REG-Thomson Reuters: QRT 3rd Quarter Results
02/11/2021 10:35
Thomson Reuters Reports Third-Quarter 2021 Results
TORONTO, Nov. 2, 2021 /PRNewswire/ -- Thomson Reuters (TSX/NYSE: TRI) today
reported results for the third quarter ended September 30, 2021:
* Total company revenue up 6% / organic revenue up 5% * Revenue for four of
five business segments grew 6% organically
* Raised full-year 2021 revenue guidance * Total company revenue forecast
increased to 4.5% - 5.0% from 4.0% - 4.5%
* "Big 3" segments revenue forecast increased to approximately 6.0% from 5.5%
- 6.0%
* Raised full-year 2021 free cash flow guidance to approximately $1.2 billion
from $1.1 - $1.2 billion
* Reaffirmed full-year 2022 and 2023 guidance, with minor adjustments to 2022
Change Program spend
* Change Program on track - achieved $132 million run-rate operating expense
savings through September 30
* Repurchased $1.1 billion of company shares under $1.2 billion buyback
program through October 31
"The momentum we saw in the first half of the year continued into the third
quarter with revenue and sales performance above our expectations and
consistent across the business. This strong performance reflects how our
products fit the needs of our customers, enabling them to better serve their
own clients in a rapidly changing workplace. It also demonstrates our leading
positions in healthy and growing markets. Based on our strong financial
performance and our confidence in the trajectory of the business for the
remainder of the year, we have again increased our full-year 2021 revenue
guidance," said Steve Hasker, president and CEO of Thomson Reuters.
Mr. Hasker added, "While the third quarter was another strong one, we still
have a lot to achieve. We are focused on building a leading content-driven
technology company, and our talented teams continue to work ambitiously
towards that goal. I am very pleased with our achievements to date and believe
we are well positioned to build on this progress in 2022."
Consolidated Financial Highlights - Three Months Ended September 30
Three Months Ended September 30, (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 $1,526 $1,443 6%
Operating profit $282 $318 -11%
Diluted (loss) earnings per share (EPS) $(0.49) $0.48 n/m
Net cash provided by operating activities $534 $581 -9%
Non-IFRS Financial Measures ((1))
Revenues $1,526 $1,443 6% 5%
Adjusted EBITDA $458 $491 -7% -7%
Adjusted EBITDA margin 30.0% 34.0% -400bp -410bp
Adjusted EPS $0.46 $0.39 18% 15%
Free cash flow $383 $541 -30%
(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 6%, driven by growth across four of the company's five
business segments and a 1% favorable impact from foreign currency.
* Organic revenues increased 5%, driven by 6% growth in recurring revenues
(81% of total revenues), as well as 8% growth in transactions revenues. Global
Print revenues declined.
* The company's "Big 3" segments (Legal Professionals, Corporates and Tax &
Accounting Professionals), which collectively comprised 79% of total revenues,
reported organic revenue growth of 6%.
Operating profit decreased 11% as the prior-year period included a significant
benefit from the revaluation of warrants that the company previously held in
Refinitiv, which was sold to London Stock Exchange Group (LSEG) in January
2021. Higher revenues and lower depreciation and amortization more than offset
higher costs which included costs associated with the company's Change
Program. Additional information regarding the Change Program is provided later
in this news release.
* Adjusted EBITDA, which excludes the impact of the warrant revaluation among
other items, declined 7% as higher revenues were more than offset by higher
costs, which included costs associated with the company's Change Program. The
related margin decreased to 30.0% from 34.0% primarily because costs from the
Change Program negatively impacted the margin by 350bp.
Diluted loss per share of $0.49 was due to a decrease in value of the
company's LSEG investment as compared to diluted earnings per share of $0.48
in the prior-year period.
* Adjusted EPS, which excludes the change in value of the company's LSEG
investment, as well as other adjustments, increased to $0.46 per share from
$0.39 per share in the prior-year period as lower depreciation and
amortization and lower income taxes offset lower adjusted EBITDA.
Net cash provided by operating activities decreased as higher revenues were
more than offset by higher expenses, which included Change Program costs, and
higher tax payments.
* Free cash flow decreased due to lower cash flow from operating activities
and because the prior-year period included proceeds from the sale of real
estate.
