REG-Thomson Reuters: Quarterly Results
05/08/2021 11:45
Thomson Reuters Reports Second-Quarter 2021 Results
TORONTO, Aug. 5, 2021 /PRNewswire/ -- Thomson Reuters (TSX/NYSE: TRI) today
reported results for the second quarter ended June 30, 2021:
* Total company revenue grew 9% and organic revenue grew 7%;
* Raised full-year 2021 total company and "Big 3" guidance for revenue growth,
adjusted EBITDA margin and free cash flow;
* Outlook provided for the third quarter of 2021;
* Change Program on track - achieved $90 million of run-rate operating expense
savings through June 30;
* New $1.2 billion buyback program announced.
"The strong results that we achieved in the first quarter accelerated in the
second quarter. Our performance was consistent across the company, above our
expectations, and positions us well for the rest of the year and 2022. These
results reflect the confidence of our customers – in both an improving
economic environment and in their prospects. This dynamic presents us with a
tailwind as customers are spending on products and solutions that fit their
workflows and improve their professional lives, which are rapidly evolving,"
said Steve Hasker, president and CEO of Thomson Reuters.
Mr. Hasker added, "Based on the strong first-half performance and our
confidence in the trajectory of the business for second half of the year, we
have increased our full-year 2021 guidance."
Consolidated Financial Highlights - Three Months Ended June 30
Three Months Ended June 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 $1,532 $1,405 9%
Operating profit $316 $365 -14%
Diluted earnings per share (EPS) $2.15 $0.25 n/m
Cash flow from operations $462 $422 10%
Non-IFRS Financial Measures ((1))
Revenues $1,532 $1,405 9% 7%
Adjusted EBITDA $502 $479 5% 5%
Adjusted EBITDA margin 32.7% 34.1% -140bp -70bp
Adjusted EPS $0.48 $0.44 9% 9%
Free cash flow $379 $305 25%
(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 9%, driven by growth across all of the company's customer
segments and a 2% favorable impact from foreign currency.
* Organic revenues increased 7%, driven by 5% growth in recurring revenues
(79% of total revenues), as well as growth in transactions, Reuters News and
Global Print revenues, which benefited from a favorable comparison to the
second quarter of 2020 when the early stages of the COVID-19 pandemic
negatively impacted results.
* The company's "Big 3" segments (Legal Professionals, Corporates and Tax &
Accounting Professionals), which collectively comprised 80% of total revenues,
reported organic revenue growth of 7%.
Operating profit decreased 14% 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.
* Adjusted EBITDA, which excludes the impact of the warrant revaluation,
among other items, increased 5% as higher revenues more than offset higher
costs, which included costs associated with the company's Change Program. The
related margin decreased to 32.7% from 34.1% in the prior-year period due to
higher costs. Adjusted EBITDA margin was negatively impacted by 270bp due to
Change Program costs. Additional information regarding the Change Program is
provided later in this news release.
Diluted EPS increased to $2.15 per share from $0.25 per share in the
prior-year period due to an increase in the value of the company's LSEG
investment.
* Adjusted EPS, which excludes the increase in value of the company's LSEG
investment, as well as other adjustments, increased to $0.48 per share from
$0.44 per share in the prior-year period, primarily due to higher adjusted
EBITDA.
Cash flow from operations increased as higher revenues and favorable movements
in working capital more than offset higher tax payments and expenses, which
included Change Program costs.
* Free cash flow increased due to higher cash flows from operations and a
dividend of $51 million paid by LSEG in the second quarter.
Highlights by Customer Segment - Three Months Ended June 30
(Millions of U.S. dollars, except for adjusted EBITDA margins) (unaudited)
Three Months Ended
June 30, Change
2021 2020 Total Constant Organic ((1))
Currency
Revenues
Legal Professionals $673 $620 9% 7% 6%
Corporates 348 329 6% 4% 4%
Tax & Accounting Professionals 197 168 17% 15% 15%
"Big 3" Segments Combined 1,218 1,117 9% 7% 7%
Reuters News 168 155 9% 6% 6%
Global Print 147 134 9% 6% 6%
Eliminations/Rounding (1) (1)
Revenues $1,532 $1,405 9% 7% 7%
Adjusted EBITDA
Legal Professionals $285 $254 12% 10%
Corporates 130 118 10% 9%
Tax & Accounting Professionals 72 54 32% 32%
"Big 3" Segments Combined 487 426 14% 13%
Reuters News 35 25 45% 66%
Global Print 56 54 2% -1%
Corporate costs (76) (26) n/a n/a
Adjusted EBITDA $502 $479 5% 5%
Adjusted EBITDA Margin
Legal Professionals 42.3% 40.9% 140bp 140bp
Corporates 37.2% 35.9% 130bp 160bp
Tax & Accounting Professionals 36.2% 31.9% 430bp 450bp
"Big 3" Segments Combined 39.9% 38.1% 180bp 190bp
Reuters News 20.8% 15.6% 520bp 820bp
Global Print 37.9% 40.5% -260bp -280bp
Corporate costs n/a n/a n/a n/a
Adjusted EBITDA margin 32.7% 34.1% -140bp -70bp
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 7% (6% organic) to $673 million.
