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Thomson Reuters Reports First-Quarter 2019 Results

TORONTO, May 8, 2019 /PRNewswire/ -- Thomson Reuters (TSX/NYSE: TRI) today reported results for the first quarter ended March 31, 2019 and reaffirmed its full-year Outlook for 2019 and 2020.

Thomson Reuters logo. (PRNewsFoto/Thomson Reuters)

"The year is off to a solid start," said Jim Smith, president and CEO of Thomson Reuters.  "The trajectory of the business continued to improve on the progress made last year. Revenue growth is tracking to our outlook.  Recurring revenue growth is the strongest we have seen in several years. Net sales are strong and our book of business continues to grow.  Our transformation initiatives are on track and we are seeing good underlying margin improvement. We remain confident in our ability to achieve our 2019 and 2020 targets."

Consolidated Financial Highlights - Three Months Ended March 31

Three Months Ended March 31,

(Millions of U.S. dollars, except for adjusted EBITDA margin and EPS)

(unaudited)

IFRS Financial Measures (1)

2019

2018

Change

Change at
Constant
Currency

Revenues

$1,487

$1,379

8%


Operating profit

$274

$268

2%


Diluted earnings per share (EPS) (includes discontinued operations)

$0.23

$(0.48)

n/m


Cash flow from operations (includes discontinued operations)

$(58)

$419

 n/m


Non-IFRS Financial Measures (1)





Revenues

$1,487

$1,379

8%

10%

Adjusted EBITDA

$397

$430

-8%

-8%

Adjusted EBITDA margin

26.7%

31.1%

-440bp

-520bp

Adjusted EPS

$0.36

$0.28

29%

25%

Free cash flow (includes discontinued operations)

$(177)

$120

n/m







n/m: not meaningful
(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.







Revenues increased 8%, due to the inclusion of revenues paid by Refinitiv to Reuters News for providing news and editorial content, and also to higher recurring revenues across all other customer segments.

Operating profit increased 2% due to benefits from other operating gains, which included gains from the sales of several small businesses. 

Diluted EPS was $0.23 compared to a loss of $0.48 in the prior-year period, which included an $844 million deferred tax charge associated with the sale of the company's F&R business, which was recorded in discontinued operations. 

Cash flow from operations decreased reflecting a contribution to a pension plan, the loss of cash flows from the company's former F&R business (which were included in the prior-year period, but are no longer included as of October 1, 2018), and investments to reposition Thomson Reuters following the separation of F&R from the company.

Highlights by Customer Segment – Three Months Ended March 31


(Millions of U.S. dollars, except for adjusted EBITDA margins)

(unaudited)




Three Months Ended







March 31,


Change



2019

2018


Total

Foreign 
Currency

Constant
Currency

Revenues








Legal Professionals


$594

$585


2%

-1%

3%

Corporates


352

329


7%

-2%

8%

Tax Professionals


222

217


2%

-3%

5%

Reuters News


155

72


115%

-6%

121%

Global Print


165

177


-7%

-3%

-4%

Eliminations


(1)

(1)





Revenues


$1,487

$1,379


8%

-2%

10%









Adjusted EBITDA 








Legal Professionals


$227

$191


19%

0%

19%

Corporates


118

111


6%

1%

5%

Tax Professionals


93

80


16%

-5%

21%

Reuters News


16

8


97%

15%

82%

Global Print


74

81


-9%

-1%

-8%

Corporate costs


(131)

(41)


n/a

n/a

n/a

Adjusted EBITDA


$397

$430


-8%

1%

-8%









Adjusted EBITDA Margin 








Legal Professionals


38.2%

32.6%


560bp

40bp

520bp

Corporates


33.6%

33.8%


-20bp

70bp

-90bp

Tax Professionals


41.9%

37.1%


480bp

-50bp

530bp

Reuters News


10.3%

11.3%


-100bp

110bp

-210bp

Global Print


44.8%

45.7%


-90bp

90bp

-180bp

Corporate costs


n/a

n/a


n/a

n/a

n/a

Adjusted EBITDA margin


26.7%

31.1%


-440bp

80bp

-520bp









n/a; not applicable

Unless otherwise noted, all revenue growth comparisons by customer segment in this news release are at constant currency (or exclude the impact of foreign currency) as Thomson Reuters believes this provides the best basis to measure their performance. 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.