Highlights by Customer Segment - Three Months Ended September 30
(Millions of U.S. dollars, except for adjusted EBITDA margins) (unaudited)
Three Months Ended
September 30, Change
2021 2020 Total Constant Organic ((1))
Currency
Revenues
Legal Professionals $682 $636 7% 6% 6%
Corporates 356 333 7% 6% 6%
Tax & Accounting Professionals 175 165 6% 6% 6%
"Big 3" Segments Combined 1,213 1,134 7% 6% 6%
Reuters News 164 154 6% 6% 6%
Global Print 149 154 -3% -5% -5%
Eliminations/Rounding - 1
Revenues $1,526 $1,443 6% 5% 5%
Adjusted EBITDA
Legal Professionals $288 $272 6% 4%
Corporates 131 120 9% 9%
Tax & Accounting Professionals 49 47 4% 6%
"Big 3" Segments Combined 468 439 7% 6%
Reuters News 25 23 4% 8%
Global Print 52 64 -18% -19%
Corporate costs (87) (35) n/a n/a
Adjusted EBITDA $458 $491 -7% -7%
Adjusted EBITDA Margin
Legal Professionals 42.3% 42.8% -50bp -80bp
Corporates 36.8% 36.0% 80bp 80bp
Tax & Accounting Professionals 28.0% 28.5% -50bp -20bp
"Big 3" Segments Combined 38.6% 38.7% -10bp -20bp
Reuters News 14.9% 15.2% -30bp 20bp
Global Print 35.0% 41.1% -610bp -630bp
Corporate costs n/a n/a n/a n/a
Adjusted EBITDA margin 30.0% 34.0% -400bp -410bp
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 6% (all organic) to $682 million.
* Recurring revenues grew 6% (93% of total, all organic), primarily due to
strong performances from Practical Law, Westlaw Edge, FindLaw and the
Government business as well as contributions from the company's Canadian,
European and Asian & Emerging Markets businesses.
* Transactions revenues grew 10% (7% of total, all organic), primarily related
to Elite, FindLaw and the Government businesses.
Adjusted EBITDA increased 6% to $288 million.
* The margin decreased to 42.3% from 42.8%, primarily due to year-over-year
timing of expenses such as marketing and selling costs.
Corporates
Revenues increased 6% (all organic) to $356 million, primarily due to strong
recurring revenue growth, including strong performance from Practical Law,
Indirect Tax and CLEAR as well as contributions from the company's Latin
American and Asian businesses.
* Recurring revenues grew 7% (87% of total, all organic) driven by Practical
Law, Indirect Tax and CLEAR as well as the company's businesses in Latin
America and Asia & Emerging Markets.
* Transactions revenues grew 2% (13% of total, all organic).
Adjusted EBITDA increased 9% to $131 million.
* The margin increased to 36.8% from 36.0%, primarily due to higher revenues.
Tax & Accounting Professionals
Revenues increased 6% (all organic) to $175 million, reflecting recurring
revenue growth of 10% and a 9% decline in transactions revenues.
* Recurring revenues grew 10% (84% of total, all organic), driven by strong
growth from the company's Latin American businesses and audit solutions, which
includes Confirmation.
* Transactions revenues decreased 9% (16% of total, all organic), primarily
due to the year-over-year timing of the U.S. federal tax filing deadlines for
individuals moving from the third quarter of 2020 to the second quarter of
2021. * Normalizing for the shift in the U.S. federal tax filing deadline,
organic revenues increased 11%.
Adjusted EBITDA increased 4% to $49 million.
* The margin decreased to 28.0% from 28.5%, primarily due to the
year-over-year timing of revenue related to the U.S. federal tax filing
deadline.
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 $164 million increased 6%, all organic, primarily due to the
Agency business and Professional business, including Reuters Events, which
grew over 60% organically compared to the prior-year period, which was
negatively impacted by COVID-19.
* Reuters Events continues to hold nearly all events virtually and continues
to assess when a return to regular in-person events can resume based on local
health guidelines and feedback from customers.
Adjusted EBITDA increased 4% to $25 million, primarily due to higher revenues.
Global Print
Revenues decreased 5% to $149 million, as expected. Global Print's full-year
2021 revenues are forecast to decline between 4% and 6%.
Adjusted EBITDA decreased 18% to $52 million.
* The margin decreased to 35.0% from 41.1% due to decreased revenues and the
dilutive impact of lower margin third-party print revenue.
Corporate Costs
Corporate costs at the adjusted EBITDA level were $87 million and included
$53 million of Change Program costs. Corporate costs were $35 million in the
prior-year period. Additional information regarding the Change Program is
provided below.