* Recurring revenues grew 6% (93% of total, all organic), primarily due to
strong performances from Practical Law, Westlaw Edge and the Government
business as well as strong contributions from FindLaw, and the company's
Canada, Europe and Asia businesses, each of which grew mid to upper single
digits in the quarter.
* Transactions revenues grew 14% (7% of total, all organic), primarily due to
the Government business.
Adjusted EBITDA increased 12% to $285 million.
* The margin increased to 42.3% from 40.9%, primarily due to higher revenues.
Corporates
Revenues increased 4% (all organic) to $348 million, primarily due to strong
recurring revenue growth, including strong growth from legal solutions and the
company's Latin America and Asia businesses.
* Recurring revenues grew 5% (86% of total, all organic).
* Transactions revenues grew 1% (14% of total, all organic), primarily related
to increasing demand for solutions provided by the Indirect Tax business.
Adjusted EBITDA increased 10% to $130 million.
* The margin increased to 37.2% from 35.9%, primarily due to higher revenues.
Tax & Accounting Professionals
Revenues increased 15% (all organic) to $197 million, reflecting transactions
revenue growth of 43% related to the 2021 extension of the U.S. federal tax
filing deadline. Additionally, revenue growth benefited from a similar shift
in 2020 when transactions revenues moved from the second quarter to the third
quarter after the U.S. federal tax filing deadline was extended from April to
July. Normalizing for the shift in the U.S. federal tax filing deadline,
organic revenues grew 10%.
* Recurring revenues grew 9% (76% of total, all organic), including strong
growth from the company's Latin American businesses.
* Transactions revenues grew 43% (24% of total, all organic), primarily due to
shifts in timing of Pay-Per-Return tax filings and audit products.
Adjusted EBITDA increased 32% to $72 million.
* The margin increased to 36.2% from 31.9%, primarily due to higher revenues.
* 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 $168 million increased 6%, all organic, primarily due to the
segment's professional business, which had strong growth from Reuters Events,
whose performance was negatively impacted by COVID-19 in 2020.
* Reuters Events continues to hold all events virtually and continues to
assess when in-person events can resume based on local health guidelines and
feedback from customers.
Adjusted EBITDA increased 45% to $35 million, primarily due to revenue growth.
Global Print
Revenues increased 6% to $147 million, driven by higher third-party revenues
for printing services and an increase in shipments, reflecting a gradual
return to office by large and mid-sized law firms. The quarter's performance
also reflected a favorable comparison to the second quarter of 2020 when
shipments were delayed at the beginning of the COVID-19 pandemic.
* Global Print's third-quarter revenues are forecast to decline between 5% and
8%.
* Global Print's full-year 2021 revenues are forecast to decline between 4%
and 7%.
Adjusted EBITDA increased 2% to $56 million.
* The margin decreased to 37.9% from 40.5% due to higher costs.
Corporate Costs
Corporate costs at the adjusted EBITDA level were $76 million, which included
$41 million of Change Program costs, compared to $26 million of Corporate
costs in the prior-year period. Additional information regarding the Change
Program is provided below.
Consolidated Financial Highlights - Six Months Ended June 30
Six Months Ended June 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 $3,112 $2,925 6%
Operating profit $703 $655 7%
Diluted earnings per share (EPS) $12.28 $0.64 n/m
Cash flow from operations $842 $598 41%
Non-IFRS Financial Measures ((1))
Revenues $3,112 $2,925 6% 5%
Adjusted EBITDA $1,060 $959 11% 10%
Adjusted EBITDA margin 34.1% 32.8% 130bp 160bp
Adjusted EPS $1.06 $0.92 15% 15%
Free cash flow $618 $340 82%
(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% due to growth in recurring revenues and a 1% favorable
impact from foreign currency.