Legal Professionals

Revenues increased 3% to $594 million.

Adjusted EBITDA increased 19% to $227 million.

Corporates

Revenues increased 8% to $352 million, primarily due to strong recurring revenue growth. The acquisition of Integration Point (a global trade management business) in the fourth quarter of 2018 contributed approximately 3% to the growth rate.

Adjusted EBITDA increased 6% to $118 million.

Tax Professionals

Revenues increased 5% to $222 million.

Adjusted EBITDA grew 16% to $93 million.

Reuters News

Revenues increased 121% to $155 million due to revenue from the 30-year agreement for Reuters News to supply news and editorial content to Refinitiv, which began in the fourth quarter of 2018.

Adjusted EBITDA was $16 million, an increase of $8 million primarily due to timing of expenses.

Global Print

Revenues decreased 4% to $165 million.

Adjusted EBITDA decreased 9% to $74 million.

Corporate Costs

Corporate costs at the adjusted EBITDA level were $131 million compared to $41 million in the prior-year period. As previously disclosed, the increase was due to costs and investments to reposition Thomson Reuters following the separation of F&R. These cash costs and investments are expected to continue throughout 2019.

Business Outlook for 2019 and 2020 (At Constant Currency)

Thomson Reuters today reaffirmed its Outlook for 2019 and 2020. The company's Outlook for 2019 and 2020 assumes constant currency rates compared to 2018 and does not factor in the impact of acquisitions or divestitures that may occur. The company has provided a full-year Outlook for two years because 2019 will be materially impacted by costs to separate the business from Refinitiv and reposition it for growth, while 2020 should represent the first year that the company's financial performance will reflect the benefits from its actions, without material costs related to the actions.


2018

Actual

2019 Outlook

Before Currency

2020 Outlook

Before Currency

Revenue Growth

4%(1)

7% - 8.5%(2)

3.5% - 4.5%

Adjusted EBITDA

$1.4 billion

($1.3 billion before currency)

$1.4 - $1.5 billion(3)

30.0% - 31.0%(3)

Corporate Costs

$499 million

~$570 million

$140 - $190 million

Free Cash Flow

$1.1 billion

$0 - $300 million

$1.0 - $1.2 billion

Capital Expenditures - % of Revenue

~10%

~9%

7.5% - 8.0%

Depreciation & Amortization of
Computer Software

$510 million

$600 - $625
million(3)

TBD

Interest Expense (P&L)

$260 million

$150 - $175 million

TBD

Effective Tax Rate on Adjusted
Earnings

15%

16% - 19%

~20%



(1)

2018 organic revenue growth was 2.5%.  

(2)

2019 organic revenue growth is expected to be 3% - 3.5%. For purposes of the organic growth calculation, the initial

contract value of the company's 30-year agreement with Refinitiv that was signed on October 1, 2018 is treated as an

acquisition until October 1, 2019.

(3)

The impact of the new lease accounting standard (IFRS 16) is expected to increase both adjusted EBITDA and

depreciation and amortization of computer software by an estimated $40 million in 2019 and $50 million in 2020 and

is reflected in this Outlook. IFRS 16 has no impact on free cash flow.

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 is forward-looking and should also be read in conjunction with the section below entitled "Special Note Regarding Forward-Looking Statements, Material Risks and Material Assumptions."

Dividend and Share Repurchases

In February 2019, the company announced that its Board of Directors approved a $0.04 per share annualized increase in the dividend to $1.44 per common share (representing the 26th consecutive year of dividend increases). A quarterly dividend of $0.36 per share is payable on June 17, 2019 to common shareholders of record as of May 23, 2019.

