REG-Thomson Reuters: Final Results
08/02/2022 11:40
Thomson Reuters Reports Fourth-Quarter and Full-Year 2021 Results
TORONTO, Feb. 8, 2022 /PRNewswire/ -- Thomson Reuters (TSX/NYSE: TRI) today
reported results for the fourth quarter and full year ended December 31,
2021:
* Strong revenue and sales growth for the fourth quarter and full year *
Full-year total company revenue up 6% / organic revenue up 5%
* Fourth-quarter total company revenue up 6% / organic revenue up 6% * Organic
revenue up 7% for the "Big 3" (Legal Professionals, Corporates, and Tax &
Accounting Professionals)
* Global Legal, Tax, Risk, Fraud & Compliance markets continue to be robust,
providing a tailwind
* Raised 2022/2023 guidance for organic revenue growth, adjusted EBITDA margin
and free cash flow
* Change Program on track - $217 million run-rate operating expense savings at
year-end
* Increased annualized dividend per share by 10% (29(th) consecutive annual
increase/largest increase since 2008)
"The momentum we saw in the first nine months of the year continued in the
fourth quarter. Revenue and sales growth were again strong and exceeded our
expectations, enabling us to finish the year on a solid footing. Our
performance has increased momentum moving into 2022, helping to build
confidence as we work to achieve our higher 2022 and 2023 targets," said Steve
Hasker, President and CEO of Thomson Reuters.
Mr. Hasker added, "Our professional markets continue to grow helped by a
significant global shift by customers to upgrade Legal, Tax and Risk, Fraud
and Compliance products. Our products are proving well suited to enable them
to effectively serve their clients. We are targeting investment in products
that are driving faster growth and where we have strong positions in growing
markets, and we continue to look to supplement organic growth with targeted
acquisitions that can bolster our positions and where we are an advantaged
owner. We look forward to continued progress in 2022 as we work to further
strengthen our positions across our businesses."
Consolidated Financial Highlights - Three Months Ended December 31
Three Months Ended December 31, (Millions of U.S. dollars, except for adjusted EBITDA margin and EPS) (unaudited)
IFRS Financial Measures ((1)) 2021 2020 Change Change at
Constant
Currency
Revenues $1,710 $1,616 6%
Operating profit $257 $956 -73%
Diluted (loss) earnings per share (EPS) $(0.36) $1.13 n/m
Net cash provided by operating activities $397 $566 -30%
Non-IFRS Financial Measures ((1))
Revenues $1,710 $1,616 6% 6%
Adjusted EBITDA $452 $525 -14% -14%
Adjusted EBITDA margin 26.4% 32.5% -610bp -610bp
Adjusted EPS $0.43 $0.54 -20% -20%
Free cash flow $255 $449 -43%
(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. See "Non-IFRS Financial Measures" section and the tables appended to this news release for additional information on these and other non-IFRS financial measures, including how they are defined and reconciled to the most directly comparable IFRS measures. n/m: not
meaningful
Revenues increased 6%, before and after the impact of foreign currency, driven
by growth across four of the company's five business segments.
* Organic revenues increased 6%, driven by 6% growth in recurring revenues
(80% of total revenues), as well as 16% growth in transactions revenues.
Global Print revenues declined 4%.
* The company's "Big 3" segments (Legal Professionals, Corporates and Tax &
Accounting Professionals) reported organic revenue growth of 7% and
collectively comprised 79% of total revenues.
Operating profit decreased 73%, primarily because the prior year included
significant gains from the sale of an investment and an amendment to a pension
plan. Additionally, higher revenues were more than offset by higher costs,
primarily related to investments associated with the company's Change Program
and higher performance bonus expense. Information regarding the Change Program
is provided later in this news release.
Fourth-quarter costs also included a $25 million investment to better position
the business for 2022, which was allocated to go-to-market and product
development initiatives, and data and analytics tools to improve the customer
experience.
* Adjusted EBITDA, which excludes the gains from the sale of the investment
and the pension plan amendment among other items, declined 14% as higher
revenues were more than offset by higher costs. The related margin decreased
to 26.4% from 32.5% primarily due to higher costs, including those associated
with the Change Program, which negatively impacted the margin by 470bp.
Diluted loss per share was $0.36 compared to diluted earnings per share of
$1.13 in the prior-year period due to lower operating profit and a decrease in
value of the company's LSEG investment, which is discussed in more detail in
the "London Stock Exchange Group (LSEG) Ownership Interest" section of this
news release.
* Adjusted EPS, which excludes the change in value of the company's LSEG
investment, as well as other adjustments, decreased to $0.43 per share from
$0.54 per share in the prior-year period primarily due to lower adjusted
EBITDA. Adjusted EPS was $0.04 lower due to the $25 million of additional
investment previously noted.
Net cash provided by operating activities decreased as higher revenues were
more than offset by higher expenses, which included Change Program costs, and
unfavorable movements in working capital.
* Free cash flow decreased $194 million due to lower cash flow from operating
activities.