Consolidated Financial Highlights - Nine Months Ended September 30
Nine Months Ended September 30, (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 $4,638 $4,368 6%
Operating profit $985 $973 1%
Diluted earnings per share (EPS) $11.80 $1.12 n/m
Net cash provided by operating activities $1,376 $1,179 17%
Non-IFRS Financial Measures ((1))
Revenues $4,638 $4,368 6% 5%
Adjusted EBITDA $1,518 $1,450 5% 4%
Adjusted EBITDA margin 32.7% 33.2% -50bp -30bp
Adjusted EPS $1.52 $1.31 16% 15%
Free cash flow $1,001 $881 13%
(1) In addition to results reported in accordance with IFRS, the company uses certain non-IFRS financial measures as supplemental
indicators of its operating performance and financial position. These and other non-IFRS financial measures are defined and reconciled
to the most directly comparable IFRS measures in the tables appended to this news release.
n/m: not meaningful
Revenues increased 6% related to 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 growth in transactions revenues.
Global Print revenues declined.
* The company's "Big 3" segments, which collectively comprised 80% of total
revenues, reported organic revenue growth of 6%.
Operating profit increased 1% as higher revenues helped to offset higher
costs, which included costs associated with the company's Change Program, as
well as a benefit associated with the revaluation of the Refinitiv warrants in
the prior-year period.
* Adjusted EBITDA which excludes the impact of the warrant revaluation among
other items, increased 5% as higher revenues more than offset higher costs.
The related margin decreased to 32.7% from 33.2% in the prior-year period.
Adjusted EBITDA margin was negatively impacted by 230bp due to Change Program
costs.
Diluted EPS increased to $11.80 per share from $1.12 per share in the
prior-year period 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, as well as
other adjustments, increased to $1.52 per share from $1.31 per share in the
prior-year period, primarily due to higher adjusted EBITDA and lower income
tax expense.
Net cash provided by operating activities increased as higher revenues and
favorable movements in working capital (including lower annual incentive bonus
payments, which were due to the impact of COVID-19 in 2020) more than offset
higher tax payments and expenses, which included Change Program costs.
* Free cash flow increased as higher cash flows from operating activities
more than offset a prior-year period benefit from the proceeds associated with
the sale of real estate.
Highlights by Customer Segment - Nine Months Ended September 30
(Millions of U.S. dollars, except for adjusted EBITDA margins) (unaudited)
Nine Months Ended
September 30, Change
2021 2020 Total Constant Organic ((1))
Currency
Revenues
Legal Professionals $2,023 $1,882 7% 6% 6%
Corporates 1,088 1,029 6% 5% 5%
Tax & Accounting Professionals 597 551 8% 8% 8%
"Big 3" Segments Combined 3,708 3,462 7% 6% 6%
Reuters News 492 464 6% 5% 5%
Global Print 439 443 -1% -3% -3%
Eliminations/Rounding (1) (1)
Revenues $4,638 $4,368 6% 5% 5%
Adjusted EBITDA
Legal Professionals $852 $756 13% 11%
Corporates 407 355 15% 14%
Tax & Accounting Professionals 219 185 18% 18%
"Big 3" Segments Combined 1,478 1,296 14% 13%
Reuters News 88 67 30% 44%
Global Print 165 181 -9% -11%
Corporate costs (213) (94) n/a n/a
Adjusted EBITDA $1,518 $1,450 5% 4%
Adjusted EBITDA Margin
Legal Professionals 42.1% 40.2% 190bp 180bp
Corporates 37.4% 34.5% 290bp 310bp
Tax & Accounting Professionals 36.6% 33.6% 300bp 310bp
"Big 3" Segments Combined 39.9% 37.4% 250bp 230bp
Reuters News 17.8% 14.5% 330bp 540bp
Global Print 37.5% 40.7% -320bp -340bp
Corporate costs n/a n/a n/a n/a
Adjusted EBITDA margin 32.7% 33.2% -50bp -30bp
n/a: not applicable (1) Computed for revenue growth only.
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. The company's 2021, 2022 and 2023 outlook is appended to this release.
The company's three-year outlook 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 third-quarter 2021 performance provides it with increasing
confidence about its outlook, the global economy continues to experience
substantial disruption due to concerns regarding resurgences and new strains
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 reaffirmed and increased part of its full-year outlook for
2021, which is reflected in the table below. The company also reaffirmed its
full-year outlook for 2022 and 2023, except for a minor increase to 2022
Change Program spend, reflecting the carryover of the lower than expected
spend in 2021.