Earlier this year, the company announced plans to repurchase up to an additional $250 million of its shares under its normal course issuer bid. The company repurchased $190 million of shares in the first quarter (approximately $40 million of which were repurchased using part of the remaining proceeds of the F&R transaction, as announced in 2018).

Refinitiv Ownership Interest

On October 1, 2018, Thomson Reuters sold a 55% interest in the company's F&R business, which is now known as Refinitiv. Except as otherwise noted, all amounts noted in this news release are from continuing operations and exclude the results of the company's former F&R business.  The company's IFRS earnings per share since October 1, 2018 have included its share of results from its 45% investment in Refinitiv, which is removed from the company's non-IFRS calculation of adjusted EPS. The company's results since October 1, 2018 also have included new revenues in the Reuters News business from providing news and editorial content to Refinitiv since that day.  Additional information regarding Refinitiv's financial results is provided in the appendix to this news release.

Thomson Reuters

Thomson Reuters (TSX/NYSE: TRI) is the world's leading provider of news and information-based tools to professionals. Our worldwide network of journalists and specialist editors keep customers up to speed on global developments, with a particular focus on legal, regulatory and tax changes. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges. For more information on Thomson Reuters, visit tr.com and for the latest world news, reuters.com.

NON-IFRS FINANCIAL MEASURES

Thomson Reuters prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

This news release includes certain non-IFRS financial measures, such as adjusted EBITDA and the related margin (other than at the customer segment level), 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 2019 or 2020 impact 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 the occurrence or amount of other operating gains and losses, which generally arise from business transactions that it does not currently anticipate.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL RISKS AND MATERIAL ASSUMPTIONS

Certain statements in this news release, including, but not limited to, statements in the "Business Outlook for 2019 and 2020 (At Constant Currency)" section, Mr. Smith's comments, statements regarding the expected timing for the closing of the sale of the Pangea3/LMS business, the company's plans to make future share repurchases, and expectations for Corporate costs, are forward-looking. The words "expect", "believe", "target" and "will" 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 the events described in any forward-looking statement will materialize. Forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from current expectations. Many of these risks, uncertainties and assumptions are beyond our company's control and the effects of them can be difficult to predict.

Some of the material risk factors that could cause actual results or events to differ materially from those expressed in or implied by forward-looking statements in this news release include, but are not limited to, changes in the general economy; actions of competitors; fraudulent or unpermitted data access or other cyber-security or privacy breaches; failures or disruptions of telecommunications, data centers, network systems or the Internet; failure to develop new products, services, applications and functionalities to meet customers' needs, attract new customers and retain existing ones, or expand into new geographic markets and identify areas of higher growth; increased accessibility to free or relatively inexpensive information sources; failure to derive fully the anticipated benefits from the Refinitiv strategic partnership with Blackstone; failure to efficiently complete the separation of Refinitiv from Thomson Reuters; failure to adapt to organizational changes and effectively implement strategic initiatives; failure to meet the challenges involved in operating globally; failure to maintain a high renewal rate for recurring, subscription-based services; dependency on third parties for data, information and other services; changes to law and regulations; tax matters, including changes to tax laws, regulations and treaties; fluctuations in foreign currency exchange and interest rates; failure to attract, motivate and retain high quality management and key employees; failure to protect the brands and reputation of Thomson Reuters; inadequate protection of intellectual property rights; threat of legal actions and claims; downgrading of credit ratings and adverse conditions in the credit markets; failure to derive fully the anticipated benefits from existing or future acquisitions, joint ventures, investments or dispositions; the effect of factors outside of the control of Thomson Reuters on funding obligations in respect of pension and post-retirement benefit arrangements; risk of antitrust/competition-related claims or investigations; actions or potential actions that could be taken by the company's principal shareholder, The Woodbridge Company Limited; impairment of goodwill and other identifiable intangible assets; and the ability of Thomson Reuters Founders Share Company to affect the company's governance and management. These and other factors are discussed in materials that Thomson Reuters from time to time files with, or furnishes to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. Thomson Reuters annual and quarterly reports are also available in the "Investor Relations" section of www.thomsonreuters.com.

