6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2022

Commission File Number: 1-31349

 

 

THOMSON REUTERS CORPORATION

(Translation of registrant’s name into English)

 

 

333 Bay Street, Suite 300

Toronto, Ontario M5H 2R2, Canada

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☐            Form 40-F  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

The information contained in Exhibit 99.1 and Exhibit 99.2 of this Form 6-K is incorporated by reference into, or as additional exhibits to, as applicable, the registrant’s outstanding registration statements.

Thomson Reuters Corporation is voluntarily furnishing certifications by its Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 99.3-99.6 of this Form 6-K.

 

 

 


EXHIBIT INDEX

 

Exhibit Number

  

Description

99.1

   Management’s Discussion and Analysis

99.2

   Unaudited Consolidated Financial Statements

99.3

   Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

99.4

   Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

99.5

   Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.6

   Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

THOMSON REUTERS CORPORATION

(Registrant)

By:  

/s/ Jennifer Ruddick

  Name:   Jennifer Ruddick
  Title:   Assistant Secretary

Date: November 3, 2022

EXHIBIT 99.1 - MANAGEMENT'S DISCUSSION AND ANALYSIS

Exhibit 99.1

 

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Management’s Discussion and Analysis

This management’s discussion and analysis is designed to provide you with a narrative explanation through the eyes of our management of how we performed, as well as information about our financial condition and future prospects. As this management’s discussion and analysis is intended to supplement and complement our financial statements, we recommend that you read this in conjunction with our consolidated interim financial statements for the three and nine months ended September 30, 2022, our 2021 annual consolidated financial statements and our 2021 annual management’s discussion and analysis. This management’s discussion and analysis contains forward-looking statements, which are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. Forward-looking statements include, but are not limited to, our two-year outlook, including forecasted impacts associated with our Change Program, and our expectations related to general economic conditions and market trends and their anticipated effects on our business segments. For additional information related to forward-looking statements, material assumptions and material risks associated with them, please see the “Outlook,” and “Additional Information—Cautionary Note Concerning Factors That May Affect Future Results” sections of this management’s discussion and analysis. This management’s discussion and analysis is dated as of November 1, 2022.

We have organized our management’s discussion and analysis in the following key sections:

 

  Executive Summary – an overview of our business and key financial highlights     3  
  Results of Operations – a comparison of our current and prior-year period results     5  
  Liquidity and Capital Resourcesa discussion of our cash flow and debt     13  
  Outlook – our two-year financial outlook, including material assumptions and material risks     18  
  Related Party Transactions – a discussion of transactions with our principal and controlling shareholder, The Woodbridge Company Limited (Woodbridge) and other related parties     21  
  Subsequent Events – a discussion of material events occurring after September  30, 2022 and through the date of this management’s discussion and analysis     21  
  Changes in Accounting Policies – a discussion of changes in our accounting policies     21  
  Critical Accounting Estimates and Judgments – a discussion of critical estimates and judgments made by our management in applying accounting policies     21  
  Additional Information – other required disclosures     22  
  Appendix – supplemental information     24  

Unless otherwise indicated or the context otherwise requires, references in this discussion to “we,” “our,” “us”, the “Company” and “Thomson Reuters” are to Thomson Reuters Corporation and our subsidiaries.

Basis of presentation

We prepare our consolidated financial statements in U.S. dollars and in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

Other than EPS, we report our results in millions of U.S. dollars, but we compute 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.

In the first quarter of 2022, we made two changes to our segment reporting to reflect changes in how we manage our businesses. Prior-period amounts have been revised to reflect the current presentation. Refer to the “Additional information” section of this management’s discussion and analysis for further information.

Use of non-IFRS financial measures

In this management’s discussion and analysis, we discuss our results on both an IFRS and non-IFRS basis. We use non-IFRS financial measures, which include ratios that incorporate one or more non-IFRS financial measures, as supplemental indicators of our operating performance and financial position as well as for internal planning purposes, our management incentive programs and our business outlook. We believe non-IFRS financial measures provide more insight into our performance. Non-IFRS measures do not have 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.

 

 

 

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See Appendix A of this management’s discussion and analysis for a description of our non-IFRS financial measures, including an explanation of why we believe they are useful measures of our performance, including our ability to generate cash flow. Refer to the “Liquidity and Capital Resources” section of this management’s discussion and analysis and Appendix B for reconciliations of our non-IFRS financial measures to the most directly comparable IFRS measures.