Update to Full-Year 2021 Outlook
Total Thomson Reuters Original FY 2021 Outlook (February 23, 2021) FY 2021 Outlook Update (May 4, 2021) FY 2021 Outlook Update (August 5, 2021) FY 2021 Outlook Update (November 2, 2021)
Total Revenue Growth 3.0% - 4.0% 3.5% - 4.0% 4.0% - 4.5% 4.5% - 5.0%
Organic Revenue Growth 3.0% - 4.0% 3.5% - 4.0% 4.0% - 4.5% 4.5% - 5.0%
Adjusted EBITDA Margin 30% - 31% Unchanged 31% - 32% Unchanged
Corporate Costs Core Corporate Costs Change Program Operating Expenses $305 - $340 million $130 - $140 million $175 - $200 million Unchanged Unchanged $305 - $330 million Unchanged $175 - $190 million
Free Cash Flow $1.0 - $1.1 billion Unchanged $1.1 - $1.2 billion ~ $1.2 billion
Capital Expenditures - % of Revenue Change Program Capital Expenditures 9.0% - 9.5% $125 - $150 million Unchanged Unchanged Unchanged $115 - $130 million
Depreciation & Amortization of Computer Software $650 - $675 million Unchanged Unchanged Unchanged
Interest Expense (P&L) $190 - $210 million Unchanged Unchanged Unchanged
Effective Tax Rate on Adjusted Earnings 16% - 18% Unchanged Unchanged 14% - 16%
Big 3 Segments (Legal Professionals, Corporates and Tax & Accounting Professionals) Original FY 2021 Outlook (February 23, 2021) FY 2021 Outlook Update (May 4, 2021) FY 2021 Outlook Update (August 5, 2021) FY 2021 Outlook Update (November 2, 2021)
Total Revenue Growth 4.5% - 5.5% 5.0% - 5.5% 5.5% - 6.0% ~ 6.0%
Organic Revenue Growth 4.5% - 5.5% 5.0% - 5.5% 5.5% - 6.0% ~ 6.0%
Adjusted EBITDA Margin 38% - 39% Unchanged ~ 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."
Share Repurchases - Update on $1.2B Buyback Program
In August 2021, Thomson Reuters announced that it plans to buy back up to $1.2
billion of its common shares. The new buyback program is in addition to a $200
million repurchase program that was completed earlier this year.
From August 2021 through October 31, 2021, the company repurchased
approximately $1.1 billion of its common shares under the new buyback program.
As of October 31, 2021, Thomson Reuters had approximately 487.1 million common
shares outstanding.
Dividends
In February 2021, the company announced a $0.10 per share annualized increase
in the dividend to $1.62 per common share, representing the 28(th) consecutive
year of dividend increases. A quarterly dividend of $0.405 per share is
payable on December 15, 2021 to common shareholders of record as of November
18, 2021.
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 October 31, 2021, Thomson Reuters indirectly owned approximately 72.4
million LSEG shares which had a market value of approximately $7.1 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 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. In the nine-month period ended September 30, 2021, the
company paid $662 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, 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) 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, the "Thomson Reuters Change Program and
Outlook" section, and the company's expectations regarding 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, those
discussed on pages 16-30 in the "Risk Factors" section of the company's annual
report for the year ended December 31, 2020. 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
(https://c212.net/c/link/?t=0&l=en&o=3343043-1&h=2407621354&u=http%3A%2F%2Fwww.thomsonreuters.com%2F&a=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. For a discussion of material assumptions and
material risks related to the company's outlook, please see pages 22-23 of the
company's second-quarter management's discussion and analysis (MD&A) for the
period ended June 30, 2021. Material assumptions and material risks related to
the company's outlook will also be included in the company's third-quarter
MD&A for the period ended September 30, 2021, expected to be filed shortly.
The company's MD&A is filed with, or furnished to, the Canadian securities
regulatory authorities and the U.S. SEC and is also available in the "Investor
Relations" section of tr.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, including those
related to the COVID-19 pandemic.