The company's 2019 and 2020 business outlook is based on information currently available to the company and is based on various external and internal assumptions made by the company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the company believes are appropriate under the circumstances. Economic and market assumptions include, but are not limited to, GDP growth in the United States (77% of the company's 2018 revenues) and secondarily, in other countries where Thomson Reuters operates; a continued increase in the demand and need for high quality information and tools that help automate or manage workflow solutions and drive productivity and efficiency; a continued need for trusted products and services that help customers navigate evolving and complex legal, tax, accounting, regulatory, geopolitical and commercial changes, developments and environments; and a continued increase in customers seeking software-as-a-service or other cloud-based offerings. Internal financial and operational assumptions include, but are not limited to, continued growth in the company's recurring revenue base which offsets anticipated declines in its global print business; acquiring new customers by enhancing the company's digital platforms and propositions and through other sales initiatives; improving customer retention through commercial simplification efforts and customer service improvements; the company's ability to continue to combine information, technology and human expertise in offerings that meet evolving customer demands and needs; the company's ability to reduce stranded costs related to the F&R transaction and the separation of the two businesses to less than $50 million in 2020; and the successful execution of a number of efficiency initiatives that are expected to generate cost savings, such as reducing headcount, office locations and the number of products offered by the company and the leveraging of fewer, shared technology platforms.

The company has provided an Outlook for the purpose of presenting information about current expectations for 2019 and 2020. This information may not be appropriate for other purposes. You are cautioned not to place undue reliance on forward-looking statements which reflect expectations only as of the date of this news release. Except as may be required by applicable law, Thomson Reuters disclaims any obligation to update or revise any forward-looking statements.

CONTACTS

MEDIA

David Crundwell

Head of Communications

+1 416 649 9904

david.crundwell@tr.com

INVESTORS

Frank J. Golden

Senior Vice President, Investor Relations

+1 646 223 5288

frank.golden@tr.com

Thomson Reuters will webcast a discussion of its first-quarter 2019 results today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You can access the webcast by visiting ir.thomsonreuters.com. An archive of the webcast will be available following the presentation.

 

Thomson Reuters Corporation

Consolidated Income Statement

(millions of U.S. dollars, except per share data)

(unaudited)



Three Months Ended


March 31,


2019

2018

CONTINUING OPERATIONS



Revenues

$1,487

$1,379

Operating expenses

(1,091)

(952)

Depreciation

(34)

(30)

Amortization of computer software

(105)

(98)

Amortization of other identifiable intangible assets

(27)

(29)

Other operating gains (losses), net

44

(2)

Operating profit

274

268

Finance costs, net:



     Net interest expense

(35)

(78)

     Other finance (costs) income

(11)

7

Income before tax and equity method investments

228

197

Share of post-tax (losses) earnings in equity method investments

(97)

2

Tax expense

(5)

(27)

Earnings from continuing operations

126

172

Loss from discontinued operations, net of tax

(10)

(483)

Net earnings (loss)

$116

$(311)




Earnings (loss) attributable to:



Common shareholders

116

(339)

Non-controlling interests

-

28




Earnings (loss) per share:



Basic and diluted earnings (loss) per share:



   From continuing operations

$0.25

$0.24

   From discontinued operations

(0.02)

(0.72)

Basic and diluted earnings (loss) per share

$0.23

$(0.48)




Basic weighted-average common shares

501,888,688

710,763,749

Diluted weighted-average common shares

503,649,290

711,498,620

 

Thomson Reuters Corporation

Consolidated Statement of Financial Position

(millions of U.S. dollars)

(unaudited)