Glossary of key terms

The following terms in this management’s discussion and analysis have the following meanings, unless otherwise indicated:

 

Term

  Definition

“Big 3” segments

  Our combined Legal Professionals, Corporates and Tax & Accounting Professionals segments

Blackstone’s consortium

  The Blackstone Group and its subsidiaries, and private equity funds affiliated with Blackstone

bp

  Basis points — one basis point is equal to 1/100th of 1%; “100bp” is equivalent to 1%

Change Program

  A two-year initiative focused on transforming our company from a holding company to an operating company and from a content provider into a content-driven technology company

constant currency

  A non-IFRS measure derived by applying the same foreign currency exchange rates to the financial results of the current and equivalent prior-year period

COVID-19

  A novel strain of coronavirus that was characterized a pandemic by the World Health Organization during March 2020

EPS

  Earnings per share

LSEG

  London Stock Exchange Group plc

n/a

  Not applicable

n/m

  Not meaningful

organic or organically

  A non-IFRS measure that 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

Refinitiv

  The Refinitiv business of LSEG. We owned 45% of Refinitiv prior to its sale on January 29, 2021

YPL

  York Parent Limited, the entity that owns LSEG shares, which is jointly owned by our company and the Blackstone consortium. A group of current LSEG and former members of Refinitiv senior management also owns part of YPL. References to YPL also include its subsidiaries. YPL was previously known as Refinitiv Holdings Limited prior to the sale of Refinitiv to LSEG on January 29, 2021

$ and US$

  U.S. dollars

 

 

 

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Executive Summary

Our company

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.

We derive most of our revenues from selling information and software solutions, primarily electronically and on a recurring subscription basis. Our solutions blend deep domain knowledge with software and automation tools. We believe our workflow solutions make our customers more productive, by streamlining how they operate, enabling them to focus on higher value activities. Many of our customers use our solutions as part of their workflows, which has led to strong customer retention. We believe that our customers trust us because of our history and dependability and our deep understanding of their businesses and industries, and they rely on our services for navigating a rapidly changing and increasingly complex digital world. Over the years, our business model has proven to be capital efficient and cash flow generative, and it has enabled us to maintain leading and scalable positions in our chosen market segments.

We are organized as five reportable segments described below, which reflect how we manage our businesses.

 

    

 

 

Third Quarter 2022 Revenues

 

 

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Legal Professionals

Serves law firms and governments with research and workflow products, focusing on intuitive legal research powered by emerging technologies and integrated legal workflow solutions that combine content, tools and analytics.

 

 

 

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Corporates

Serves corporate customers from small businesses to multinational organizations, including the seven largest global accounting firms, with our full suite of content-enabled technology solutions for in-house legal, tax, regulatory, compliance and IT professionals.

 

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Tax & Accounting Professionals

Serves tax, accounting and audit professionals in accounting firms (other than the seven largest, which are served by our Corporates segment) with research and workflow products, focusing on intuitive tax offerings and automating tax workflows.

 

 

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Reuters News

Supplies business, financial and global news to the world’s media organizations, professionals and news consumers through Reuters News Agency, Reuters.com, Reuters Events, Thomson Reuters products and the Refinitiv business of LSEG.

 

 

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Global Print

Provides legal and tax information primarily in print format to customers around the world.

 

Our businesses are supported by a corporate center that centrally manages commercial and technology operations, including those around our sales capabilities, digital customer experience and product and content development. Our corporate center also centrally manages functions such as finance, legal and human resources, and our Change Program. We report “Corporate costs” which includes expenses for corporate functions and our Change Program.

 

 

 

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Key Financial Highlights

The momentum of our businesses continued in the third quarter of 2022. Total company revenues grew 3%, while organic revenues increased 6% driven by the third consecutive quarter of 7% recurring revenue growth. Organic revenues for our “Big 3” segments (Legal Professionals, Corporates and Tax & Accounting Professionals) increased 6%. In September 2022, we launched Westlaw Precision, a significant upgrade to our flagship legal research offering. We are encouraged by the customer interest, feedback, and initial sales activity for the product.