Highlights by Customer Segment - Three Months Ended December 31
(Millions of U.S. dollars, except for adjusted EBITDA margins) (unaudited)
Three Months Ended Change
December 31,
2021 2020 Total Constant Organic ((1)(2))
Currency ((1))
Revenues
Legal Professionals $689 $653 5% 5% 6%
Corporates 361 338 7% 7% 7%
Tax & Accounting Professionals 309 285 9% 9% 9%
"Big 3" Segments Combined ((1)) 1,359 1,276 6% 7% 7%
Reuters News 182 164 11% 12% 12%
Global Print 170 177 -4% -4% -4%
Eliminations/Rounding (1) (1)
Revenues $1,710 $1,616 6% 6% 6%
Adjusted EBITDA (()(1))
Legal Professionals $239 $245 -3% -2%
Corporates 95 105 -10% -10%
Tax & Accounting Professionals 154 145 6% 7%
"Big 3" Segments Combined ((1)) 488 495 -2% -1%
Reuters News 15 6 139% 107%
Global Print 61 61 0% -1%
Corporate costs (112) (37) n/a n/a
Adjusted EBITDA $452 $525 -14% -14%
Adjusted EBITDA Margin (()(1))
Legal Professionals 34.5% 37.5% -300bp -270bp
Corporates 26.3% 31.1% -480bp -480bp
Tax & Accounting Professionals 49.8% 51.1% -130bp -120bp
"Big 3" Segments Combined ((1)) 35.8% 38.8% -300bp -280bp
Reuters News 8.3% 3.9% 440bp 450bp
Global Print 35.9% 34.6% 130bp 110bp
Corporate costs n/a n/a n/a n/a
Adjusted EBITDA margin 26.4% 32.5% -610bp -610bp
(1) See "Non-IFRS Financial Measures" section and the tables appended to this news release for additional information on these and other non-IFRS financial measures. (2) Computed for revenue growth only. n/a: not applicable
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% (6% organic) to $689 million.
* Recurring revenues grew 5% (93% of total, 6% organic), primarily due to
strong performances from Practical Law, Elite, FindLaw and the Government
business, as well as contributions from the company's Canadian, European and
Latin American businesses.
* Transactions revenues grew 4% (7% of total, 6% organic), primarily related
to the Elite, Government, and Asia and Emerging Markets businesses.
Adjusted EBITDA decreased 3% to $239 million.
* The margin decreased to 34.5% from 37.5%, primarily due to higher
performance bonus expense.
Corporates
Revenues increased 7% (all organic) to $361 million.
* Recurring revenues grew 7% (87% of total, all organic) driven by Practical
Law, Indirect Tax, CLEAR and Legal software, as well as the company's
businesses in Latin America.
* Transactions revenues grew 4% (13% of total, all organic).
Adjusted EBITDA decreased 10% to $95 million.
* The margin decreased to 26.3% from 31.1%, primarily due to higher
performance bonus expense.
Tax & Accounting Professionals
Revenues increased 9% (all organic) to $309 million.
* Recurring revenues grew 9% (89% of total, all organic), driven by strong
growth from Audit Solutions, Tax Compliance and the company's Latin America
businesses.
* Transactions revenues increased 10% (11% of total, all organic).
Adjusted EBITDA increased 6% to $154 million.
* The margin decreased to 49.8% from 51.1%, primarily due to higher
performance bonus expense.
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 $182 million increased 12% (all organic), driven by growth in all
businesses, including Reuters Events as it continues to recover from the
negative impact from COVID-19 in 2020.
Adjusted EBITDA increased 139% to $15 million, primarily due to higher
revenues.
Global Print
Revenues decreased 4% to $170 million.
Adjusted EBITDA was unchanged from the prior-year period at $61 million.
* The margin increased to 35.9% from 34.6% due to year-over-year timing of
expenses.
Corporate Costs
Corporate costs at the adjusted EBITDA level were $112 million and included
$78 million of Change Program costs. Corporate costs were $37 million in the
prior-year period. Additional information regarding the Change Program is
provided below.
Consolidated Financial Highlights - Year Ended December 31
Year Ended December 31, ( Millions of U.S. dollars, except for adjusted EBITDA margin and EPS) (unaudited)
IFRS Financial Measures ((1)) 2021 2020 Change Change at
Constant
Currency
Revenues $6,348 $5,984 6%
Operating profit $1,242 $1,929 -36%
Diluted earnings per share (EPS) $11.50 $2.25 n/m
Net cash provided by operating activities $1,773 $1,745 2%
Non-IFRS Financial Measures ((1))
Revenues $6,348 $5,984 6% 5%
Adjusted EBITDA $1,970 $1,975 0% -1%
Adjusted EBITDA margin 31.0% 33.0% -200bp -190bp
Adjusted EPS $1.95 $1.85 5% 5%
Free cash flow $1,256 $1,330 -6%
(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. See "Non-IFRS Financial Measures" section and the tables appended to this news release for additional information on these and other non-IFRS financial measures, including how they are defined and reconciled to the most directly comparable IFRS measures. n/m: not meaningful
Revenues increased 6% driven by growth in recurring and transactions revenues
and a 1% favorable impact from foreign currency.
* Organic revenues increased 5%, primarily due to 5% growth in recurring
revenues (79% of total revenues), as well as 13% growth in transactions
revenues. Global Print revenues declined. * Organic growth of 5% included an
approximate 100bp benefit resulting from easier year-over-year comparisons due
to the negative impact of COVID-19 on the business in 2020.
* The company's "Big 3" segments, which collectively comprised 80% of total
revenues, reported organic revenue growth of 6%.
