NEW YORK, N.Y., Apr 28, 2011 - (ACN Newswire) - Thomson Reuters (TSX / NYSE: TRI), the world's leading source of intelligent information for businesses and professionals, today reported results for the first quarter ended March 31, 2011. The company reported ongoing revenues of $3.2 billion, a 5% increase before currency, underlying operating profit of $556 million and an underlying operating profit margin of 17.2%.
* Revenue growth continues to accelerate; up 5% before currency
* Underlying operating profit up 1% (8% before one-time charges)
* Underlying operating profit margin was 17.2% (18.4% before one-
time charges)
* Adjusted earnings per share were $0.39 ($0.42 before one-time
charges) vs.$0.36 in first quarter 2010
* 2011 Outlook affirmed
Adjusted earnings per share (EPS) were $0.39, as compared to $0.36 in the first
quarter of 2010. The company incurred $39 million in one-time charges in the
first quarter, which it estimates will result in savings of $40 million in
2011. These charges, and related savings, are non-integration related and result
from ongoing efficiency opportunities to streamline the company's operations.
"I am pleased with our solid results for the first quarter," said Thomas H.
Glocer, chief executive officer of Thomson Reuters. "2011 is playing out much as
we anticipated, with accelerating revenue growth which will drive expanding
margins and higher cash flow as the year progresses."
"We are also focused on creating value by reallocating capital and talent to
drive growth and returns across the company. Today we announced the planned
divestiture of two businesses in the Markets division which, with the proceeds
of the previously announced sales of BARBRI and our Scandinavian Legal and Tax &
Accounting businesses, should provide approximately $1 billion for re-investment
in the attractive opportunities we find in our core businesses."
"Based on our good start to the year, we are confident that we will deliver on
our expectations for the full year."
Consolidated Financial Highlights
Today, the company announced its intention to sell its Enterprise Risk and
Portia businesses. Both of these transactions are expected to close in the
second half of 2011. The information presented in this news release excludes the
results from the businesses announced for disposal (BARBRI, the Scandinavian
Legal and Tax & Accounting businesses and the Enterprise Risk and Portia
businesses).
Three Months Ended March 31,
(Millions of U.S. dollars, except EPS and margin)
IFRS Financial Measures 2011 2010 Change
Revenues $3,330 $3,140 6%
Operating profit $396 $321 23%
Diluted earnings per share (EPS) $0.30 $0.15 100%
Cash flow from operations $124 $209 -41%
Change Before
Non-IFRS Financial Measures[1] 2011 2010 Change Currency
Revenues from ongoing businesses $3,240 $3,057 6% 5%
Adjusted EBITDA $751 $725 4% 3%
Adjusted EBITDA margin 23.2% 23.7% -50bp
Underlying operating profit $556 $550 1% 0%
Underlying operating profit margin 17.2% 18.0% -80bp
Adjusted earnings per share (EPS) $0.39 $0.36 8%
Underlying free cash flow $13 $107 -88%
[1] 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. Additional information is provided in the explanatory note at the end
of this news release.
* Revenues from ongoing businesses were $3.2 billion, a 5% increase
before currency. Strong growth across the Professional division,
up 8%, and a 2% increase in the Markets division revenues contributed
to the overall increase.
* Adjusted EBITDA increased 4%, and the corresponding margin was 23.2%
versus 23.7% in the prior-year period. Flow-through from higher
revenues and synergy savings in Markets were partly offset by $39
million of one-time charges and the dilutive effects of 2010
acquisitions. Adjusted EBITDA margin, excluding these one-time
charges, was 24.4%.
* Underlying operating profit increased 1% and the corresponding margin
was 17.2% (18.4% excluding one-time charges), versus 18.0% in the
same period in 2010. Underlying operating profit growth across both
divisions was partly offset by the one-time charges.
* Adjusted EPS was $0.39 compared to $0.36 in the prior-year period.
The increase was largely attributable to lower integration costs and
higher underlying operating profit. Adjusted EPS prior to one-time
charges was $0.42.
First-Quarter Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are
before the impact of foreign currency as Thomson Reuters believes this provides
the best basis to measure the performance of its business. All revenue growth
and operating profit comparisons are based upon results from ongoing businesses
and exclude the results of disposals.