While we acknowledge growing macroeconomic uncertainty, our businesses are resilient and continue to benefit from the increasing complexity of regulation in our legal, tax and risk-related markets. To date, we have not observed significant changes in customer buying patterns, except for a few pockets within our Corporates segment where sales cycles have lengthened modestly. On November 1, 2022, we announced that we are maintaining our outlooks for 2022 and 2023. Refer to the “Outlook” section of this management’s discussion and analysis for additional information.

As of October 28, 2022, we have repurchased 8.0 million of our common shares for a total spend of $855 million under the $2.0 billion share buyback program announced on June 8, 2022.

Recent Global Events

We continue to operate in an uncertain macroeconomic and geopolitical environment. To combat high inflation, central banks are aggressively raising short-term borrowing rates. Lingering COVID-19 impacts, supply chain disruptions and the Russian military invasion of Ukraine are additional factors creating stress on economic growth and financial markets. We are closely monitoring the evolving macroeconomic and geopolitical conditions to assess potential impacts on our businesses.

While our Reuters News business continues to report from Ukraine and Russia in order to provide unbiased and reliable news, our operations in Ukraine and Russia are not material to our business. We have taken steps to comply with applicable restrictions arising from sanctions that apply to our company. We have also relocated services previously performed under outsourcing contracts in the region.

Change Program Update

Our two-year Change Program is intended to drive growth and efficiency by transitioning our company from a holding company into an operating company, and from a content provider into a content-driven technology company. We expect our Change Program to be largely completed by the end of 2022. The Change Program remains on track to achieve our overall objectives, which are to:

 

   

Make it easier for our customers to do business with us;

   

Significantly modernize and simplify our product portfolio and product development groups;

   

Reduce complexity in our operations and technology organization; and

   

Continue to simplify our organizational structure to enable a more innovative culture.

We have invested the following amounts in our Change Program on technology, organizational and market-related initiatives.

 

     

 

Change Program Investments

 

 
   (millions of U.S. dollars)   

Three months ended
September 30, 2022

 

    

Nine months ended
September 30, 2022

 

    

Cumulative
to Date

 

    

Total
Expected

 

 

Change Program investments:

           

Operating expenses

     47        111        294        343 - 383  

Accrued capital expenditures

     32        97        209        212 - 252  

Total investment

     79        208        503        600  

Specifically, we have migrated portions of our revenue to cloud solutions, increased the proportion of sales we make through our digital channels, and improved our customers’ experience interacting with us. As of September 30, 2022, we achieved $410 million of annualized run-rate operating expense savings. We expect to achieve $500 million of annualized run-rate operating expense savings by the end of 2022, and to achieve our full targeted amount of $600 million by the end of 2023. Refer to the “Outlook” section of the management’s discussion and analysis for additional information about our Change Program.

 

 

 

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Results of Operations

Our revenues and operating profit on a consolidated basis do not tend to be significantly impacted by seasonality as we record a large portion of our revenues ratably over the contract term and our costs are generally incurred evenly throughout the year. However, our revenues from quarter to consecutive quarter can be impacted by the release of certain tax products, which tend to be concentrated in the fourth quarter and, to a lesser extent, in the first quarter of the year. The timing of costs related to the Change Program impacted the seasonality of our expenses and operating profit in 2022 and 2021.

The section below contains non-IFRS measures where indicated. Refer to Appendices A and B of this management’s discussion and analysis for additional information and reconciliations of our non-IFRS financial measures to the most directly comparable IFRS financial measures.

Consolidated results

 

     

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 
                  

 

Change

 

                  

 

Change

 

 
   (millions of U.S. dollars, except per share amounts
   and margins)
  

2022

 

    

2021

 

    

Total

 

    

 

Constant
Currency

 

    

2022

 

    

2021

 

    

Total

 

    

 

Constant
Currency

 

 

IFRS Financial Measures

                       

Revenues

     1,574        1,526        3%           4,862        4,638        5%     

Operating profit

     398        282        41%           1,203        985        22%     

Diluted earnings (loss) per share

     $0.47        $(0.49)        n/m                 $2.30        $11.80        n/m           

Non-IFRS Financial Measures

                       

Revenues

     1,574        1,526        3%        5%        4,862        4,638        5%        6%  

Organic revenue growth

              6%                 6%  

Adjusted EBITDA

     535        458        17%        17%        1,696        1,518        12%        11%  