Operating profit declined 36%, primarily because the prior year included
significant gains from the sale of an investment and from an amendment to a
pension plan.
* Adjusted EBITDA, which excludes the gains from the sale of the investment
and the pension plan amendment among other items, was unchanged on a
year-over-year basis as higher revenues were offset by higher costs, which
included investments associated with the company's Change Program and higher
performance bonus expense. The related margin decreased to 31.0% from 33.0% in
the prior year. Adjusted EBITDA margin was negatively impacted by 290bp due to
Change Program costs.
Diluted EPS increased to $11.50 per share from $2.25 per share in the prior
year due to the gain on the sale of Refinitiv to LSEG in January 2021.
* Adjusted EPS, which excludes the gain on the sale of Refinitiv and other
adjustments, increased to $1.95 per share from $1.85 per share in the prior
year, primarily due to lower depreciation and software amortization and lower
income tax expense.
Net cash provided by operating activities increased as higher revenues more
than offset higher tax payments and expenses, which included Change Program
costs.
* Free cash flow decreased by $74 million as higher cash flows from operating
activities were more than offset by a prior-year benefit from the proceeds
associated with the sale of real estate.
Highlights by Customer Segment – Year Ended December 31
(Millions of U.S. dollars, except for adjusted EBITDA margins) (unaudited)
Year Ended Change
December 31,
2021 2020 Total Constant Organic ((1)(2))
Currency (()(1))
Revenues
Legal Professionals $2,712 $2,535 7% 6% 6%
Corporates 1,449 1,367 6% 5% 5%
Tax & Accounting Professionals 906 836 8% 9% 9%
"Big 3" Segments Combined ((1)) 5,067 4,738 7% 6% 6%
Reuters News 674 628 7% 7% 7%
Global Print 609 620 -2% -3% -3%
Eliminations/Rounding (2) (2)
Revenues $6,348 $5,984 6% 5% 5%
Adjusted EBITDA (()(1))
Legal Professionals $1,091 $1,001 9% 7%
Corporates 502 460 9% 9%
Tax & Accounting Professionals 373 330 13% 13%
"Big 3" Segments Combined ((1)) 1,966 1,791 10% 9%
Reuters News 103 73 40% 51%
Global Print 226 242 -7% -8%
Corporate costs (325) (131) n/a n/a
Adjusted EBITDA $1,970 $1,975 0% -1%
Adjusted EBITDA Margin ((1))
Legal Professionals 40.2% 39.5% 70bp 50bp
Corporates 34.6% 33.7% 90bp 100bp
Tax & Accounting Professionals 41.1% 39.5% 160bp 170bp
"Big 3" Segments Combined ((1)) 38.8% 37.8% 100bp 90bp
Reuters News 15.2% 11.7% 350bp 500bp
Global Print 37.1% 39.0% -190bp -210bp
Corporate costs n/a n/a n/a n/a
Adjusted EBITDA margin 31.0% 33.0% -200bp -190bp
(1) See "Non-IFRS Financial Measures" section and the tables appended to this news release for additional information on these and other non-IFRS financial measures. (2) Computed for revenue growth only. n/a: not applicable
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 company is 12 months into
the program, which is expected to be largely complete by the end of 2022. The
program is projected to require an investment of approximately $600 million
during that time of which $295 million was invested in 2021.
The company's updated outlook for 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. The
company expects its first-quarter 2022 revenue growth rate and adjusted EBITDA
margin will be comparable to its full-year 2022 outlook targets.
While the company's full-year 2021 performance provides it with increasing
confidence about its outlook, the global economy has recently experienced
substantial disruption due to concerns regarding resurgences and new strains
of COVID-19, measures intended to mitigate the pandemic's impact, and other
events and macroeconomic factors. Any worsening of the global economic or
business environment could impact the company's ability to achieve its
outlook.
Reported Full-Year 2021 and Updated Full-Year 2022 – 2023 Outlook
Total Thomson Reuters FY 2021 Reported 2/23/21 FY 2022 Outlook 2/23/21 FY 2023 Outlook 2/8/22 FY 2022 Outlook 2/8/22 FY 2023 Outlook
Total Revenue Growth 6.1% 4.0% - 5.0% 5.0% - 6.0% ~ 5% 5.5% - 6.0%
Organic Revenue Growth ((1)) 5.2% 4.0% - 5.0% 5.0% - 6.0% ~ 5% 5.5% - 6.0%
Adjusted EBITDA Margin ((1)) 31.0% 34% - 35% 38% – 40% ~ 35% 39% - 40%
Corporate Costs Core Corporate Costs Change Program Opex $325 million $142 million $183 million $245 - $280 million $120 - $130 million $125 - $150 million $110 - $120 million $110 - $120 million $0 $280 - $330 million Unchanged $160 - $200 million Unchanged Unchanged Unchanged
Free Cash Flow ((1)) $1.3 billion $1.2 - $1.3 billion $1.8 - $2.0 billion ~ $1.3 billion $1.9 – $2.0 billion
Accrued Capex as % of Revenue ((1)) Change Program Accrued Capex 8.5% $112 million 7.5% - 8.0% $75 - $100 million 6.0% - 6.5% $0 Unchanged $100 - $140 million Unchanged Unchanged
Depreciation & Amortization of Computer Software $651 million $620 - $645 million $580 - $605 million Unchanged Unchanged
Interest Expense (P&L) $196 million $190 - $210 million $190 - $210 million Unchanged Unchanged
Effective Tax Rate on Adjusted Earnings ((1)) 13.9% n/a n/a 19% - 21% n/a
"Big 3" ((1)) FY 2021 Reported 2/23/21 FY 2022 Outlook 2/23/21 FY 2023 Outlook 2/8/22 FY 2022 Outlook 2/8/22 FY 2023 Outlook
Total Revenue Growth 6.9% 5.5% - 6.5% 6.0% - 7.0% 6.0% - 6.5% 6.5% - 7.0%
Organic Revenue Growth 6.2% 5.5% - 6.5% 6.0% - 7.0% 6.0% - 6.5% 6.5% - 7.0%
Adjusted EBITDA Margin 38.8% 41% - 42% 43% - 45% ~42% 44% – 45%
(1) Non-IFRS financial measures. See the "Non-IFRS Financial Measures" section below as well as the tables and footnotes appended to this news release for more information.