* Organic revenues increased 5%, driven by 4% growth in recurring revenues,
which comprised 79% of total revenues, and higher transactions revenues.
* The company's "Big 3" segments, which collectively comprised 80% of total
revenues, reported organic revenue growth of 6%.
Operating profit increased 7% as higher revenues more than offset higher
costs, which included Change Program costs.
* Adjusted EBITDA increased 11% reflecting the same factors that impacted
operating profit. The related margin increased to 34.1% from 32.8% in the
prior-year period. Adjusted EBITDA margin was negatively impacted by 160bp due
to Change Program costs.
Diluted EPS increased to $12.28 per share from $0.64 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 $1.06 per share from $0.92 per share in the
prior-year period, primarily due to higher adjusted EBITDA.
Cash flow from operations 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 due to higher cash flows from operations and the
dividend paid by LSEG previously noted.
Highlights by Customer Segment - Six Months Ended June 30
(Millions of U.S. dollars, except for adjusted EBITDA margins) (unaudited)
Six Months Ended
June 30, Change
2021 2020 Total Constant Organic ((1))
Currency
Revenues
Legal Professionals $1,341 $1,246 8% 6% 6%
Corporates 732 696 5% 4% 4%
Tax & Accounting Professionals 422 386 9% 9% 9%
"Big 3" Segments Combined 2,495 2,328 7% 6% 6%
Reuters News 328 310 6% 4% 4%
Global Print 290 289 0% -2% -2%
Eliminations/Rounding (1) (2)
Revenues $3,112 $2,925 6% 5% 5%
Adjusted EBITDA
Legal Professionals $564 $484 17% 14%
Corporates 276 235 17% 17%
Tax & Accounting Professionals 170 138 23% 23%
"Big 3" Segments Combined 1,010 857 18% 16%
Reuters News 63 44 45% 65%
Global Print 113 117 -4% -6%
Corporate costs (126) (59) n/a n/a
Adjusted EBITDA $1,060 $959 11% 10%
Adjusted EBITDA Margin
Legal Professionals 42.1% 38.8% 330bp 300bp
Corporates 37.7% 33.8% 390bp 410bp
Tax & Accounting Professionals 40.2% 35.7% 450bp 440bp
"Big 3" Segments Combined 40.5% 36.8% 370bp 350bp
Reuters News 19.2% 14.1% 510bp 780bp
Global Print 38.9% 40.5% -160bp -190bp
Corporate costs n/a n/a n/a n/a
Adjusted EBITDA margin 34.1% 32.8% 130bp 160bp
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 outlook for 2021, 2022 and 2023 incorporates the forecasted
impacts associated with the Change Program, assumes constant currency rates,
and excludes the impact of any future acquisitions or dispositions that may
occur during those periods. Thomson Reuters believes that this type of
guidance provides useful insight into the performance of its businesses.
While the company's second-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 provided an outlook for the third quarter of 2021 and
updated its full-year outlook for 2021, which are reflected in the table
below. The company also reaffirmed its outlook for 2022 and 2023.
Third-Quarter 2021 Outlook
* Total company revenues and total organic revenues are expected to increase
between 3.5% and 4.0%.
* "Big 3" total revenue growth and organic revenue growth are forecast to
range between 5.0% and 5.5%.
* Tax & Accounting Professionals revenue growth is forecast to increase low
single digits.
* Reuters News revenues are expected to increase between 2.0% and 3.0%.
* Global Print revenues are expected to decline between 5.0% and 8.0%.