Adjusted EBITDA margin

     34.0%        30.0%        400bp        310bp        34.9%        32.7%        220bp        150bp  

Adjusted EBITDA less accrued capital expenditures(1)

     391        328        19%           1,289        1,154        12%     

Adjusted EBITDA less accrued capital expenditures margin(1)

     24.8%        21.5%        330bp           26.5%        24.9%        160bp     

Adjusted EPS

     $0.57        $0.46        24%        24%        $1.82        $1.52        20%        18%  

 

(1)

As of December 31, 2021, we changed the basis for reporting capital expenditures. Prior-period amounts have been revised to reflect the change. Refer to Appendix A of this management’s discussion and analysis for additional information.

“Big 3” Segments—Legal Professionals, Corporates and Tax & Accounting Professionals Combined

 

       
    

Three months ended September 30,

 

           

Nine months ended September 30,

 

 
                  

 

Change

 

                  

 

Change

 

 

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

 

  

2022

 

    

2021

 

    

Total

 

    

 

Constant
Currency

 

    

2022

 

    

2021

 

    

Total

 

    

 

Constant
Currency

 

 

Non-IFRS Financial Measures

                       

Revenues

     1,264        1,213        4%        6%        3,916        3,708        6%        7%  

Organic revenue growth

              6%                 7%  

Adjusted EBITDA

     530        468        13%        14%        1,638        1,478        11%        11%  

Adjusted EBITDA margin

     41.9%        38.6%        330bp        290bp        41.8%        39.9%        190bp        160bp  

Revenues

 

     
    

Three months ended September 30,

 

    

Nine months ended September 30,

 

 
                   Change                   

 

Change

 

(millions of U.S. dollars)

 

  

2022

 

    

2021

 

    

Total

 

    

 

Constant
Currency

 

    

Organic

 

    

2022

 

    

2021

 

    

Total

 

    

 

Constant
Currency

 

    

Organic

 

 

Recurring revenues

     1,291        1,233        5%        7%        7%        3,882        3,672        6%        7%        7%  

Transactions revenues

     137        144        (5%)        (4%)        (3%)        550        527        4%        6%        6%  

Global Print revenues

     146        149        (3%)                      430        439        (2%)        (1%)        (1%)  

Revenues

     1,574        1,526        3%        5%        6%        4,862        4,638        5%        6%        6%  

 

 

 

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Revenues

Revenues in the third quarter increased 3% in total driven by growth across four of our five business segments. Foreign currency had a 2% negative impact on revenue growth. On an organic basis, total revenues increased 6%, driven by 7% growth in recurring revenues (82% of total revenues). On the same basis, transaction revenues declined 3% and Global Print revenues were nearly unchanged.

Revenues in the nine-month period increased 5% in total, also driven by growth across four of our five business segments. Foreign currency had a 1% negative impact on revenue growth. On an organic basis, total revenues increased 6%, driven by 7% growth in recurring revenues (80% of total revenues) and 6% growth in transactions revenues. Global Print revenues declined slightly.

Revenues from the “Big 3” segments in the third quarter increased 4% in total and 6% on both a constant currency and organic basis. Organic revenue growth was driven by 8% growth in recurring revenues. Transactions revenues declined 3%. This is the sixth consecutive quarter the “Big 3” segments have grown at least 6% organically. In the nine-month period, revenues from the “Big 3” segments increased 6% in total and 7% on both a constant currency and organic basis due to increases in recurring and transactions revenues. In each period, our “Big 3” segments represented approximately 80% of our total revenues.

Foreign currency negatively impacted revenue growth in both periods due to the strengthening of the U.S. dollar against most major currencies compared to the prior-year periods, with the greatest impact coming from the British pound sterling and the Euro.

Operating profit, adjusted EBITDA and adjusted EBITDA less accrued capital expenditures

Operating profit increased 41% in the third quarter driven by higher revenues and lower costs, which included cost benefits resulting from the Change Program, as well as gains from the sale of certain non-core businesses. In the nine-month period, operating profit increased 22%, as higher revenues more than offset higher costs, which included investments associated with the Change Program.

In the third quarter, adjusted EBITDA, which excludes gains on sale of certain non-core businesses, increased 17% and the related margin increased to 34.0% due to higher revenues and lower costs. Investments in the Change Program negatively impacted the third quarter of 2022 adjusted EBITDA margin by 300bp. Foreign currency benefited the year-over-year change in adjusted EBITDA margin by 90bp.