The information in this section is forward-looking. Actual results, which will
include the impact of currency and future acquisitions and dispositions
completed during 2022 and 2023, may differ materially from the company's
outlook. 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
The company announced today that its Board of Directors approved a 10% or
$0.16 per share annualized increase in the dividend to $1.78 per common share,
representing the 29(th) consecutive year of dividend increases. A quarterly
dividend of $0.445 per share is payable on March 15, 2022 to common
shareholders of record as of February 24, 2022.
In the fourth quarter of 2021, the company completed a previously announced
plan to buy back up to $1.2 billion of its common shares. This buyback program
was in addition to the $200 million repurchase program that was completed
earlier in 2021. As of February 7, 2022, Thomson Reuters had approximately
486.2 million common shares outstanding.
In 2021, Thomson Reuters returned a total of $2.2 billion of cash to
shareholders through dividends and share repurchases.
London Stock Exchange Group (LSEG) Ownership Interest
In January 2021, Thomson Reuters and private equity funds affiliated with
Blackstone sold Refinitiv to LSEG in an all-share transaction. Thomson Reuters
indirectly owns LSEG shares through an entity that it jointly owns with
Blackstone's consortium and a group of current LSEG and former Refinitiv
senior management.
As of February 7, 2022, Thomson Reuters indirectly owned approximately 72.4
million LSEG shares which had a market value of approximately $7.0 billion
based on LSEG's closing share price on that day. The company received $51
million of dividends from its LSEG investment in June 2021 and an additional
$24 million in October 2021.
In March 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 paid $223 million of tax on
the sale of these shares and used the after-tax proceeds to pay $627 million
of tax that became payable when the Refinitiv sale closed. In 2021, the
company paid $850 million of taxes related to these transactions.
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
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and for the latest world news, reuters.com
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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, which include
ratios that incorporate one or more non-IFRS financial measures, such as
adjusted EBITDA and the related margin (other than at the customer segment
level), free cash flow, adjusted EPS, accrued capital expenditures expressed
as a percentage of revenues, selected measures excluding the impact of foreign
currency, changes in revenues computed on an organic basis as well as all
financial measures for the "Big 3". Thomson Reuters uses these non-IFRS
financial measures as supplemental indicators of its operating performance and
financial position as well as for internal planning purposes and the company's
business outlook. Additionally, Thomson Reuters uses non-IFRS measures as the
basis for management incentive programs. 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 directly comparable IFRS
measures because it cannot predict, with reasonable certainty, the 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) its 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 and the "Thomson Reuters Change Program
and Outlook" section, 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 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.
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, those
discussed on pages 16-30 in the "Risk Factors" section of the company's 2020
annual report. A "Risk Factors" section will also be included in the company's
2021 annual report, which the company plans to file in March. 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 (SEC). Thomson Reuters annual
and quarterly reports are also available in the "Investor Relations" section
of tr.com
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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, 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. For a discussion of
material assumptions and material risks related to the company's 2022 and 2023
updated outlook, please see pages 22-23 of the company's third-quarter
management's discussion and analysis (MD&A) for the period ended September 30,
2021. In addition to those material assumptions and material risks, material
assumptions related to the company's updated 2022 and 2023 outlook include the
following updates: (i) the company's revenue outlook now assumes that there
will be improved global economic conditions throughout 2022 and 2023, despite
periods of volatility due to disruption caused by COVID-19, measures intended
to mitigate the pandemic's impact, and other events and macroeconomic factors;
(ii) the company's adjusted EBITDA margin outlook assumes Change Program
operating expenditures between $160 million and $200 million in 2022; (iii)
the company's free cash flow outlook now assumes accrued capital expenditures
between 7.5% and 8% of revenues in 2022 and between 6% and 6.5% of revenues in
2023; and (iv) the company's effective tax rate on adjusted earnings outlook
now assumes (a) the mix of taxing jurisdictions where the company recognized
pre-tax profit or losses in 2021 does not significantly change; (b) there will
be minimal changes in tax laws and treaties within the jurisdictions where the
company operates; (c) the imposition of minimum taxes in various
jurisdictions; (d) no significant benefits from the finalization of prior tax
years; (e) depreciation and amortization of computer software between $620
million and $645 million in 2022; and (f) interest expense between $190
million and $210 million in 2022. Material assumptions and material risks
related to the company's outlook will also be included in the company's 2021
annual report, which the company plans to file in March. The company's
quarterly MD&A and annual report are filed with, or furnished to, the Canadian
securities regulatory authorities and the U.S. SEC and are also available in
the "Investor Relations" section of tr.com
(https://c212.net/c/link/?t=0&l=en&o=3436318-1&h=3742491766&u=http%3A%2F%2Fwww.tr.com%2F&a=%C2%A0tr.com).