March 31,  


December 31,

2019


2018

Assets




Cash and cash equivalents

$2,258


$2,706

Trade and other receivables

1,137


1,313

Other financial assets

48


76

Prepaid expenses and other current assets

553


434

Current assets

3,996


4,529





Computer hardware and other property, net

460


473

Computer software, net

884


908

Other identifiable intangible assets, net

3,298


3,324

Goodwill

5,091


5,076

Equity method investments

2,074


2,207

Other financial assets

109


53

Other non-current assets

552


446

Deferred tax

31


31

Total assets

$16,495


$17,047





Liabilities and equity




Liabilities




Current indebtedness

-


$3

Payables, accruals and provisions

$1,245


1,549

Deferred revenue

747


815

Other financial liabilities

186


95

Current liabilities 

2,178


2,462





Long-term indebtedness

3,223


3,213

Provisions and other non-current liabilities

1,163


1,268

Other financial liabilities

216


79

Deferred tax

718


799

Total liabilities

7,498


7,821





Equity




Capital

5,367


5,348

Retained earnings

4,502


4,755

Accumulated other comprehensive loss

(872)


(877)

Total equity

8,997


9,226

Total liabilities and equity

$16,495


$17,047

                                                                  

Thomson Reuters Corporation

Consolidated Statement of Cash Flow

(millions of U.S. dollars)

(unaudited)  



Three Months Ended March 31,


2019

2018

Cash (used in) provided by:



Operating activities



Earnings from continuing operations

$126

$172

Adjustments for:



Depreciation

34

30

Amortization of computer software

105

98

Amortization of other identifiable intangible assets

27

29

Net gains on disposals of businesses and investments

(24)

-

Deferred tax

(64)

5

Other

130

47

Pension contribution

(167)

-

Changes in working capital and other items 

(168)

(172)

Operating cash flows from continuing operations

(1)

209

Operating cash flows from discontinued operations

(57)

210

Net cash (used in) provided by operating activities

(58)

419




Investing activities



Acquisitions, net of cash acquired

(4)

(27)

Proceeds from disposals of businesses and investments

34

-

Capital expenditures

(110)

(179)

Other investing activities

3

-

Investing cash flows from continuing operations

(77)

(206)

Investing cash flows from discontinued operations

29

(108)

Net cash used in investing activities

(48)

(314)




Financing activities



Proceeds from debt

-

1,370

Net repayments under short-term loan facilities

-

(1,252)

Payments of lease principal

(11)

-

Repurchases of common shares

(190)

-

Dividends paid on preference shares

(1)

(1)

Dividends paid on common shares

(174)

(236)

Other financing activities

35

-

Financing cash flows from continuing operations

(341)

(119)

Financing cash flows from discontinued operations

-

(11)

Net cash used in financing activities

(341)

(130)

Decrease in cash and bank overdrafts

(447)

(25)

Translation adjustments

2

1

Cash and bank overdrafts at beginning of period

2,703

868

Cash and bank overdrafts at end of period

$2,258

$844

Cash and bank overdrafts at end of period comprised of:



Cash and cash equivalents

$2,258

$502

Cash and cash equivalents in assets held for sale

-

346

Bank overdrafts

-

(4)


$2,258

$844

 

Thomson Reuters Corporation

Reconciliation of Earnings from Continuing Operations to Adjusted EBITDA(1)

(millions of U.S. dollars, except for margins)

(unaudited)



Three Months Ended


March 31,



2019 

2018


Earnings from continuing operations

$126

$172


Adjustments to remove:




Tax expense

5

27


Other finance costs (income)

11

(7)


Net interest expense

35

78


Amortization of other identifiable intangible assets

27

29


Amortization of computer software

105

98


Depreciation

34

30


EBITDA

$343

$427


Adjustments to remove:




Share of post-tax losses (earnings) in equity method investments

97

(2)


Other operating (gains) losses, net

(44)

2


Fair value adjustments

1

3


Adjusted EBITDA

$397

$430


Adjusted EBITDA margin(1)

26.7%

31.1%


 

Thomson Reuters Corporation

Reconciliation of Net Earnings (Loss) to Adjusted Earnings(2)

(millions of U.S. dollars, except for share and per share data)

(unaudited)



Three Months Ended



March 31,



2019

2018

Change

Net earnings (loss)

$116

$(311)


Adjustments to remove:




Fair value adjustments

1

3


Amortization of other identifiable assets 

27

29


Other operating (gains) losses, net

(44)

2


Other finance costs (income)

11

(7)


Share of post-tax losses (earnings) in equity method investments

97

(2)


Tax on above items

(25)

(5)


Tax items impacting comparability

(11)

2


Loss from discontinued operations, net of tax

10

483


Interim period effective tax rate normalization(3)

-

4


Dividends declared on preference shares

(1)

(1)


Adjusted earnings

$181

$197


Adjusted EPS

$0.36

$0.28

29%

Foreign currency(4)



4%

Before currency (4)



25%





Diluted weighted-average common shares (millions)

503.6

711.5




Refer to page 13 for footnotes.

 

Thomson Reuters Corporation

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow(5)

(millions of U.S. dollars)

(unaudited)



Three Months Ended

March 31,


2019

2018

Net cash (used in) provided by operating activities

$(58)

$419

Capital expenditures

(110)

(179)

Capital expenditures from discontinued operations

-

(108)

Other investing activities

3

-

Payments of lease principal

(11)

-

Dividends paid on preference shares

(1)

(1)

Dividends paid to non-controlling interests from discontinued operations

-

(11)

Free cash flow

$(177)

$120

 


Thomson Reuters Corporation

Reconciliation of Changes in Segment and Consolidated Revenues (for Total Revenues, Recurring Revenues and
Transactions Revenues) to Changes in Revenues on an Organic Basis
(6)

(millions of U.S. dollars)

(unaudited)




Three Months Ended





March 31,


Change



2019

2018


Total

Foreign
Currency

Acquisitions/
(Divestitures)

Organic

Total Revenues









Legal Professionals


$594

$585


2%

-1%

-

3%

Corporates


352

329


7%

-2%

3%

6%

Tax Professionals


222

217


2%

-3%

-

5%

Reuters News


155

72


115%

-6%

118%*

3%

Global Print


165

177


-7%

-3%

-

-4%

Eliminations


(1)

(1)


-

-

-

-

Revenues


$1,487

$1,379


8%

-2%

7%

3%










Recurring Revenues 









Legal Professionals


$550

$533


3%

-1%

-

5%

Corporates


269

243


10%

-2%

3%

9%

Tax Professionals


173

167


4%

-3%

-

7%

Reuters News


145

62


133%

-3%

135%*

1%

Total Recurring Revenues


$1,137

$1,005


13%

-2%

9%

6%










Transactions Revenues









Legal Professionals


$44

$52


-15%

-1%

-4%

-9%

Corporates


83

86


-3%

-1%

3%

-4%

Tax Professionals


49

50


-2%

-2%

-

-

Reuters News


10

10


3%

-27%

-

31%

Total Transactions Revenues


$186

$198


-5%

-3%

-

-3%





















*

Includes initial contract value of revenues in Reuters News for providing news and editorial content to Refinitiv under the 30-year agreement that began in

the fourth quarter of 2018.



Growth percentages are computed using whole dollars. Components of revenue growth may not total due to rounding.



Refer to page 13 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)

Adjusted earnings and adjusted EPS include dividends declared on preference shares but exclude 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 using diluted weighted-average shares and does not represent actual earnings or loss per share

attributable to shareholders. Thomson Reuters uses adjusted earnings and adjusted EPS as they provide a more comparable basis to analyze earnings and

they are also measures commonly used by shareholders to measure the company's performance.

(3)

Adjustment to reflect income taxes based on estimated full-year effective tax rate. Earnings or losses for interim periods under IFRS reflect income taxes

based on the estimated effective tax rates of each of the jurisdictions in which Thomson Reuters operates. The non-IFRS adjustment reallocates estimated

full-year income taxes between interim periods, but has no effect on full-year income taxes.

(4)

The changes in revenues, adjusted EBITDA and the related margins, and adjusted earnings per share before currency (at constant currency or excluding the

effects of currency) are determined by converting the current and prior-year period's local currency equivalent using the same exchange rates.