Third-Quarter 2021 Outlook and update to Full-Year 2021 Outlook
Total Thomson Reuters Q3 2021 Original FY 2021 Outlook (February 23, 2021) FY 2021 Outlook Update (May 4, 2021) FY 2021 Outlook Update (August 5, 2021)
Outlook
Total Revenue Growth 3.5% - 4.0% 3.0% - 4.0% 3.5% - 4.0% 4.0% - 4.5%
Organic Revenue Growth 3.5% - 4.0% 3.0% - 4.0% 3.5% - 4.0% 4.0% - 4.5%
Adjusted EBITDA Margin - 30% - 31% Unchanged 31% - 32%
Corporate Costs Core Corporate Costs Change Program Operating Expenses - $305 - $340 million $130 - $140 million $175 - $200 million Unchanged Unchanged
Free Cash Flow - $1.0 - $1.1 billion Unchanged $1.1 - $1.2 billion
Capital Expenditures - % of Revenue Change Program Capital Expenditures - 9.0% - 9.5% $125 - $150 million Unchanged Unchanged
Depreciation & Amortization of Computer Software - $650 - $675 million Unchanged Unchanged
Interest Expense (P&L) - $190 - $210 million Unchanged Unchanged
Effective Tax Rate on Adjusted Earnings - 16% - 18% Unchanged Unchanged
Big 3 Segments (Legal Professionals, Corporates and Tax & Accounting Professionals) Q3 2021 Outlook Original FY 2021 Outlook (February 23, 2021) FY 2021 Outlook Update (May 4, 2021) FY 2021 Outlook Update (August 5, 2021)
Total Revenue Growth 5.0% - 5.5% 4.5% - 5.5% 5.0% - 5.5% 5.5% - 6.0%
Organic Revenue Growth 5.0% - 5.5% 4.5% - 5.5% 5.0% - 5.5% 5.5% - 6.0%
Adjusted EBITDA Margin - 38% - 39% Unchanged ~ 39%
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 - New $1.2 Billion Buyback Program and Amended Normal Course
Issuer Bid
Thomson Reuters also announced today that it plans to buy back up to $1.2
billion of its common shares. The new buyback program is in addition to the
$200 million repurchase program that was completed earlier this year.
Shares will be repurchased for the new buyback program under an amended normal
course issuer bid (NCIB). The amended NCIB, which is subject to acceptance by
the Toronto Stock Exchange (TSX), is expected to become effective on or about
August 10, 2021. The amended NCIB will increase the maximum number of common
shares that may be repurchased by an additional 15 million. Under the amended
NCIB, up to 20 million common shares (representing approximately 4% of the
company's 497,117,528 issued and outstanding shares as of December 24, 2020)
may be repurchased between January 4, 2021 and January 3, 2022. The NCIB, as
originally approved in December 2020, contemplated the repurchase of up to 5
million common shares. Under the current NCIB, Thomson Reuters repurchased
2,455,807 common shares in the first quarter of 2021 for a total cost of
approximately $200 million, representing an average price of $81.45 per share.
Under the amended NCIB, shares may be repurchased in open market transactions
on the TSX, the NYSE and/or other exchanges and alternative trading systems,
if eligible, or by such other means as may be permitted by the TSX and/or NYSE
or under applicable law, including private agreement purchases if Thomson
Reuters receives an issuer bid exemption order in the future from applicable
securities regulatory authorities in Canada for such purchases. The price that
Thomson Reuters will pay for common shares in open market transactions will be
the market price at the time of purchase or such other price as may be
permitted by the TSX. Any private agreement purchases made under an exemption
order may be at a discount to the prevailing market price. In accordance with
TSX rules, any daily repurchases (other than pursuant to a block purchase
exception) on the TSX under the amended NCIB are limited to a maximum of
127,341 shares, which represents 25% of the average daily trading volume on
the TSX of 509,367 for the six months ended November 30, 2020 (net of
repurchases made by the company during that time period). Any shares that are
repurchased are cancelled.
From time to time when Thomson Reuters does not possess material non-public
information about itself or its securities, it may enter into a pre-defined
plan with its broker to allow for the repurchase of shares at times when the
company ordinarily would not be active in the market due to its own internal
trading blackout periods, insider trading rules or otherwise. Any such plans
entered into with the company's broker will be adopted in accordance with
applicable Canadian securities laws and the requirements of Rule 10b5-1 under
the U.S. Securities Exchange Act of 1934, as amended.
Decisions regarding any future repurchases will depend on factors, such as
market conditions, share price and other opportunities to invest capital for
growth. Thomson Reuters may elect to suspend or discontinue share repurchases
at any time, in accordance with applicable laws.
Dividends
In February 2021, the company announced its Board of Directors approved a
$0.10 per share annualized increase in the dividend to $1.62 per common share,
representing the 28(th) consecutive year of dividend increases. A quarterly
dividend of $0.405 per share is payable on September 15, 2021 to common
shareholders of record as of August 19, 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 and former Refinitiv senior
management.
As of August 4, 2021, Thomson Reuters indirectly owned approximately 72.4
million LSEG shares which had a market value of approximately $7.5 billion
based on LSEG's closing share price on that day. Based on Thomson Reuters'
ownership interest in LSEG, it expects to receive dividends of approximately
$75 million in 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 six-month period ended June 30, 2021, the
company paid $444 million of taxes related to these transactions.