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.
CONTACTS
MEDIA Melissa Cassar Head of Commercial Communications & Corporate Affairs +1 437 388 3619 melissa.cassar@tr.com INVESTORS Frank J. Golden Head of Investor Relations +1 332 219 1111 frank.golden@tr.com
Thomson Reuters will webcast a discussion of its fourth-quarter and full-year
2021 results and its two-year business outlook today beginning at 9:00 a.m.
Eastern Standard Time (EST). You can access the webcast by visiting ir.tr.com
(https://c212.net/c/link/?t=0&l=en&o=3436318-1&h=997531299&u=https%3A%2F%2Fir.thomsonreuters.com%2F&a=ir.tr.com).
An archive of the webcast will be available following the presentation.
Thomson Reuters Corporation Consolidated Income Statement (millions of U.S. dollars, except per share data) (unaudited)
Three Months Ended Year Ended
December 31, December 31,
2021 2020 2021 2020
CONTINUING OPERATIONS
Revenues $1,710 $1,616 $6,348 $5,984
Operating expenses (1,256) (1,098) (4,370) (3,999)
Depreciation (49) (40) (177) (184)
Amortization of computer software (118) (123) (474) (485)
Amortization of other identifiable intangible assets (29) (31) (119) (123)
Other operating (losses) gains, net (1) 632 34 736
Operating profit 257 956 1,242 1,929
Finance costs, net:
Net interest expense (50) (49) (196) (195)
Other finance (costs) income (22) (6) 8 30
Income before tax and equity method investments 185 901 1,054 1,764
Share of post-tax (losses) earnings in equity method investments (477) (159) 6,240 (544)
Tax benefit (expense) 115 (155) (1,607) (71)
(Loss) earnings from continuing operations (177) 587 5,687 1,149
Earnings (loss) from discontinued operations, net of tax 2 (25) 2 (27)
Net (loss) earnings $(175) $562 $5,689 $1,122
(Loss) earnings attributable to common shareholders $(175) $562 $5,689 $1,122
Earnings (loss) per share:
Basic (loss) earnings per share:
From continuing operations $(0.36) $1.18 $11.52 $2.31
From discontinued operations - (0.05) 0.01 (0.06)
Basic (loss) earnings per share $(0.36) $1.13 $11.53 $2.25
Diluted (loss) earnings per share:
From continuing operations $(0.36) $1.18 $11.50 $2.30
From discontinued operations - (0.05) - (0.05)
Diluted (loss) earnings per share $(0.36) $1.13 $11.50 $2.25
Basic weighted-average common shares 487,297,738 497,372,688 493,444,031 496,722,292
Diluted weighted-average common shares 487,297,738 498,809,560 494,504,504 498,032,006
Thomson Reuters Corporation Consolidated Statement of Financial Position (millions of U.S. dollars) (unaudited)
December 31, December 31,
2021 2020
Assets
Cash and cash equivalents $778 $1,787
Trade and other receivables 1,057 1,151
Other financial assets 108 612
Prepaid expenses and other current assets 510 425
Current assets 2,453 3,975
Property and equipment, net 502 545
Computer software, net 822 830
Other identifiable intangible assets, net 3,331 3,427
Goodwill 5,940 5,976
Equity method investments 6,736 1,136
Other non-current assets 1,226 788
Deferred tax 1,139 1,204
Total assets $22,149 $17,881
Liabilities and equity
Liabilities
Payables, accruals and provisions $1,363 $1,159
Current tax liabilities 169 251
Deferred revenue 874 866
Other financial liabilities 175 376
Current liabilities 2,581 2,652
Long-term indebtedness 3,786 3,772
Provisions and other non-current liabilities 943 1,083
Deferred tax 1,005 394
Total liabilities 8,315 7,901
Equity
Capital 5,496 5,458
Retained earnings 9,149 5,211
Accumulated other comprehensive loss (811) (689)
Total equity 13,834 9,980
Total liabilities and equity $22,149 $17,881
Thomson Reuters Corporation Consolidated Statement of Cash Flow (millions of U.S. dollars) (unaudited)
Three Months Ended December 31, Year Ended December 31,
2021 2020 2021 2020
Cash provided by (used in):
Operating activities
(Loss) earnings from continuing operations $(177) $587 $5,687 $1,149
Adjustments for:
Depreciation 49 40 177 184
Amortization of computer software 118 123 474 485
Amortization of other identifiable intangible assets 29 31 119 123
Share of post-tax losses (earnings) in equity method investments 477 159 (6,240) 544
Net gains on disposals of businesses and investments - (472) (5) (471)
Deferred tax (108) (41) 662 (231)
Other 74 (106) 135 (123)
Changes in working capital and other items (69) 249 832 102
Operating cash flows from continuing operations 393 570 1,841 1,762
Operating cash flows from discontinued operations 4 (4) (68) (17)
Net cash provided by operating activities 397 566 1,773 1,745
Investing activities
Acquisitions, net of cash acquired (13) (2) (18) (167)
Proceeds from disposals of businesses and investments, net of taxes paid - 366 28 367
Dividend from sale of LSEG shares - - 994 -
Capital expenditures (123) (100) (487) (504)