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 third-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
(https://c212.net/c/link/?t=0&l=en&o=3343043-1&h=3748010811&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
2021 - 2023 Outlook
Total Thomson Reuters 2021 Outlook Updated 2022 Outlook Reaffirmed 2023 Outlook Reaffirmed
Total Revenue Growth 4.5% - 5.0% 4.0% - 5.0% 5.0% - 6.0%
Organic Revenue Growth 4.5% - 5.0% 4.0% - 5.0% 5.0% - 6.0%
Adjusted EBITDA Margin 31% - 32% 34% - 35% 38% – 40%
Corporate Costs Core Corporate Costs Change Program Operating Expenses $305 - $330 million $130 - $140 million $175 - $190 million $245 - $290 million $120 - $130 million $125 - $160 million $110 - $120 million $110 - $120 million $0
Free Cash Flow ~ $1.2 billion $1.2 - $1.3 billion $1.8 - $2.0 billion
Capital Expenditures - % of Revenue Change Program Capital Expenditures 9.0% - 9.5% $115 - $130 million 7.5% - 8.0% $85 - $120 million 6.0% - 6.5% $0
Depreciation & Amortization of Computer Software $650 - $675 million $620 - $645 million $580 - $605 million
Interest Expense (P&L) $190 - $210 million $190 - $210 million $190 - $210 million
Effective Tax Rate on Adjusted Earnings 14% - 16% n/a n/a
Big 3 Segments (Legal Professionals, Corporates and Tax & Accounting Professionals) 2021 Outlook Updated 2022 Outlook Reaffirmed 2023 Outlook Reaffirmed
Total Revenue Growth ~ 6.0% 5.5% - 6.5% 6.0% - 7.0%
Organic Revenue Growth ~ 6.0% 5.5% - 6.5% 6.0% - 7.0%
Adjusted EBITDA Margin ~ 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 Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
CONTINUING OPERATIONS
Revenues $1,526 $1,443 $4,638 $4,368
Operating expenses (1,060) (955) (3,114) (2,901)
Depreciation (40) (61) (128) (144)
Amortization of computer software (119) (133) (356) (362)
Amortization of other identifiable intangible assets (29) (32) (90) (92)
Other operating gains, net 4 56 35 104
Operating profit 282 318 985 973
Finance costs, net:
Net interest expense (46) (49) (146) (146)
Other finance income 34 2 30 36
Income before tax and equity method investments 270 271 869 863
Share of post-tax (losses) earnings in equity method investments (672) (178) 6,717 (385)
Tax benefit (expense) 161 147 (1,722) 84
(Loss) earnings from continuing operations (241) 240 5,864 562
Earnings (loss) from discontinued operations, net of tax 1 1 - (2)
Net (loss) earnings $(240) $241 $5,864 $560
(Loss) earnings attributable to common shareholders $(240) $241 $5,864 $560
Earnings (loss) per share:
Basic (loss) earnings per share:
From continuing operations $(0.49) $0.48 $11.83 $1.13
From discontinued operations - - - (0.01)
Basic (loss) earnings per share $(0.49) $0.48 $11.83 $1.12
Diluted (loss) earnings per share:
From continuing operations $(0.49) $0.48 $11.80 $1.12
From discontinued operations - - - -
Diluted (loss) earnings per share $(0.49) $0.48 $11.80 $1.12
Basic weighted-average common shares 494,624,854 497,090,942 495,515,310 496,544,202
Diluted weighted-average common shares 494,624,854 498,433,719 496,593,404 497,828,059
Thomson Reuters Corporation
Consolidated Statement of Financial Position
(millions of U.S. dollars)
(unaudited)
September 30, December 31,
2021 2020
Assets
Cash and cash equivalents $1,511 $1,787
Trade and other receivables 951 1,151
Other financial assets 83 612
Prepaid expenses and other current assets 463 425
Current assets 3,008 3,975
Property and equipment, net 473 545
Computer software, net 808 830
Other identifiable intangible assets, net 3,359 3,427
Goodwill 5,935 5,976
Equity method investments 7,225 1,136
Other non-current assets 1,148 788
Deferred tax 1,143 1,204
Total assets $23,099 $17,881
Liabilities and equity
Liabilities
Payables, accruals and provisions $1,226 $1,159
Current tax liabilities 398 251
Deferred revenue 838 866
Other financial liabilities 649 376
Current liabilities 3,111 2,652
Long-term indebtedness 3,782 3,772
Provisions and other non-current liabilities 971 1,083
Deferred tax 1,044 394
Total liabilities 8,908 7,901
Equity
Capital 5,463 5,458
Retained earnings 9,550 5,211
Accumulated other comprehensive loss (822) (689)
Total equity 14,191 9,980
Total liabilities and equity $23,099 $17,881
