indebtedness 3,788 3,772
Provisions and other non-current liabilities 954 1,083
Deferred tax 1,043 394
Total liabilities 8,963 7,901
Equity
Capital 5,465 5,458
Retained earnings 10,119 5,211
Accumulated other comprehensive loss (767) (689)
Total equity 14,817 9,980
Total liabilities and equity $23,780 $17,881
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months
Ended
March 31,
2021 2020
Cash provided by (used in):
Operating activities
Earnings from continuing operations $5,033 $191
Adjustments for:
Depreciation 46 40
Amortization of computer software 115 111
Amortization of other identifiable intangible assets 31 30
Share of post-tax (earnings) losses in equity method (6,297) 54
investments
Deferred tax 674 (3)
Other 30 11
Changes in working capital and other items 785 (243)
Operating cash flows from continuing operations 417 191
Operating cash flows from discontinued operations (37) (15)
Net cash provided by operating activities 380 176
Investing activities
Acquisitions, net of cash acquired (3) (124)
Proceeds (payments) from disposals of businesses and 5 (3)
investments
Dividend from sale of LSEG shares 994 -
Capital expenditures (120) (142)
Proceeds from disposals of property and equipment - 19
Other investing activities 1 1
Taxes paid on sale of Refinitiv and LSEG shares (6) -
Investing cash flows from continuing operations 871 (249)
Investing cash flows from discontinued operations (42) -
Net cash provided by (used in) investing activities 829 (249)
Financing activities
Proceeds from debt - 1,020
Repayments of debt - (645)
Net borrowings under short-term loan facilities - 118
Payments of lease principal (21) (18)
Repurchases of common shares (200) (200)
Dividends paid on preference shares (1) (1)
Dividends paid on common shares (194) (182)
Other financing activities 5 (12)
Net cash (used in) provided by financing activities (411) 80
Increase in cash and bank overdrafts 798 7
Translation adjustments (1) (10)
Cash and bank overdrafts at beginning of period 1,787 825
Cash and bank overdrafts at end of period $2,584 $822
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents $2,584 $823
Bank overdrafts - (1)
$2,584 $822
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
March 31,
2021 2020
Earnings from continuing operations $5,033 $191
Adjustments to remove:
Tax expense 1,594 47
Other finance costs (income) 6 (47)
Net interest expense 51 45
Amortization of other identifiable intangible assets 31 30
Amortization of computer software 115 111
Depreciation 46 40
EBITDA $6,876 $417
Adjustments to remove:
Share of post-tax (earnings) losses in equity method (6,297) 54
investments
Other operating (gains) losses, net (17) 32
Fair value adjustments (4) (23)
Adjusted EBITDA (1) $558 $480
Adjusted EBITDA margin(1) 35.3% 31.6%
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
March 31,
2021 2020 Change
Net earnings $5,036 $193
Adjustments to remove:
Fair value adjustments (4) (23)
Amortization of other identifiable intangible assets 31 30
Other operating (gains) losses, net (17) 32
Other finance costs (income) 6 (47)
Share of post-tax (earnings) losses in equity method (6,297) 54
investments
Tax on above items 1,535 (31)
Tax items impacting comparability 1 30
Earnings from discontinued operations, net of tax (3) (2)
Interim period effective tax rate normalization(3) 1 4
Dividends declared on preference shares (1) (1)
Adjusted earnings(2) $288 $239
Adjusted EPS(2) $0.58 $0.48 21%
Foreign currency(4) 2%
Constant currency(4) 19%
Diluted weighted-average common shares (millions) 496.9 498.1
Refer to page 19 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
March 31,
2021 2020
Net cash provided by operating activities $380 $176
Capital expenditures (120) (142)
Proceeds from disposals of property and equipment - 19
Other investing activities 1 1
Payments of lease principal (21) (18)
Dividends paid on preference shares (1) (1)
Free cash flow $239 $35
Thomson Reuters Corporation
Reconciliation of Net Debt and Leverage Ratio of Net Debt to Adjusted EBITDA(7)
(millions of U.S. dollars)
(unaudited)
March
31,
2021
Long-term indebtedness $3,788
Total debt 3,788
Swaps (110)
Total debt after swaps 3,678
Remove fair value adjustments for hedges (5)
Total debt after currency arrangements 3,673
Remove transaction costs, premiums or discounts included in the 37
carrying value of debt
Add: lease liabilities (current and non-current) 280
Less: cash and cash equivalents (2,584)
Net debt (7) $1,406
Adjusted EBITDA(1)* $2,053
Net Debt / Adjusted EBITDA(7)* 0.7
* Our target leverage ratio of 2.5:1 is a non-IFRS measure. For purposes of
this calculation, adjusted EBITDA is computed on a rolling twelve-month basis
and includes adjusted EBITDA of $558 million, $525 million, $491 million and
$479 million for the three months ended March 31, 2021, December 31, 2020,
September 30, 2020 and June 30, 2020, respectively. Refer to the tables
appended to this news release, the company's 2020 annual report and the
company's interim reports for the three months ended September 30, 2020 and
June 30, 2020, for additional information regarding the calculation of adjusted
EBITDA in each of these periods.