Social Impact/ESG
In the second quarter of 2021, Thomson Reuters issued its 2020 Social Impact
Report, which focuses on the company's Environmental, Social and Governance
(ESG) efforts. A copy of the report is available on the company's Social
Impact website
(https://c212.net/c/link/?t=0&l=en&o=3249983-1&h=440760850&u=https%3A%2F%2Fwww.thomsonreuters.com%2Fen%2Fabout-us%2Fsocial-impact%2Fsocial-impact-report.html&a=Social+Impact+website).
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=3249983-1&h=1900113545&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 21-22 of the
company's first-quarter management's discussion and analysis (MD&A) for the
period ended March 31, 2021. Material assumptions and material risks related
to the company's outlook will also be included in the company's second-quarter
MD&A for the period ended June 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 second-quarter 2021 results
and its business outlook today beginning at 9:00 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=3249983-1&h=564533080&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 4.0% - 4.5% 4.0% - 5.0% 5.0% - 6.0%
Organic Revenue Growth 4.0% - 4.5% 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 - $340 million $130 - $140 million $175 - $200 million $245 - $280 million $120 - $130 million $125 - $150 million $110 - $120 million $110 - $120 million $0
Free Cash Flow $1.1 - $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% $125 - $150 million 7.5% - 8.0% $75 - $100 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 16% - 18% 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 5.5% - 6.0% 5.5% - 6.5% 6.0% - 7.0%
Organic Revenue Growth 5.5% - 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 Six Months Ended
June 30, June 30,
2021 2020 2021 2020
CONTINUING OPERATIONS
Revenues $1,532 $1,405 $3,112 $2,925
Operating expenses (1,036) (929) (2,054) (1,946)
Depreciation (42) (43) (88) (83)
Amortization of computer software (122) (118) (237) (229)
Amortization of other identifiable intangible assets (30) (30) (61) (60)
Other operating gains, net 14 80 31 48
Operating profit 316 365 703 655
Finance costs, net:
Net interest expense (49) (52) (100) (97)
Other finance income (costs) 2 (13) (4) 34
Income before tax and equity method investments 269 300 599 592
Share of post-tax earnings (losses) in equity method investments 1,092 (153) 7,389 (207)
Tax expense (289) (16) (1,883) (63)
Earnings from continuing operations 1,072 131 6,105 322
Loss from discontinued operations, net of tax (4) (5) (1) (3)
Net earnings $1,068 $126 $6,104 $319
Earnings attributable to common shareholders $1,068 $126 $6,104 $319
Earnings (loss) per share:
Basic earnings per share:
From continuing operations $2.16 $0.26 $12.31 $0.65
From discontinued operations (0.01) (0.01) (0.01) (0.01)
Basic earnings per share $2.15 $0.25 $12.30 $0.64
Diluted earnings per share:
From continuing operations $2.16 $0.26 $12.28 $0.65
From discontinued operations (0.01) (0.01) - (0.01)
Diluted earnings per share $2.15 $0.25 $12.28 $0.64
Basic weighted-average common shares 496,098,238 496,317,115 496,016,467 496,261,070
Diluted weighted-average common shares 497,259,072 497,580,339 497,109,791 497,579,131
Thomson Reuters Corporation Consolidated Statement of Financial Position (millions of U.S. dollars) (unaudited)
June 30, December 31,
2021 2020
Assets
Cash and cash equivalents $2,342 $1,787
Trade and other receivables 1,041 1,151
Other financial assets 77 612
Prepaid expenses and other current assets 425 425
Current assets 3,885 3,975
Property and equipment, net 482 545
Computer software, net 819 830
Other identifiable intangible assets, net 3,368 3,427
Goodwill 5,992 5,976
Equity method investments 7,913 1,136
Other non-current assets 929 788
Deferred tax 1,173 1,204
Total assets $24,561 $17,881
Liabilities and equity
Liabilities
Payables, accruals and provisions $1,023 $1,159
Current tax liabilities 663 251
Deferred revenue 923 866
Other financial liabilities 158 376
Current liabilities 2,767 2,652
Long-term indebtedness 3,806 3,772
Provisions and other non-current liabilities 927 1,083
Deferred tax 1,284 394
Total liabilities 8,784 7,901
Equity
Capital 5,502 5,458
Retained earnings 11,010 5,211
Accumulated other comprehensive loss (735) (689)
Total equity 15,777 9,980
Total liabilities and equity $24,561 $17,881
Thomson Reuters Corporation Consolidated Statement of Cash Flow (millions of U.S. dollars) (unaudited)
Three Months Ended Six Months Ended June 30,
June 30,
2021 2020 2021 2020
Cash provided by (used in):
Operating activities
Earnings from continuing operations $1,072 $131 $6,105 $322
Adjustments for:
Depreciation 42 43 88 83
Amortization of computer software 122 118 237 229
Amortization of other identifiable intangible assets 30 30 61 60
Share of post-tax (earnings) losses in equity method investments (1,092) 153 (7,389) 207
Deferred tax 249 (34) 923 (37)
Other 33 (17) 63 (6)