Professional Division
Three Months Ended March 31,
(Millions of U.S. dollars, except margin)
Change Before
2011 2010 Change Currency
Revenues
Legal $885 $799 11% 10%
Tax & Accounting $272 $260 5% 4%
Healthcare & Science $220 $208 6% 6%
Professional Division
Total $1,377 $1,267 9% 8%
Adjusted EBITDA
Legal $291 $278 5%
Tax & Accounting $66 $57 16%
Healthcare & Science $62 $62 0%
Professional Division
Total $419 $397 6% 5%
Operating profit
Legal $216 $210 3%
Tax & Accounting $41 $35 17%
Healthcare & Science $44 $44 0%
Professional Division
Total $301 $289 4% 4%
* Revenues were up 8%, driven by solid growth across all businesses,
in particular Legal which grew 10% driven by growth in revenues
across all major units and acquisitions.
* EBITDA increased 6% compared to the prior-year period. The
corresponding margin was 30.4% compared to 31.3% for the prior year.
The decline in margin was due to $11 million in one-time charges and
the dilutive effect from 2010 acquisitions.
* Operating profit was up 4% compared to the prior-year period. The
corresponding margin was 21.9% compared to 22.8% for the prior year.
The decline in margin was due to one-time charges and the dilutive
effect from 2010 acquisitions.
* Excluding one-time charges, EBITDA margin was 31.2% versus 31.3%
in the prior-year period, and the operating profit margin was 22.7%
versus 22.8% for the same period a year ago.
Legal
* Revenues increased 10% from the prior-year period largely helped by
acquisitions. Subscription revenues grew 8%, led by 16% growth in
FindLaw. Corporate, Government and Academic revenues increased 12%.
Non-subscription revenues increased 26% primarily due to strong sales
at our Elite law firm automation unit (up 30%). Print revenues were
up 5% primarily due to timing and stabilizing print attrition.
* EBITDA increased 5% and the associated margin was 32.9% and included
$10 million in one-time charges and the dilutive effect of
acquisitions. Excluding one-time charges, EBITDA rose 8% and the
associated margin was 34.0%.
* Operating profit increased 3% and the associated margin was 24.4%.
Excluding one-time charges, operating profit rose 8% and the related
margin was 25.5%.
* WestlawNext has been sold to over 18,500 customers since its launch
in February 2010 - representing 34% of Westlaw's revenue base.
Customer feedback continues to be extremely positive.
Tax & Accounting
* Revenues were up 4%. Workflow & Service Solutions (two-thirds of the
segment's revenues) grew 5%, led by growth in income tax software
products, global tax technology products and acquisitions. Business
Compliance & Knowledge Solutions revenues grew 3%, as online
(including Checkpoint) growth of 12% and acquisitions were partly
offset by decline in print, which comprised 8% of Tax & Accounting's
first-quarter revenues.
* EBITDA increased 16% and the related margin increased 240 basis
points to 24.3%.
* Operating profit increased 17% and the related margin increased 160
basis points to 15.1%.
* EBITDA and operating profit growth was driven by strong flow-through
from revenues and the results of efficiency initiatives. Tax &
Accounting is a seasonal business with nearly 50% of its operating
profit tr aditionally generated in the fourth quarter.
Healthcare & Science
* Revenues grew 6% from the prior-year period. Growth was driven by
continued demand for healthcare spending analytics in the Payer
business, which was up double-digit. Scientific & Scholarly Research
was down 2%, primarily due to timing related to a significant
backfiles sale in the first quarter of
2010. Life Sciences revenues increased 14% due to strong demand for
biology and disease analytics products and the GeneGo acquisition.
* EBITDA was flat with the corresponding margin decreasing to 28.2%.
* Operating profit was flat with the corresponding margin decreasing
to 20.0%. The decline in EBITDA and operating profit margins was due
to timing of revenues and a difficult prior-year comparison.
Markets Division
Three Months Ended March 31,
(Millions of U.S. dollars, except margin)
Change Before
2011 2010 Change Currency
Revenues
Sales & Trading $927 $890 4% 2%
Investment & Advisory $560 $559 0% -1%
Enterprise $296 $263 13% 10%
Media $82 $80 2% 1%
Markets Division Total $1,865 $1,792 4% 2%
Adjusted EBITDA $471 $475 -1% -3%
Adjusted EBITDA Margin % 25.3% 26.5%
Operating Profit $330 $318 4% 2%
Operating Profit Margin % 17.7% 17.7%
* Revenues increased 2%. By segment, strong revenue growth in
Enterprise, Commodities & Energy and Tradeweb was partly offset by
weakness in Investment Management and Exchange Traded Instruments.