Thomson Reuters Corporation
Consolidated Statement of Cash Flow
(millions of U.S. dollars)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Cash provided by (used in):
Operating activities
(Loss) earnings from continuing operations $(241) $240 $5,864 $562
Adjustments for:
Depreciation 40 61 128 144
Amortization of computer software 119 133 356 362
Amortization of other identifiable intangible assets 29 32 90 92
Share of post-tax losses (earnings) in equity method investments 672 178 (6,717) 385
Deferred tax (153) (153) 770 (190)
Other (7) (10) 56 (16)
Changes in working capital and other items 101 103 901 (147)
Operating cash flows from continuing operations 560 584 1,448 1,192
Operating cash flows from discontinued operations (26) (3) (72) (13)
Net cash provided by operating activities 534 581 1,376 1,179
Investing activities
Acquisitions, net of cash acquired (2) (43) (5) (165)
Proceeds from disposals of businesses and investments 13 - 28 1
Dividend from sale of LSEG shares - - 994 -
Capital expenditures (131) (117) (364) (404)
Proceeds from disposals of property and equipment - 98 - 162
Other investing activities 3 - 56 2
Taxes paid on sale of Refinitiv and LSEG shares (218) - (662) -
Investing cash flows from continuing operations (335) (62) 47 (404)
Investing cash flows from discontinued operations (210) - (252) -
Net cash used in investing activities (545) (62) (205) (404)
Financing activities
Proceeds from debt - - - 2,019
Repayments of debt - - - (1,645)
Net borrowings under short-term loan facilities - (120) - (2)
Payments of lease principal (22) (20) (65) (56)
Repurchases of common shares (603) - (803) (200)
Dividends paid on preference shares (1) (1) (2) (2)
Dividends paid on common shares (194) (183) (582) (547)
Other financing activities 3 6 8 (10)
Net cash used in financing activities (817) (318) (1,444) (443)
(Decrease) increase in cash and bank overdrafts (828) 201 (273) 332
Translation adjustments (3) 5 (3) (5)
Cash and bank overdrafts at beginning of period 2,342 946 1,787 825
Cash and bank overdrafts at end of period $1,511 $1,152 $1,511 $1,152
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents $1,511 $1,152 $1,511 $1,152
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 Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
(Loss) earnings from continuing operations $(241) $240 $5,864 $562
Adjustments to remove:
Tax (benefit) expense (161) (147) 1,722 (84)
Other finance income (34) (2) (30) (36)
Net interest expense 46 49 146 146
Amortization of other identifiable intangible assets 29 32 90 92
Amortization of computer software 119 133 356 362
Depreciation 40 61 128 144
EBITDA $(202) $366 $8,276 $1,186
Adjustments to remove:
Share of post-tax losses (earnings) in equity method investments 672 178 (6,717) 385
Other operating gains, net (4) (56) (35) (104)
Fair value adjustments ((4)) (8) 3 (6) (17)
Adjusted EBITDA ((1)) $458 $491 $1,518 $1,450
Adjusted EBITDA margin ((1)) 30.0% 34.0% 32.7% 33.2%
Thomson Reuters Corporation
Reconciliation of Net (Loss) Earnings to Adjusted Earnings ((2))
Reconciliation of Total Change in Adjusted EPS ((2))to Change in Constant Currency ((5))
(millions of U.S. dollars, except for share and per share data)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
Net (loss) earnings $(240) $241 $5,864 $560
Adjustments to remove:
Fair value adjustments ((4)) (8) 3 (6) (17)
Amortization of other identifiable intangible assets 29 32 90 92
Other operating gains, net (4) (56) (35) (104)
Other finance income (34) (2) (30) (36)
Share of post-tax losses (earnings) in equity method investments 672 178 (6,717) 385
Tax on above items (174) (41) 1,616 (100)
Tax items impacting comparability (4) (146) (15) (107)
(Earnings) loss from discontinued operations, net of tax (1) (1) - 2
Interim period effective tax rate normalization ((3)) (8) (15) (10) (21)
Dividends declared on preference shares (1) (1) (2) (2)
Adjusted earnings ((2)) $227 $192 $755 $652
Adjusted EPS ((2)) $0.46 $0.39 18% $1.52 $1.31 16%
Foreign currency ((5)) 3% 1%
Constant currency ((5)) 15% 15%
Diluted weighted-average common shares (millions) ((2)) 495.9 498.4 496.6 497.8
Refer to page 23 for footnotes.