Changes in working capital and other items 15 (7) 800 (250)
Operating cash flows from continuing operations 471 417 888 608
Operating cash flows from discontinued operations (9) 5 (46) (10)
Net cash provided by operating activities 462 422 842 598
Investing activities
Acquisitions, net of cash acquired - 2 (3) (122)
Proceeds from disposals of businesses and investments 10 4 15 1
Dividend from sale of LSEG shares - - 994 -
Capital expenditures (113) (145) (233) (287)
Proceeds from disposals of property and equipment - 45 - 64
Other investing activities 52 1 53 2
Taxes paid on sale of Refinitiv and LSEG shares (438) - (444) -
Investing cash flows from continuing operations (489) (93) 382 (342)
Investing cash flows from discontinued operations - - (42) -
Net cash (used in) provided by investing activities (489) (93) 340 (342)
Financing activities
Proceeds from debt - 999 - 2,019
Repayments of debt - (1,000) - (1,645)
Net borrowings under short-term loan facilities - - - 118
Payments of lease principal (22) (18) (43) (36)
Repurchases of common shares - - (200) (200)
Dividends paid on preference shares - - (1) (1)
Dividends paid on common shares (194) (182) (388) (364)
Other financing activities - (4) 5 (16)
Net cash used in financing activities (216) (205) (627) (125)
(Decrease) increase in cash and bank overdrafts (243) 124 555 131
Translation adjustments 1 - - (10)
Cash and bank overdrafts at beginning of period 2,584 822 1,787 825
Cash and bank overdrafts at end of period $2,342 $946 $2,342 $946
Cash and bank overdrafts at end of period comprised of:
Cash and cash equivalents $2,342 $946 $2,342 $946
Thomson Reuters Corporation
Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA ((1))
(millions of U.S. dollars, except for margins)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Earnings from continuing operations $1,072 $131 $6,105 $322
Adjustments to remove:
Tax expense 289 16 1,883 63
Other finance (income) costs (2) 13 4 (34)
Net interest expense 49 52 100 97
Amortization of other identifiable intangible assets 30 30 61 60
Amortization of computer software 122 118 237 229
Depreciation 42 43 88 83
EBITDA $1,602 $403 $8,478 $820
Adjustments to remove:
Share of post-tax (earnings) losses in equity method investments (1,092) 153 (7,389) 207
Other operating gains, net (14) (80) (31) (48)
Fair value adjustments ((4)) 6 3 2 (20)
Adjusted EBITDA $502 $479 $1,060 $959
Adjusted EBITDA margin ((1)) 32.7% 34.1% 34.1% 32.8%
Thomson Reuters Corporation
Reconciliation of Net 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 June 30, Six Months Ended
June 30,
2021 2020 Change 2021 2020 Change
Net earnings $1,068 $126 $6,104 $319
Adjustments to remove:
Fair value adjustments ((4)) 6 3 2 (20)
Amortization of other identifiable intangible assets 30 30 61 60
Other operating gains, net (14) (80) (31) (48)
Other finance (income) costs (2) 13 4 (34)
Share of post-tax (earnings) losses in equity method investments (1,092) 153 (7,389) 207
Tax on above items 255 (28) 1,790 (59)
Tax items impacting comparability (12) 9 (11) 39
Loss from discontinued operations, net of tax 4 5 1 3
Interim period effective tax rate normalization ((3)) (3) (10) (2) (6)
Dividends declared on preference shares - - (1) (1)
Adjusted earnings ((2)) $240 $221 $528 $460
Adjusted EPS ((2)) $0.48 $0.44 9% $1.06 $0.92 15%
Foreign currency ((5)) 0% 0%
Constant currency ((5)) 9% 15%
Diluted weighted-average common shares (millions) 497.3 497.6 497.1 497.6
Refer to page 24 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 Six Months Ended
June 30, Jun
e
30,
2021 2020 2021 2020
Net cash provided by operating activities $462 $422 $842 $598
Capital expenditures (113) (145) (233) (287)
Proceeds from disposals of property and equipment - 45 - 64
Other investing activities 52 1 53 2
Payments of lease principal (22) (18) (43) (36)
Dividends paid on preference shares - - (1) (1)
Free cash flow $379 $305 $618 $340
Thomson Reuters Corporation
Reconciliation of Net Debt and Leverage Ratio of Net Debt to Adjusted EBITDA ((8))
(millions of U.S. dollars)
(unaudited)
June 30,
2021
Long-term indebtedness $3,806
Total debt 3,806
Swaps (125)
Total debt after swaps 3,681
Remove fair value adjustments for hedges (7)
Total debt after currency arrangements 3,674
Remove transaction costs, premiums or discounts included in the carrying value of debt 36
Add: lease liabilities (current and non-current) 271
Less: cash and cash equivalents (2,342)
Net debt ((8)) $1,639
Adjusted EBITDA ((1)*) $2,076
Net Debt / Adjusted EBITDA ((8)*) 0.8:1
* 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
twelve-month basis and includes adjusted EBITDA of $502 million, $558 million,
$525 million and $491 million for the three months ended June 30, 2021, March
31, 2021, December 31, 2020 and September 30, 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 March 31, 2021 and September 30,
2020, for additional information regarding the calculation of adjusted EBITDA
in each of these periods.