(5)

Free cash flow (includes free cash flow from continuing and discontinued operations) 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, dividends paid on the company's preference

shares, and dividends paid to non-controlling interests from discontinued operations. Thomson Reuters uses free cash flow as it helps assess the company's

ability, over the long term, to create value for its shareholders as it represents cash available to repay debt, pay common dividends and fund share

repurchases and new acquisitions.

(6)

Changes in revenues computed on an organic basis are revenues at constant currency excluding the impacts from acquisitions and dispositions, as well as the

initial contract value of the 30-year Reuters News agreement with Refinitiv signed in 2018. 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.  

 

APPENDIX – INFORMATION ABOUT REFINITIV

As of October 1, 2018, Thomson Reuters owns a 45% interest in Refinitiv, which was formerly its wholly owned F&R business. 55% of Refinitiv is owned by private equity funds managed by Blackstone. Beginning with the fourth quarter of 2018, Thomson Reuters' IFRS results include the company's 45% share of Refinitiv's results reported in a single line item on the company's consolidated income statement titled "Share of post-tax (losses) earnings in equity method investments." Thomson Reuters' non-IFRS measures, including adjusted earnings, exclude its share of post-tax results in Refinitiv and other equity method investments.

Because Refinitiv has only been in existence since October 1, 2018, there are no financial statements for the business for the three months ended March 31, 2018. The table below sets forth selected financial information for 100% of Refinitiv for the first quarter of 2019, on both an IFRS and non-IFRS basis, as well as a reconciliation between the two bases, as provided to Thomson Reuters from Refinitiv for inclusion in this news release. A reconciliation from Refinitiv's IFRS measures to its non-IFRS measures is also included in this appendix. The information for the first quarter of 2018 that was previously reported for the F&R business by Thomson Reuters is not fully comparable to Refinitiv's current basis of presentation, as Refinitiv must apply accounting rules related to the purchase of the business and because Refinitiv defines its non-IFRS measures differently than Thomson Reuters. To provide a reasonable basis to assess revenue trends for the business, Thomson Reuters has noted the first quarter 2018 F&R revenues, as previously reported by the company on a discontinued operations basis prior to the change in ownership, and provided a supplemental change before currency and purchase accounting adjustments.

(millions of U.S. dollars, except for margin)

Three months ended March 31,

(unaudited)



Change


Refinitiv
Actuals
2019

As Reported
by Thomson
Reuters
2018

Total

Before
Currency

& Purchase
Accounting 
Adjustments

IFRS Measures





Revenues

$1,567

$1,583

-1%

3%






Net loss

$(201)




Cash flow from operations

$(200)




Capital expenditures

$132




Debt at March 31, 2019

$12,906




Preferred equity at March 31, 2019

$1,073









Non-IFRS Measures





Adjusted EBITDA

$557




Adjusted EBITDA margin  

35.5%




Free cash flow

$(341)




















 

The following reconciliation of IFRS measures to non-IFRS measures was provided by Refinitiv. The definitions of

non-IFRS measures used by Refinitiv are not the same as those used by Thomson Reuters.




Refinitiv



Reconciliation of Net Loss to Adjusted EBITDA



(millions of U.S. dollars, except for margins)



(unaudited)







Three Months Ended



March 31,




2019 



Net loss

$(201)



Adjustments to remove:




Tax benefit

(25)



Finance costs

196



Depreciation and amortization

479



EBITDA

$449



Adjustments to remove:




Other operating losses

2



Fair value adjustments

9



Transformation-related costs

97



Adjusted EBITDA

$557



Adjusted EBITDA margin

35.5%









Refinitiv



Reconciliation of Net Cash Used In Operating Activities to Free Cash Flow



(millions of U.S. dollars)



(unaudited)







Three Months Ended



March 31,




2019 



Net cash used in operating activities

$(200)



Capital expenditures

(132)



Proceeds from disposals of property and equipment

1



Other investing activities

(1)



Dividends paid to non-controlling interests  

(9)



Free cash flow

$(341)



 

 

Cision

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