Refer to page 19 for footnotes.
Thomson Reuters Corporation
Reconciliation of Changes in Revenues to Changes in Revenues on a Constant
Currency (4) and Organic Basis (6)
(millions of U.S. dollars)
(unaudited)
Three Months
Ended
March 31, Change
2021 2020 Total Foreign SUBTOTAL Acquisitions/ Organic
Currency Constant (Divestitures) (6)
Currency
(4)
Total Revenues
Legal $668 $626 7% 1% 5% 1% 5%
Professionals
Corporates 384 367 5% 0% 4% 0% 4%
Tax & 225 218 3% -1% 5% 0% 5%
Accounting
Professionals
"Big 3" Segments 1,277 1,211 5% 1% 5% 0% 5%
Combined
Reuters News 160 155 3% 2% 2% 0% 2%
Global Print 143 155 -7% 1% -9% 0% -9%
Eliminations/ - (1)
Rounding
Revenues $1,580 $1,520 4% 1% 3% 0% 3%
Recurring
Revenues
Legal $621 $587 6% 1% 4% 1% 4%
Professionals
Corporates 295 281 5% 0% 4% 0% 4%
Tax & 160 158 2% -2% 4% 0% 4%
Accounting
Professionals
"Big 3" Segments 1,076 1,026 5% 1% 4% 0% 4%
Combined
Reuters News 144 142 2% 2% 0% 0% 0%
Total Recurring $1,220 $1,168 5% 1% 4% 0% 3%
Revenues
Transactions
Revenues
Legal $47 $39 20% 3% 17% 0% 17%
Professionals
Corporates 89 86 4% 0% 4% 0% 4%
Tax & 65 60 7% 1% 7% 0% 7%
Accounting
Professionals
"Big 3" Segments 201 185 8% 1% 8% 0% 8%
Combined
Reuters News 16 13 23% 1% 22% 0% 22%
Total $217 $198 9% 1% 9% 0% 9%
Transactions
Revenues
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 19 for footnotes.
Thomson Reuters Corporation
Reconciliation of Changes in Adjusted EBITDA to Changes on a Constant
Currency Basis (4)
(millions of U.S. dollars)
(unaudited)
Three Months
Ended
March 31, Change
2021 2020 Total Foreign Constant
Currency Currency
(4)
Adjusted EBITDA
Legal Professionals $279 $230 21% 3% 18%
Corporates 146 117 25% 0% 25%
Tax & Accounting Professionals 98 84 17% -1% 17%
"Big 3" Segments Combined 523 431 21% 2% 20%
Reuters News 28 19 45% -20% 65%
Global Print 57 63 -9% 2% -11%
Corporate costs (50) (33) n/a n/a n/a
Adjusted EBITDA $558 $480 16% 1% 15%
Adjusted EBITDA Margin
Legal Professionals 41.8% 36.7% 510bp 50bp 460bp
Corporates 38.1% 31.9% 620bp -10bp 630bp
Tax & Accounting Professionals 43.7% 38.7% 500bp 30bp 470bp
"Big 3" Segments Combined 41.0% 35.6% 540bp 30bp 510bp
Reuters News 17.6% 12.6% 500bp -250bp 750bp
Global Print 39.9% 40.5% -60bp 20bp -80bp
Corporate costs n/a n/a n/a n/a n/a
Adjusted EBITDA margin 35.3% 31.6% 370bp 10bp 360bp
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 19 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.
(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 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 and dividends paid on the
company's preference shares. 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.
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.
(7) Net debt is total indebtedness (excluding the associated unamortized
transaction costs and premiums or discounts) plus the currency related fair
value of associated hedging instruments, and lease liabilities less cash
and cash equivalents. For purposes of calculating the leverage ratio, net
debt is divided by adjusted EBITDA for the previous twelve-month period
ending with the current fiscal quarter.
END
(END) Dow Jones Newswires
May 04, 2021 06:30 ET (10:30 GMT)
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