Proceeds from disposals of property and equipment - - - 162
Other investing activities 25 2 81 4
Taxes paid on sale of Refinitiv and LSEG shares (188) - (850) -
Investing cash flows from continuing operations (299) 266 (252) (138)
Investing cash flows from discontinued operations - - (252) -
Net cash (used in) provided by investing activities (299) 266 (504) (138)
Financing activities
Proceeds from debt - - - 2,019
Repayments of debt - - - (1,645)
Net repayments under short-term loan facilities - - - (2)
Payments of lease principal (44) (19) (109) (75)
Repurchases of common shares (597) - (1,400) (200)
Dividends paid on preference shares - - (2) (2)
Dividends paid on common shares (191) (183) (773) (730)
Other financing activities 3 1 11 (9)
Net cash used in financing activities (829) (201) (2,273) (644)
(Decrease) increase in cash and bank overdrafts (731) 631 (1,004) 963
Translation adjustments (2) 4 (5) (1)
Cash and bank overdrafts at beginning of period 1,511 1,152 1,787 825
Cash and bank overdrafts at end of period $778 $1,787 $778 $1,787
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents $778 $1,787 $778 $1,787
Thomson Reuters Corporation
Reconciliation of (Loss) Earnings from Continuing Operations to Adjusted EBITDA ((1))
(millions of U.S. dollars, except for margins)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2021 2020 2021 2020
(Loss) earnings from continuing operations $(177) $587 $5,687 $1,149
Adjustments to remove:
Tax (benefit) expense (115) 155 1,607 71
Other finance costs (income) 22 6 (8) (30)
Net interest expense 50 49 196 195
Amortization of other identifiable intangible assets 29 31 119 123
Amortization of computer software 118 123 474 485
Depreciation 49 40 177 184
EBITDA $(24) $991 $8,252 $2,177
Adjustments to remove:
Share of post-tax losses (earnings) in equity method investments 477 159 (6,240) 544
Other operating losses (gains), net 1 (632) (34) (736)
Fair value adjustments (*) (2) 7 (8) (10)
Adjusted EBITDA ((1)) $452 $525 $1,970 $1,975
Adjusted EBITDA margin ((1)) 26.4% 32.5% 31.0% 33.0%
* Fair value adjustments, a component of operating expenses, primarily represent gains or losses due to changes in foreign currency exchange rates on intercompany balances that arise in the ordinary course of business.
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow ((1))
(millions of U.S. dollars)
(unaudited)
Three Months Ended Year Ended
December 31, Dec
emb
er
31,
2021 2020 2021 2020
Net cash provided by operating activities $397 $566 $1,773 $1,745
Capital expenditures (123) (100) (487) (504)
Proceeds from disposals of property and equipment - - - 162
Other investing activities 25 2 81 4
Payments of lease principal (44) (19) (109) (75)
Dividends paid on preference shares - - (2) (2)
Free cash flow ((1)) $255 $449 $1,256 $1,330
Thomson Reuters Corporation
Reconciliation of Capital Expenditures to Accrued Capital Expenditures ((1))
(millions of U.S. dollars)
(unaudited)
Year Ended
December 31,
2021 2020
Capital expenditures $487 $504
Remove: IFRS adjustment to cash basis 54 (37)
Accrued capital expenditures ((1)) $541 $467
Accrued capital expenditures as a percentage of revenues ((1)) 8.5% 7.8%
(1) Refer to page 21 for additional information on non-IFRS financial measures.
Thomson Reuters Corporation
Reconciliation of Net (Loss) Earnings to Adjusted Earnings ((1))
Reconciliation of Total Change in Adjusted EPS ((1))to Change in Constant Currency ((1))
(millions of U.S. dollars, except for share and per share data)
(unaudited)
Three Months Ended December 31, Year Ended December 31,
2021 2020 Change 2021 2020 Change
Net (loss) earnings $(175) $562 $5,689 $1,122
Adjustments to remove:
Fair value adjustments* (2) 7 (8) (10)
Amortization of other identifiable intangible assets 29 31 119 123
Other operating losses (gains), net 1 (632) (34) (736)
Other finance costs (income) 22 6 (8) (30)
Share of post-tax losses (earnings) in equity method investments 477 159 (6,240) 544
Tax on above items ((1)) (141) 119 1,475 19
Tax items impacting comparability ((1)) (9) (29) (24) (136)
(Earnings) loss from discontinued operations, net of tax (2) 25 (2) 27
Interim period effective tax rate normalization ((1)) 10 21 - -
Dividends declared on preference shares - - (2) (2)
Adjusted earnings ((1)) $210 $269 $965 $921
Adjusted EPS ((1)) $0.43 $0.54 -20% $1.95 $1.85 5%
Foreign currency 0% 1%
Constant currency -20% 5%
Diluted weighted-average common shares (millions) (**) 488.6 498.8 494.5 498.0
* Fair value adjustments, a component of operating expenses, primarily represent gains or losses due to changes in foreign currency exchange rates on intercompany balances that arise in the ordinary course of business.