Thomson Reuters Corporation
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow ((6))
(millions of U.S. dollars)
(unaudited)
Three Months Ended Nine Months Ended
September 30, Sep
tem
ber
30,
2021 2020 2021 2020
Net cash provided by operating activities $534 $581 $1,376 $1,179
Capital expenditures (131) (117) (364) (404)
Proceeds from disposals of property and equipment - 98 - 162
Other investing activities 3 - 56 2
Payments of lease principal (22) (20) (65) (56)
Dividends paid on preference shares (1) (1) (2) (2)
Free cash flow ((6)) $383 $541 $1,001 $881
Thomson Reuters Corporation
Reconciliation of Net Debt and Leverage Ratio of Net Debt to Adjusted EBITDA ((8))
(millions of U.S. dollars)
(unaudited)
September 30, 2021
Long-term indebtedness $3,782
Total debt 3,782
Swaps (97)
Total debt after swaps 3,685
Remove fair value adjustments for hedges (9)
Total debt after currency arrangements 3,676
Remove transaction costs, premiums or discounts included in the carrying value of debt 35
Add: lease liabilities (current and non-current) 268
Less: cash and cash equivalents (1,511)
Net debt ((8)) $2,468
Adjusted EBITDA ((1)*) $2,043
Net Debt / Adjusted EBITDA ((8)*) 1.2:1
* The company's target leverage ratio of 2.5:1 is a non-IFRS measure. For
purposes of this calculation, adjusted EBITDA is computed on a rolling
12-month basis and includes adjusted EBITDA of $458 million, $502 million,
$558 million and $525 million for the three months ended September 30, 2021,
June 30, 2021, March 31, 2021 and December 31, 2020, respectively. Refer to
the tables appended to this news release, the company's 2020 annual report and
the company's MD&A for the three months ended June 30, 2021 and March 31, 2021
for additional information regarding the calculation of adjusted EBITDA in
each of these periods.
Refer to page 23 for footnotes.
Thomson Reuters Corporation
Reconciliation of Changes in Revenues to Changes in Revenues on a Constant Currency ((5))and Organic Basis ((7))
(millions of U.S. dollars)
(unaudited)
Three Months Ended
September 30, Change
2021 2020 Total Foreign SUBTOTAL Constant Acquisitions/ Organic ((7))
Currency Currency ((5)) (Divestitures)
Total Revenues
Legal Professionals $682 $636 7% 1% 6% 0% 6%
Corporates 356 333 7% 1% 6% 0% 6%
Tax & Accounting Professionals 175 165 6% 0% 6% 0% 6%
"Big 3" Segments Combined 1,213 1,134 7% 1% 6% 0% 6%
Reuters News 164 154 6% 0% 6% 0% 6%
Global Print 149 154 -3% 1% -5% 0% -5%
Eliminations/Rounding - 1
Revenues $1,526 $1,443 6% 1% 5% 0% 5%
Recurring Revenues
Legal Professionals $634 $592 7% 1% 6% 0% 6%
Corporates 309 287 8% 1% 7% 0% 7%
Tax & Accounting Professionals 147 133 10% 0% 10% 0% 10%
"Big 3" Segments Combined 1,090 1,012 8% 1% 7% 0% 7%
Reuters News 143 141 1% 0% 1% 0% 1%
Total Recurring Revenues $1,233 $1,153 7% 1% 6% 0% 6%
Transactions Revenues
Legal Professionals $48 $44 11% 1% 10% -1% 10%
Corporates 47 46 2% 0% 2% 0% 2%
Tax & Accounting Professionals 28 32 -9% 0% -9% 0% -9%
"Big 3" Segments Combined 123 122 2% 1% 2% 0% 2%
Reuters News 21 13 62% -5% 66% 0% 66%
Total Transactions Revenues $144 $135 8% 0% 8% 0% 8%
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 23 for footnotes.