In the nine-month period, adjusted EBITDA increased 12% and the related margin increased to 34.9% as higher revenues more than offset higher costs. Investments in the Change Program negatively impacted the nine-month period of 2022 adjusted EBITDA margin by 230bp. Foreign currency benefited the year-over-year change in adjusted EBITDA margin by 70bp.

Adjusted EBITDA less accrued capital expenditures and the related margin increased in both periods as higher adjusted EBITDA more than offset higher accrued capital expenditures. Accrued capital expenditures in the third quarter and nine-month period of 2022 included $32 million (2021 — $26 million) and $97 million (2021 — $65 million) associated with the Change Program, respectively.

Operating expenses

 

     

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 
                  

 

Change

 

                  

 

Change

 

 

   (millions of U.S. dollars)

 

  

2022

 

    

2021

 

    

Total

 

    

Constant
Currency

 

    

2022

 

    

2021

 

    

Total

 

    

Constant
Currency

 

 

Operating expenses

     1,023        1,060        (4%)        1%        3,145        3,114        1%        4%  

Remove fair value adjustments(1)

     16        8                          21        6                    

Operating expenses excluding fair value adjustments

     1,039        1,068        (3%)        1%        3,166        3,120        2%        4%  

 

(1)

Fair value adjustments primarily represent gains or losses on intercompany balances that arise in the ordinary course of business due to changes in foreign currency exchange rates.

Reflecting the strengthening of the U.S. dollar against most major currencies, operating expenses, excluding fair value adjustments, decreased in the third quarter. On a constant currency basis, operating expenses, excluding fair value adjustments, increased in both periods. While both periods benefited from savings from our Change Program, the savings were more than offset by higher sales related expenses associated with higher revenues, investments in technology and Change Program costs, which were $47 million in the third quarter of 2022 (2021 — $53 million) and $111 million in the nine-month period of 2022 (2021 — $105 million). Both periods included spending on severance as well as costs to drive technology and digital sales efficiencies.

 

 

 

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Depreciation and amortization

 

     

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 
   (millions of U.S. dollars)    2022      2021      Change      2022      2021      Change  

Depreciation

     34        40        (16%)        110        128        (14%)  

Amortization of computer software

     119        119        —          354        356        (1%)  

Subtotal

     153        159        (4%)        464        484        (4%)  

Amortization of other identifiable intangible assets

     25        29        (14%)        76        90        (16%)  

 

   

Depreciation and amortization of computer software on a combined basis decreased in both periods, reflecting the completion of depreciation and amortization on certain assets acquired in previous years. The decrease in the nine-month period also reflected that the prior-year period included the write-down of assets associated with real estate leases we have vacated.

   

Amortization of other identifiable intangible assets decreased due to the completion of amortization of assets acquired in previous years.

Other operating gains, net

 

     

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 
   (millions of U.S. dollars)   

2022

 

    

2021

 

    

2022

 

    

2021

 

 

   Other operating gains, net

     25        4        26        35  

In the third quarter and nine-month period of 2022, other operating gains, net, included gains on the sale of two non-core businesses. In 2021, other operating gains, net, in both periods included income from a license that allowed the Refinitiv business of LSEG to use the “Reuters” mark. Additionally, the nine-month period included a benefit from the revaluation of warrants that we held in Refinitiv prior to its sale to LSEG on January 29, 2021 and a gain on the sale of a business.

Net interest expense

 

     

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 
(millions of U.S. dollars)   

2022

 

    

2021

 

    

Change

 

    

2022

 

    

2021

 

    

Change

 

 

Net interest expense

     48        46        5%        145        146        (1%)  

Net interest expense increased in the third quarter due to higher interest costs associated with tax liabilities. In the nine-month period, net interest expense decreased slightly as lower interest costs on net pension obligations and higher interest income more than offset higher interest associated with tax liabilities. As substantially all of our long-term debt obligations paid interest at fixed rates (after swaps), the net interest expense on our term debt was essentially unchanged compared to the prior-year periods.