Refer to page 24 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
June 30, Change
2021 2020 Total Foreign SUBTOTAL Constant Acquisitions/ Organic ((7))
Currency Currency ((5)) (Divestitures)
Total Revenues
Legal Professionals $673 $620 9% 2% 7% 0% 6%
Corporates 348 329 6% 1% 4% 0% 4%
Tax & Accounting Professionals 197 168 17% 1% 15% 0% 15%
"Big 3" Segments Combined 1,218 1,117 9% 2% 7% 0% 7%
Reuters News 168 155 9% 2% 6% 0% 6%
Global Print 147 134 9% 3% 6% 0% 6%
Eliminations/Rounding (1) (1)
Revenues $1,532 $1,405 9% 2% 7% 0% 7%
Recurring Revenues
Legal Professionals $626 $580 8% 2% 6% 0% 6%
Corporates 300 282 6% 2% 5% 0% 5%
Tax & Accounting Professionals 150 136 10% 1% 9% 0% 9%
"Big 3" Segments Combined 1,076 998 8% 2% 6% 0% 6%
Reuters News 144 141 3% 2% 1% 0% 1%
Total Recurring Revenues $1,220 $1,139 7% 2% 5% 0% 5%
Transactions Revenues
Legal Professionals $47 $40 18% 4% 14% 0% 14%
Corporates 48 47 2% 1% 1% 0% 1%
Tax & Accounting Professionals 47 32 45% 2% 43% 0% 43%
"Big 3" Segments Combined 142 119 19% 2% 17% 0% 17%
Reuters News 24 14 72% 9% 62% 2% 61%
Total Transactions Revenues $166 $133 25% 3% 22% 0% 22%
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 24 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)
Six Months Ended
June 30, Change
2021 2020 Total Foreign SUBTOTAL Constant Acquisitions/(Divestitures) Organic ((7))
Currency Currency ((5))
Total Revenues
Legal Professionals $1,341 $1,246 8% 2% 6% 0% 6%
Corporates 732 696 5% 1% 4% 0% 4%
Tax & Accounting Professionals 422 386 9% 0% 9% 0% 9%
"Big 3" Segments Combined 2,495 2,328 7% 1% 6% 0% 6%
Reuters News 328 310 6% 2% 4% 0% 4%
Global Print 290 289 0% 2% -2% 0% -2%
Eliminations/Rounding (1) (2)
Revenues $3,112 $2,925 6% 1% 5% 0% 5%
Recurring Revenues
Legal Professionals $1,247 $1,167 7% 2% 5% 0% 5%
Corporates 595 563 6% 1% 5% 0% 5%
Tax & Accounting Professionals 310 294 6% -1% 6% 0% 6%
"Big 3" Segments Combined 2,152 2,024 6% 1% 5% 0% 5%
Reuters News 288 283 2% 2% 0% 0% 0%
Total Recurring Revenues $2,440 $2,307 6% 1% 5% 0% 4%
Transactions Revenues
Legal Professionals $94 $79 19% 3% 16% 0% 16%
Corporates 137 133 3% 0% 3% 0% 3%
Tax & Accounting Professionals 112 92 20% 1% 19% 0% 19%
"Big 3" Segments Combined 343 304 13% 1% 11% 0% 11%
Reuters News 40 27 48% 5% 43% 1% 42%
Total Transactions Revenues $383 $331 15% 2% 14% 0% 14%
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 24 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
June 30, Change
2021 2020 Total Foreign Currency Constant Currency ((5))
Adjusted EBITDA
Legal Professionals $285 $254 12% 2% 10%
Corporates 130 118 10% 1% 9%
Tax & Accounting Professionals 72 54 32% 1% 32%
"Big 3" Segments Combined 487 426 14% 2% 13%
Reuters News 35 25 45% -21% 66%
Global Print 56 54 2% 3% -1%
Corporate costs (76) (26) n/a n/a n/a
Adjusted EBITDA $502 $479 5% 0% 5%
Adjusted EBITDA Margin
Legal Professionals 42.3% 40.9% 140bp 0bp 140bp
Corporates 37.2% 35.9% 130bp -30bp 160bp
Tax & Accounting Professionals 36.2% 31.9% 430bp -20bp 450bp
"Big 3" Segments Combined 39.9% 38.1% 180bp -10bp 190bp
Reuters News 20.8% 15.6% 520bp -300bp 820bp
Global Print 37.9% 40.5% -260bp 20bp -280bp
Corporate costs n/a n/a n/a n/a n/a
Adjusted EBITDA margin 32.7% 34.1% -140bp -70bp -70bp
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 24 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)
Six Months Ended
June 30, Change
2021 2020 Total Foreign Currency Constant Currency ((5))
Adjusted EBITDA