* Recurring subscription-related revenues increased 2%. Revenue growth
would have been 3% absent a 5% decline in recoveries (pass-through
revenues from third party services such as exchange fees).
Transactions-related revenues increased 15%, primarily due to the
change in the company's ownership in Tradeweb. Outright revenues
increased 3%.
* By geography, revenues in the first quarter grew across all major
regions of the world. Asia increased 3%, while Europe, Middle East
and Africa (EMEA) increased 2% and the Americas increased 2%.
* EBITDA was $471 million, down 1%, with the related margin of 25.3%.
* Operating profit was $330 mil, up 4%, with related margin of 17.7%.
* EBITDA and operating profit margin included a one-time charge of
approximately $28 million.
* Excluding the one-time charge, EBITDA margin was 26.8% (up 30
basis points versus a year ago) and the operating margin was 19.2%
(up 150 basis points versus a year ago).
* Markets has sold or migrated more than 19,000 Thomson Reuters Eikon
desktops since the launch of its new flagship desktop offering in
September 2010.
Sales & Trading
* Revenues were up 2% driven by Tradeweb growth of 35%, primarily due
to the change in the company's ownership in the business. Revenue
growth was partly offset by a 9% decline in recoveries.
* The Treasury business grew 1% with growth impacted by 2010
subscription cancellations.
* Revenues from Commodities & Energy grew 9% primarily due to an
acquisition, while Exchange Traded Instruments declined 6%, due
to planned shutdowns of low-margin products and the continued
reduction of recoveries revenue as exchanges move to direct billing.
Investment & Advisory
* Revenues declined 1%. A 3% increase in Corporates and a 1% increase
in Wealth Management was not enough to offset weak performance in
Investment Management which declined 4% - an improvement over the
10% annual decline in 2010.
* An integrated plan has been established to improve the performance
of the Investment Management unit, including a change in management,
changes in the "go-to-market" strategy as well as longer-term product
enhancements culminating in the planned release of Thomson Reuters
Eikon for Investment Management later in the year.
Enterprise
* Revenues grew 10%, driven by continued strong customer demand. The
Enterprise Real Time Solutions business grew 10% as customers
continued to invest in low-latency data feeds and hosting solutions.
The Enterprise Content business grew 17%, driven by growth in
pricing and reference data. The Platform business grew 4%, driven
by strong sales of recurring products. Omgeo's revenues increased 7%
due to strong equity volumes.
* Thomson Reuters Elektron continued to gain momentum as customers in
established and emerging markets adopted its combination of hosted
and deployed information and trading solutions. In total, 12 data
hosting centers are up and running with India having opened in the
first quarter and Brazil scheduled to open in the second quarter.
Media
* Revenues increased 1% driven by flow-through from good sales in the
second half of 2010.
* The Consumer business grew 6% in the first quarter, due to a pickup
in online advertising sales across all global properties, while the
News Agency business was flat.
Corporate & Other
Corporate costs were $143 million, compared to $163 million in the prior-year
period, and were comprised of core corporate costs of $75 million, favorable
fair-value adjustments (non-cash) of $2 million and integration program costs of
$70 million. Compared to the prior-year period, corporate costs decreased by $20
million primarily from lower integration program expenses.
Integration Programs
At the end of the first quarter of 2011, Thomson Reuters had achieved combined
run-rate savings of $1.5 billion from the Reuters integration, and legacy
savings programs. An incremental $80 million in run-rate savings achieved during
the first quarter of 2011 was largely attributable to retirement of legacy
products and execution of our sales and customer service transformation
programs.
Integration-related costs totaled $70 million in the quarter and are forecast to
be $200 million for the full-year 2011.
Business Outlook (Before Currency)
The information in this section is forward-looking and should be read in
conjunction with the section below entitled "Special Note Regarding Forward-
Looking Statements, Material Assumptions and Material Risks."
Thomson Reuters today reaffirmed its business outlook for 2011 that was
previously communicated in February.
Based on new products gaining momentum and our markets recovering, Thomson
Reuters expects revenues to grow mid-single digits in 2011.
Thomson Reuters expects adjusted EBITDA margin to increase by at least 300 basis
points in 2011 reflecting revenue growth and the completion of integration
programs.
Thomson Reuters expects underlying operating profit margin to increase by at
least 100 basis points in 2011. This increase comes after absorbing a 70 basis
point impact from higher depreciation and amortization related to prior years'
investments in recently launched products.