Other finance income

 

     

 

Three months ended September 30,

    

 

Nine months ended September 30,

 
(millions of U.S. dollars)   

2022

 

    

2021

 

    

2022

 

    

2021

 

 
Other finance income      (448)        (34)        (862)        (30)  

In the third quarter and nine-month period of 2022, other finance income included $353 million and $673 million, respectively, of gains associated with foreign exchange contracts related to a portion of our indirect investment in LSEG, which is denominated in British pounds sterling. All four periods included net foreign exchange gains on intercompany funding arrangements.

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

 

     

 

Three months ended September 30,

    

 

Nine months ended September 30,

 
(millions of U.S. dollars)   

2022

 

    

2021

 

    

2022

 

    

2021

 

 

YPL (formerly Refinitiv Holdings Limited)

     (520)        (675)        (543)        6,710  

Other equity method investments

     (5)        3        (9)        7  

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

     (525)        (672)        (552)        6,717  

Our investment in LSEG is subject to equity accounting because the LSEG shares are held through YPL, over which we have significant influence. The investment in LSEG shares held by YPL is accounted for at fair value, based on the share price of LSEG, which is denominated in British pounds sterling.

 

 

 

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In the third quarter of 2022, our share of post-tax losses in equity method investments primarily reflected a decrease in value of the Company’s LSEG investment due to foreign exchange losses of $543 million, which were partly offset by dividend income of $25 million. The nine-month period of 2022 primarily reflected foreign exchange losses of $1,317 million from the LSEG investment, partly offset by increases in the LSEG share price of $687 million and dividend income of $87 million.

In 2021, share of post-tax losses in equity method investments in the three-month period reflected a $699 million decrease in value of the LSEG investment. The nine-month period reflected an $8,075 million gain from the sale of Refinitiv, in which the Company owned a 45% interest, to LSEG, and $75 million of dividend income from LSEG after the sale. Both the gain and dividend were partly offset by a $1,272 million decline in the value of the LSEG investment after the sale and $168 million of post-tax losses related to the Refinitiv operations prior to the sale.

In the third quarter of 2022, LSEG repurchased approximately 0.7 million ordinary shares from YPL under a buyback program announced by LSEG in August 2022. We received proceeds of $24 million, for approximately 0.3 million shares, which were distributed as a dividend and reduced our investment. In March 2021, as permitted under a lock-up exception, approximately 10.1 million of our LSEG shares were sold for pre-tax net proceeds of $994 million. Proceeds from the sale of the shares by YPL were also distributed to us as a dividend.

As of October 28, 2022, we indirectly owned approximately 72.0 million LSEG shares, which had a market value of approximately $6.3 billion based on LSEG’s closing share price on that date.

Tax expense (benefit)

 

     

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 
(millions of U.S. dollars)   

2022

 

    

2021

 

    

2022

 

    

2021

 

 

Tax expense (benefit)

     8        (161)        156        1,722  

Tax expense (benefit) in each period included significant impacts related to the Company’s indirect investment in LSEG. In 2022, each period also included significant impacts related to other finance income, primarily associated with gains from foreign exchange contracts related to the Company’s investment in LSEG. Tax expense in the nine-month period of 2021 included tax expense associated with the gain on sale of Refinitiv to LSEG. Additionally, tax expense in each period reflected the mix of taxing jurisdictions in which pre-tax profits and losses were recognized. Because the geographical mix of pre-tax profits and losses in interim periods may be different from that for the full year, tax expense or benefit in interim periods is not necessarily indicative of tax expense (benefit) for the full year.

The comparability of our tax expense (benefit) was impacted by various transactions and accounting adjustments during each period. The following table sets forth certain components within income tax expense (benefit) that impact comparability from period to period, including tax expense (benefit) associated with items that are removed from adjusted earnings:

 

      Three months ended September 30,      Nine months ended September 30,  
(millions of U.S. dollars)   

2022

 

    

2021

 

    

2022

 

    

2021

 

 

Tax expense (benefit)

           

Tax items impacting comparability:

           

Corporate tax laws and rates(1)

     -        -        (10)        (11)  

Deferred tax adjustments(2)

     -        (4)        (35)        (4)  

Subtotal

     -        (4)        (45)        (15)  

Tax related to:

           

Amortization of other identifiable intangible assets

     (6)        (6)        (17)        (20)  

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

     (133)        (169)        (150)        1,631  

Other finance income

     81        -        159        -  

Other items

     7        1        8        5  

Subtotal

     (51)        (174)        -        1,616  

Total

     (51)        (178)        (45)        1,601  

 

(1)

The nine-month period of 2022 consists primarily of adjustments to deferred tax balances due to changes in effective state tax rates. The 2021 period includes changes in deferred tax assets due to changes in foreign tax rates.