** Because Thomson Reuters reported a net loss for continuing operations under IFRS for the three months ended December 31, 2021, the weighted-average number of common shares used for basic and diluted loss per share is the same for all per-share calculations in the period, as the effect of stock options and other equity incentive awards would reduce the loss per share, and therefore be anti-dilutive. Since the company's non-IFRS measure "adjusted earnings" is a profit, potential common shares are included,
as they lower adjusted EPS and are therefore dilutive. The following table reconciles IFRS and non-IFRS common share information:
(weighted-average common shares) Three Months Ended December 31, 2021
IFRS: Basic and Diluted 487,297,738
Effect of stock options and other equity incentive awards 1,291,196
Non-IFRS Diluted 488,588,934
(1) Refer to page 21 for additional information on non-IFRS financial measures.
Thomson Reuters Corporation
Reconciliation of Changes in Revenues to Changes in Revenues on a Constant Currency ((1))and Organic Basis ((1))
(millions of U.S. dollars)
(unaudited)
Three Months Ended
December 31, Change
2021 2020 Total Foreign SUBTOTAL Constant Acquisitions/ Organic
Currency Currency (Divestitures)
Total Revenues
Legal Professionals $689 $653 5% 0% 5% 0% 6%
Corporates 361 338 7% 0% 7% 0% 7%
Tax & Accounting Professionals 309 285 9% -1% 9% 0% 9%
"Big 3" Segments Combined ((1)) 1,359 1,276 6% 0% 7% 0% 7%
Reuters News 182 164 11% -1% 12% 0% 12%
Global Print 170 177 -4% 0% -4% 0% -4%
Eliminations/Rounding (1) (1)
Revenues $1,710 $1,616 6% 0% 6% 0% 6%
Recurring Revenues
Legal Professionals $642 $608 6% 0% 5% 0% 6%
Corporates 314 293 7% 0% 7% 0% 7%
Tax & Accounting Professionals 276 255 9% 0% 9% 0% 9%
"Big 3" Segments Combined ((1)) 1,232 1,156 7% 0% 7% 0% 7%
Reuters News 145 142 2% -1% 3% 0% 3%
Total Recurring Revenues $1,377 $1,298 6% 0% 6% 0% 6%
Transactions Revenues
Legal Professionals $47 $45 4% 0% 4% -2% 6%
Corporates 47 45 4% 0% 4% 0% 4%
Tax & Accounting Professionals 33 30 9% -1% 10% 0% 10%
"Big 3" Segments Combined ((1)) 127 120 5% 0% 6% -1% 6%
Reuters News 37 22 66% 2% 64% 0% 64%
Total Transactions Revenues $164 $142 15% 0% 15% -1% 16%
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.
(1) Refer to page 21 for additional information on non-IFRS financial measures.
Thomson Reuters Corporation
Reconciliation of Changes in Revenues to Changes in Revenues on a Constant Currency ((1))and Organic Basis ((1))
(millions of U.S. dollars)
(unaudited)
Year Ended
December 31, Change
2021 2020 Total Foreign SUBTOTAL Constant Acquisitions/ Organic
Currency Currency (Divestitures)
Total Revenues
Legal Professionals $2,712 $2,535 7% 1% 6% 0% 6%
Corporates 1,449 1,367 6% 1% 5% 0% 5%
Tax & Accounting Professionals 906 836 8% 0% 9% 0% 9%
"Big 3" Segments Combined ((1)) 5,067 4,738 7% 1% 6% 0% 6%
Reuters News 674 628 7% 1% 7% 0% 7%
Global Print 609 620 -2% 1% -3% 0% -3%
Eliminations/Rounding (2) (2)
Revenues $6,348 $5,984 6% 1% 5% 0% 5%
Recurring Revenues
Legal Professionals $2,523 $2,367 7% 1% 6% 0% 5%
Corporates 1,218 1,143 7% 1% 6% 0% 6%
Tax & Accounting Professionals 733 682 8% 0% 8% 0% 8%
"Big 3" Segments Combined ((1)) 4,474 4,192 7% 1% 6% 0% 6%
Reuters News 576 566 2% 1% 1% 0% 1%
Total Recurring Revenues $5,050 $4,758 6% 1% 5% 0% 5%
Transactions Revenues
Legal Professionals $189 $168 13% 2% 11% -1% 12%
Corporates 231 224 3% 0% 3% 0% 3%
Tax & Accounting Professionals 173 154 12% 0% 12% 0% 12%
"Big 3" Segments Combined ((1)) 593 546 9% 1% 8% 0% 8%
Reuters News 98 62 57% 2% 55% 0% 55%
Total Transactions Revenues $691 $608 14% 1% 13% 0% 13%
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.
(1) Refer to page 21 for additional information on non-IFRS financial measures.