The company expects that strong adjusted EBITDA growth in 2011 will contribute
to a 20% - 25% increase in reported free cash flow.
Dividend
As previously announced, Thomson Reuters increased its 2011 annual dividend by
$0.08 per share to $1.24 per share. A quarterly dividend of $0.31 per share is
payable on June 15, 2011 to shareholders of record as of May 19, 2011.
Recent Developments
Today, the company announced its intention to sell its Enterprise Risk and
Portia businesses. Both of these transactions are expected to close in the
second half of 2011.
The company closed the sale of its Scandinavian Legal and Tax & Accounting
businesses earlier this month and has signed an agreement to dispose of its
BARBRI legal education business, which is expected to close later this quarter.
The company expects net proceeds resulting from these dispositions of
approximately $1 billion.
Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for
businesses and professionals. We combine industry expertise with innovative
technology to deliver critical information to leading decision makers in the
financial, legal, tax and accounting, healthcare and science and media markets,
powered by the world's most trusted news organization. With headquarters in New
York and major operations in London and Eagan, Minnesota, Thomson Reuters
employs more than 55,000 people and operates in over 100 countries. Thomson
Reuters shares are listed on the Toronto and New York Stock Exchanges (symbol:
TRI). For more information, go to www.thomsonreuters.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. 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.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, MATERIAL ASSUMPTIONS AND
MATERIAL RISKS
Certain statements in this news release, including, but not limited to,
statements in the "Integration Programs" and "Business Outlook (Before
Currency)" sections and Mr. Glocer's comments, are forward-looking. These
forward-looking statements are based on certain assumptions and reflect our
company's current expectations. As a result, forward-looking statements are
subject to a number of risks and uncertainties that could cause actual results
or events to differ materially from current expectations. There is no assurance
that the events described in any forward-looking statement will materialize. A
business outlook is provided for the purpose of presenting information about
current expectations for 2011. 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.
The material assumptions underlying the company's 2011 business outlook are
based on various external and internal assumptions. Economic and market
assumptions include, but are not limited to, positive global GDP growth led by
rapidly developing economies and a continued increase in the number of
professionals around the world and their demand for high quality information and
services. Internal financial and operational assumptions include, but are not
limited to, the successful execution of the company's ongoing product release
programs, globalization strategy, other growth initiatives and efficiency
programs.
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; increased accessibility to free or
relatively inexpensive information sources; failure to develop new products,
services, applications and functionalities to meet customers' needs, attract new
customers or expand into new geographic markets; failure to maintain a high
renewal rate for subscription-based services; failures or disruptions of network
systems or the Internet; detrimental reliance on third parties for information
and other services; changes to law and regulations, including the impact of the
Dodd-Frank legislation and similar financial services laws around the world;
failure to meet the challenges involved in operating globally; failure to
protect the reputation of Thomson Reuters; impairment of goodwill and
identifiable intangible assets; inadequate protection of intellectual property
rights; threat of legal actions and claims; downgrading of credit ratings and
adverse conditions in the credit markets; fluctuations in foreign currency
exchange and interest rates; failure to recruit and retain high quality
management and key employees; the effect of factors outside of the control of
Thomson Reuters on funding obligations in respect of pension and post-retirement
benefit arrangements; actions or potential actions that could be taken by the
company's principal shareholder, The Woodbridge Company Limited; failure to
fully derive anticipated benefits from future or existing acquisitions, joint
ventures, investments or dispositions; and failure to achieve benefits from
integration programs to the extent, or within the time period, currently
expected. 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.
CONTACT
MEDIA
Calvin Mitchell
Senior Vice President, Corporate
Affairs
+1 646 223 5285
calvin.mitchell@thomsonreuters.com
INVESTORS
Frank J. Golden
Senior Vice President, Investor
Relations
+1 646 223 5288
frank.golden@thomsonreuters.com
Thomson Reuters will webcast a discussion of its first-quarter 2011 results
today beginning at 8:30 a.m. Eastern Daylight Time (EDT). You can access the
webcast by visiting www.thomsonreuters.com and clicking on "Investor Relations"
at the top of the page and then "Thomson Reuters Reports First-Quarter 2011
Results." An archive of the webcast will be available in the "Investor
Relations" section of the Thomson Reuters website.
Topic: Earnings
Source: Thomson Reuters
Sectors: Daily Finance
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