Thomson Reuters Reports Third-Quarter 2016 Results; Revenues were essentially unchanged 

Thomson Reuters (TSX / NYSE: TRI) today reported results for the third quarter ended September 30, 2016.

“It is encouraging to see our continued progress flow through in the third-quarter numbers,” said Jim Smith, president and chief executive officer of Thomson Reuters. “Our core subscription businesses are moving in the right direction, our cost controls are working and we are increasingly confident in our execution capability. That is why we are going to pick up the pace of our transformation efforts.”

Consolidated Financial Highlights – Third Quarter

(All amounts are from continuing operations, except cash flow measures)

Three Months Ended September 30,
(Millions of U.S. dollars, except earnings per share (EPS) and margins)

• Revenues were essentially unchanged as growth in subscription revenues was offset by the impact of foreign currency and a decline in low margin recoveries revenues
• Operating profit was essentially unchanged as higher subscription revenues were offset by the impact of foreign currency, which included unfavorable fair value adjustments associated with foreign currency derivatives embedded in certain customer contracts
• Diluted EPS increased 6% to $0.34, with the increase driven by the benefit of lower common shares outstanding
• Cash flow from operations, which includes discontinued operations, increased 11% to $758 million, primarily due to favorable timing of working capital

• Revenues were unchanged. Before currency, revenues increased 1%
  • Excluding recoveries, revenues increased 2% (before currency)
• Adjusted EBITDA increased 4% to $814 million, and the margin increased 120 basis points to 29.7% from 28.5% in the prior-year period. Excluding currency, the margin increased 20 basis points
• Underlying operating profit increased 7% to $559 million, and the margin increased 130 basis points to 20.4% from 19.1% in the prior-year period. Excluding currency, the margin increased 30 basis points
• Adjusted EPS increased 20% to $0.54, an increase of $0.09 per share. Currency had a $0.03 favorable impact

Planned Charge in Fourth-Quarter 2016 and Updated Full-Year 2016 Outlook

Thomson Reuters today announced that it plans to record a charge of approximately $200 million to $250 million to be incurred in the fourth quarter of 2016. This charge is intended to accelerate the pace of the company’s Transformation program by further simplifying and streamlining the business. The majority of the charges will be taken in Financial & Risk and the Enterprise, Technology & Operations Group that was created in January 2016. The resulting run-rate cash savings in 2017 are estimated to be of a similar magnitude to the planned charge, with some of the savings to be reinvested in the business.

The company updated its 2016 full-year outlook to reflect the planned charge, as outlined in the Business Outlook section of this news release.

Sale of IP & Science Business

The IP & Science business was sold for $3.55 billion in cash on October 3, 2016. The net proceeds from the sale will be approximately $3.2 billion. The company utilized $1.7 billion of the proceeds to repay commercial paper during October and it plans to use the remaining proceeds primarily to buy back shares under its current $1.5 billion share repurchase program, further pay down debt and for reinvestment in the business.

Highlights by Business Unit

Unless otherwise noted, all revenue growth comparisons in this news release are before the impact of foreign currency (constant currency) as Thomson Reuters believes this provides the best basis to measure the performance of its business.

Source: Reuters

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