Thomson Reuters Corporation
Reconciliation of Changes in Adjusted EBITDA ((1))to Changes on a Constant Currency Basis ((1))
(millions of U.S. dollars)
(unaudited)
Three Months Ended
December 31, Change
2021 2020 Total Foreign Currency Constant Currency
Adjusted EBITDA ((1))
Legal Professionals $239 $245 -3% 0% -2%
Corporates 95 105 -10% 0% -10%
Tax & Accounting Professionals 154 145 6% -1% 7%
"Big 3" Segments Combined ((1)) 488 495 -2% 0% -1%
Reuters News 15 6 139% 32% 107%
Global Print 61 61 0% 1% -1%
Corporate costs (112) (37) n/a n/a n/a
Adjusted EBITDA $452 $525 -14% 0% -14%
Adjusted EBITDA Margin ((1))
Legal Professionals 34.5% 37.5% -300bp -30bp -270bp
Corporates 26.3% 31.1% -480bp 0bp -480bp
Tax & Accounting Professionals 49.8% 51.1% -130bp -10bp -120bp
"Big 3" Segments Combined ((1)) 35.8% 38.8% -300bp -20bp -280bp
Reuters News 8.3% 3.9% 440bp -10bp 450bp
Global Print 35.9% 34.6% 130bp 20bp 110bp
Corporate costs n/a n/a n/a n/a n/a
Adjusted EBITDA margin 26.4% 32.5% -610bp 0bp -610bp
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.
(1) Refer to page 21 for additional information on non-IFRS financial measures.
Thomson Reuters Corporation
Reconciliation of Changes in Adjusted EBITDA ((1))to Changes on a Constant Currency Basis ((1))
(millions of U.S. dollars)
(unaudited)
Year Ended
December 31, Change
2021 2020 Total Foreign Currency Constant Currency
Adjusted EBITDA ((1))
Legal Professionals $1,091 $1,001 9% 2% 7%
Corporates 502 460 9% 0% 9%
Tax & Accounting Professionals 373 330 13% 0% 13%
"Big 3" Segments Combined ((1)) 1,966 1,791 10% 1% 9%
Reuters News 103 73 40% -11% 51%
Global Print 226 242 -7% 2% -8%
Corporate costs (325) (131) n/a n/a n/a
Adjusted EBITDA $1,970 $1,975 0% 0% -1%
Adjusted EBITDA Margin ((1))
Legal Professionals 40.2% 39.5% 70bp 20bp 50bp
Corporates 34.6% 33.7% 90bp -10bp 100bp
Tax & Accounting Professionals 41.1% 39.5% 160bp -10bp 170bp
"Big 3" Segments Combined ((1)) 38.8% 37.8% 100bp 10bp 90bp
Reuters News 15.2% 11.7% 350bp -150bp 500bp
Global Print 37.1% 39.0% -190bp 20bp -210bp
Corporate costs n/a n/a n/a n/a n/a
Adjusted EBITDA margin 31.0% 33.0% -200bp -10bp -190bp
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.
(1) Refer to page 21 for additional information on non-IFRS financial measures.
Non-IFRS Financial Measures Definition Why Useful to the Company and Investors
Segment adjusted EBITDA, adjusted EBITDA and adjusted EBITDA margin Earnings or losses from continuing operations before tax expense or benefit, net interest expense, other finance costs or income, depreciation, amortization of software 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. Also, represents a measure commonly reported and widely used by investors as a valuation metric, as well as to assess a company's ability to incur and service debt.
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 of the business segments and
corporate costs. Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of revenues.
Adjusted earnings and adjusted earnings per share Net earnings or loss including dividends declared on preference shares but excluding the post-tax impacts of fair value adjustments, amortization of other identifiable Provides a more comparable basis to analyze earnings. These measures are commonly used by shareholders to measure the company's performance.
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. The post-tax amount of each item is 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.
Effective tax rate on adjusted earnings Adjusted tax expense divided by pre-tax adjusted earnings. Adjusted tax expense is computed as Income tax (benefit) expense plus or minus the income tax impacts of all Provides a basis to analyze the effective tax rate associated with adjusted earnings. Because the geographical mix of pre-tax profits and losses in interim periods may be different from that for the full year, our effective tax rate computed in accordance with IFRS may be more volatile by quarter. Therefore, we believe that using the expected full-year effective tax rate provides more comparability among interim periods.
items impacting adjusted earnings (as described above), and other tax items affecting comparability. In interim periods, we also make an adjustment to reflect income
taxes based on the 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.
Free cash flow Net cash provided by operating activities, proceeds from disposals of property and equipment, and other investing activities less capital expenditures, payments of lease 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 acquisitions.
principal and dividends paid on the company's preference shares.
Changes before the impact of foreign currency "constant currency" 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 Provides better comparability of business trends from period to period.
currency) are determined by converting the current and prior-year period's local currency equivalent using the same exchange rates.
Organic revenue growth Represents changes in revenues of the company's existing businesses at constant currency. The metric excludes the distortive impacts of acquisitions and dispositions from 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.
not owning the business in both comparable periods.
Accrued capital expenditures as a percentage of revenues Accrued capital expenditures divided by revenues, where accrued capital expenditures include amounts that remain unpaid at the end of the reporting period. Prior to Reflects the basis on which the company manages capital expenditures for internal budgeting purposes.
December 31, 2021, the company used capital expenditures paid in this calculation, from its consolidated statement of cash flow, as measured under IFRS. The prior period
has been revised to reflect the current methodology.
"Big 3" segments The combined Legal Professionals, Corporates and Tax & Accounting Professionals segments. All measures reported for the "Big 3" segments are non-IFRS financial measures. Information for the "Big 3" segments comprise 80% of revenues and represent the core of the company's business information service product offerings.
Please refer to reconciliations for most directly comparable IFRS measures.
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