Thomson Reuters Corporation
Reconciliation of Changes in Revenues to Changes in Revenues on a Constant Currency ((5))and Organic Basis ((7))
(millions of U.S. dollars)
(unaudited)
Nine Months Ended
September 30, Change
2021 2020 Total Foreign SUBTOTAL Constant Acquisitions/ Organic ((7))
Currency Currency ((5)) (Divestitures)
Total Revenues
Legal Professionals $2,023 $1,882 7% 1% 6% 0% 6%
Corporates 1,088 1,029 6% 1% 5% 0% 5%
Tax & Accounting Professionals 597 551 8% 0% 8% 0% 8%
"Big 3" Segments Combined 3,708 3,462 7% 1% 6% 0% 6%
Reuters News 492 464 6% 1% 5% 0% 5%
Global Print 439 443 -1% 2% -3% 0% -3%
Eliminations/Rounding (1) (1)
Revenues $4,638 $4,368 6% 1% 5% 0% 5%
Recurring Revenues
Legal Professionals $1,881 $1,759 7% 1% 6% 0% 5%
Corporates 904 850 6% 1% 5% 0% 5%
Tax & Accounting Professionals 457 427 7% 0% 7% 0% 7%
"Big 3" Segments Combined 3,242 3,036 7% 1% 6% 0% 6%
Reuters News 431 424 2% 1% 0% 0% 0%
Total Recurring Revenues $3,673 $3,460 6% 1% 5% 0% 5%
Transactions Revenues
Legal Professionals $142 $123 16% 3% 14% 0% 14%
Corporates 184 179 3% 0% 3% 0% 3%
Tax & Accounting Professionals 140 124 13% 1% 12% 0% 12%
"Big 3" Segments Combined 466 426 10% 1% 9% 0% 9%
Reuters News 61 40 52% 2% 50% 1% 50%
Total Transactions Revenues $527 $466 13% 1% 12% 0% 12%
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 23 for footnotes.
Thomson Reuters Corporation
Reconciliation of Changes in Adjusted EBITDA ((1))to Changes on a Constant Currency Basis ((5))
(millions of U.S. dollars)
(unaudited)
Three Months Ended
September 30, Change
2021 2020 Total Foreign Currency Constant Currency ((5))
Adjusted EBITDA
Legal Professionals $288 $272 6% 2% 4%
Corporates 131 120 9% 1% 9%
Tax & Accounting Professionals 49 47 4% -1% 6%
"Big 3" Segments Combined 468 439 7% 1% 6%
Reuters News 25 23 4% -4% 8%
Global Print 52 64 -18% 1% -19%
Corporate costs (87) (35) n/a n/a n/a
Adjusted EBITDA $458 $491 -7% 1% -7%
Adjusted EBITDA Margin
Legal Professionals 42.3% 42.8% -50bp 30bp -80bp
Corporates 36.8% 36.0% 80bp 0bp 80bp
Tax & Accounting Professionals 28.0% 28.5% -50bp -30bp -20bp
"Big 3" Segments Combined 38.6% 38.7% -10bp 10bp -20bp
Reuters News 14.9% 15.2% -30bp -50bp 20bp
Global Print 35.0% 41.1% -610bp 20bp -630bp
Corporate costs n/a n/a n/a n/a n/a
Adjusted EBITDA margin 30.0% 34.0% -400bp 10bp -410bp
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 23 for footnotes.
Thomson Reuters Corporation
Reconciliation of Changes in Adjusted EBITDA ((1))to Changes on a Constant Currency Basis ((5))
(millions of U.S. dollars)
(unaudited)
Nine Months Ended
September 30, Change
2021 2020 Total Foreign Currency Constant Currency ((5))
Adjusted EBITDA
Legal Professionals $852 $756 13% 2% 11%
Corporates 407 355 15% 1% 14%
Tax & Accounting Professionals 219 185 18% 0% 18%
"Big 3" Segments Combined 1,478 1,296 14% 1% 13%
Reuters News 88 67 30% -14% 44%
Global Print 165 181 -9% 2% -11%
Corporate costs (213) (94) n/a n/a n/a
Adjusted EBITDA $1,518 $1,450 5% 1% 4%
Adjusted EBITDA Margin
Legal Professionals 42.1% 40.2% 190bp 10bp 180bp
Corporates 37.4% 34.5% 290bp -20bp 310bp
Tax & Accounting Professionals 36.6% 33.6% 300bp -10bp 310bp
"Big 3" Segments Combined 39.9% 37.4% 250bp 20bp 230bp
Reuters News 17.8% 14.5% 330bp -210bp 540bp
Global Print 37.5% 40.7% -320bp 20bp -340bp
Corporate costs n/a n/a n/a n/a n/a
Adjusted EBITDA margin 32.7% 33.2% -50bp -20bp -30bp
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 23 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.
Because Thomson Reuters reported a net loss for continuing operations under IFRS for the three months ended September 30, 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 September 30, 2021
IFRS: Basic and Diluted 494,624,854
Effect of stock options and other equity incentive awards 1,275,150
Non-IFRS Diluted 495,900,004
(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) Fair value adjustments primarily represent gains or losses due to changes in foreign currency exchange rates on intercompany balances that arise in the ordinary course of business.
(5) 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.
(6) 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.
(7) 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.
(8) 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.
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