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Thomson Reuters Q2 Adjusted Earnings, Revenues Beat

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Leading provider of value-added information and technology, Thomson Reuters Corporation (TRI - Free Report) posted its second quarter 2014 results wherein the company’s adjusted earnings of 51 cents a share increased 6.3% year over year and surpassed the Zacks Consensus Estimate of 47 cents.    



Total revenue came in at $3,159 million, compared to $3,163 million reported last year. However, revenues cruised ahead of the Zacks Consensus Estimate of $3,123 million.

Further, Thomson Reuters’ adjusted earnings before interest, taxes and depreciation (EBITDA) climbed 2.2% to $877 million. The adjusted EBITDA margin expanded 20 basis points (bps) to 27.8%, on the back of cost savings realized in the company’s Financial & Risk segment.

Also, benefiting from the same factors mentioned above, the company’s operating profit inched up 2.1% to $581 million, with the respective margin expanding 10 bps to 18.4%.

Segment Details

On analyzing the company’s major segments, while revenues at Financial & Risk segment remained almost flat at $1,655 million, the Legal; Tax & Accounting; and Intellectual Property & Science segments posted 1%, 13% and 7% year-over-year growth in revenues, coming in at $850 million, $324 million and $251 million, respectively.

However, adjusted EBITDA delivered growth in all main segments as it ascended by 1% to $426 million, 2% to $331 million, 13% to $98 million and by 8% to $85 million at the Financial & Risk; Legal; Tax & Accounting; and Intellectual Property & Science segments, respectively.


The company ended the quarter with cash and cash equivalents of $704 million and total shareholders equity, excluding non-controlling interests standing at $15,645 million.

During the quarter, the company bought back 10 million shares worth $353 million, bringing its total number of share repurchased to 26.6 million, for a total cost of $960 million. These repurchases formed a part of the company’s previous authorization of $1.0 billion, declared in Oct 2013.

Concurrent to this press release, management announced its plans to buy back shares worth an additional $1.0 billion by the end of fiscal 2015.

Moreover, it declared to pay a quarterly dividend of 33 cents a share on Sep 15, 2014, to shareholders of record as on Aug 21, 2014.

Going Forward

The company reiterated its full-year 2014 guidance. It still envisions revenues to be in line with the 2013 level. Management continues to anticipate adjusted EBITDA margin to lie in the band of 26%–27%, underlying operating profit margin to lie in the range of 17% – 18% and free cash flow to come in the $1.3–$1.5 million range.

Management seems impressed with its second-quarter performance and believes that it is well-positioned to achieve its full-year goals. It remains focused on allocating resources tactfully and simplifying its organizational structure in order to exploit growth opportunities and sustain its current momentum.

Other Stocks to Consider

Thomson Reuters currently carries a Zacks Rank #2 (Buy). Other computer & technology stocks, which look attractive at current levels include VeriFone Systems, Inc. (PAY - Free Report) , ExamWorks Group, Inc. and CRA International Inc. (CRAI - Free Report) , each carrying a Zacks Rank #1 (Strong Buy).

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