Legal Professionals $564 $484 17% 3% 14%
Corporates 276 235 17% 0% 17%
Tax & Accounting Professionals 170 138 23% 0% 23%
"Big 3" Segments Combined 1,010 857 18% 2% 16%
Reuters News 63 44 45% -20% 65%
Global Print 113 117 -4% 3% -6%
Corporate costs (126) (59) n/a n/a n/a
Adjusted EBITDA $1,060 $959 11% 1% 10%
Adjusted EBITDA Margin
Legal Professionals 42.1% 38.8% 330bp 30bp 300bp
Corporates 37.7% 33.8% 390bp -20bp 410bp
Tax & Accounting Professionals 40.2% 35.7% 450bp 10bp 440bp
"Big 3" Segments Combined 40.5% 36.8% 370bp 20bp 350bp
Reuters News 19.2% 14.1% 510bp -270bp 780bp
Global Print 38.9% 40.5% -160bp 30bp -190bp
Corporate costs n/a n/a n/a n/a n/a
Adjusted EBITDA margin 34.1% 32.8% 130bp -30bp 160bp
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 24 for footnotes.
Footnotes
(1) Thomson Reuters defines adjusted EBITDA for its business segments as earnings or losses from continuing operations before tax expense or benefit, net interest expense, other finance costs or income, depreciation, amortization of software and other
identifiable intangible assets, Thomson Reuters share of post-tax earnings or losses in equity method investments, other operating gains and losses, certain asset impairment charges, fair value adjustments and corporate related items. Consolidated adjusted
EBITDA is comprised of adjusted EBITDA for its business segments and corporate costs. Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of revenues. Thomson Reuters uses adjusted EBITDA because it provides a consistent basis to evaluate
operating profitability and performance trends by excluding items that the company does not consider to be controllable activities for this purpose. Adjusted EBITDA also represents a measure commonly reported and widely used by investors as a valuation
metric. Additionally, this measure is used by Thomson Reuters and investors to assess a company's ability to incur and service debt.
(2) Thomson Reuters defines adjusted earnings as net earnings or loss including dividends declared on preference shares but excluding the post-tax impacts of fair value adjustments, amortization of other identifiable intangible assets, other operating gains
and losses, certain asset impairment charges, other finance costs or income, Thomson Reuters share of post-tax earnings or losses in equity method investments, discontinued operations and other items affecting comparability. Thomson Reuters calculates the
post-tax amount of each item excluded from adjusted earnings based on the specific tax rules and tax rates associated with the nature and jurisdiction of each item. Adjusted EPS is calculated from adjusted earnings using diluted weighted-average shares and
does not represent actual earnings or loss per share attributable to shareholders. Thomson Reuters uses adjusted earnings and adjusted EPS as they provide a more comparable basis to analyze earnings and they are also measures commonly used by shareholders
to measure the company's performance.
(3) Adjustment to reflect income taxes based on estimated full-year effective tax rate. Earnings or losses for interim periods under IFRS reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which Thomson Reuters
operates. The non-IFRS adjustment reallocates estimated full-year income taxes between interim periods, but has no effect on full-year income taxes.
(4) 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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