(2)

Includes the recognition of deferred tax assets for a tax basis step-up attributable to a non-U.S. subsidiary and adjustments required for a business that was classified as held for sale as well as adjustments required due to divestitures and acquisitions.

 

 

 

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Because the items described above impact the comparability of our tax expense or benefit for each period, we remove them from our calculation of adjusted earnings, along with the pre-tax items to which they relate. The computation of our adjusted tax expense is set forth below:

 

      Three months ended September 30,      Nine months ended September 30,  
(millions of U.S. dollars)   

2022

 

    

2021

 

    

2022

 

    

2021

 

 

Tax expense (benefit)

     8        (161)        156        1,722  

Remove: Items from above impacting comparability

     51        178        45        (1,601)  

Other adjustment:

           

Interim period effective tax rate normalization(1)

     -        8        (3)        10  
         

Total tax expense on adjusted earnings

     59        25        198        131  

 

(1)

Adjustment to reflect income taxes based on estimated full-year effective tax rates. Earnings or losses for interim periods under IFRS generally reflect income taxes based on the estimated effective tax rates of each of the jurisdictions in which we operate. The non-IFRS adjustment reallocates estimated full-year income taxes between interim periods but has no effect on full-year income taxes.

In the fourth quarter of 2022, we expect new tax legislation to be enacted in Canada that will reduce our ability to deduct interest expense against our Canadian income. As a result, we expect to increase our taxable profits in Canada against which we will apply tax loss carryforwards. When the legislation is enacted, we expect to recognize previously unrecognized tax loss carryforwards in our income statement and record corresponding deferred tax assets, the amount of which could be significant.

Results of Discontinued Operations

 

      Three months ended September 30,      Nine months ended September 30,  
(millions of U.S. dollars)    2022      2021      2022      2021  

(Loss) earnings from discontinued operations, net of tax

     (37)        1        (92)        —    

In the three and nine-month periods of 2022, loss from discontinued operations, net of tax, was primarily comprised of losses arising on a receivable balance from LSEG relating to a tax indemnity. The losses were due to changes in foreign exchange and interest rates.

Net earnings (loss) and diluted earnings (loss) per share

 

     

 

Three months ended September 30,

    

 

Nine months ended September 30,

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

2022

 

    

2021

 

    

Change

 

    

2022

 

    

2021

 

    

Change

 

 

Net earnings (loss)

     228        (240)        n/m        1,120        5,864        n/m  

Diluted earnings (loss) per share

     $0.47        $(0.49)        n/m        $2.30      $ 11.80        n/m  

We reported net earnings and diluted earnings per share in the third quarter of 2022, compared to a net loss and diluted loss per share in 2021. While the third quarter of 2022 and 2021 included significant reductions in the value of our investment in LSEG, the third quarter of 2022 benefited from gains on foreign exchange contracts related to a portion of the investment, which is denominated in British pound sterling. In the nine-month period of 2022, net earnings and diluted EPS decreased compared to the prior-year period because 2021 included a gain of approximately $8.1 billion on the sale of Refinitiv to LSEG in January 2021.

Adjusted earnings and adjusted EPS

 

     
     Three months ended September 30,      Nine months ended September 30,  
                   Change                    Change  
(millions of U.S. dollars, except per share amounts)    2022      2021      Total      Constant
Currency
     2022      2021      Total      Constant
Currency
 

Adjusted earnings

     274        227        21%           887        755        18%     

Adjusted EPS

   $ 0.57      $ 0.46        24%        24%      $ 1.82      $ 1.52        20%        18%  

Adjusted earnings and the related per share amount increased in both periods primarily due to higher adjusted EBITDA, which more than offset higher income tax expense.

 

 

 

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Segment results

The following is a discussion of our five reportable segments and our Corporate costs for the three and nine months ended September 30, 2022. We assess revenue growth for each segment, as well as the businesses within each segment, in constant currency and on an organic basis. See Appendix A of this management’s discussion and analysis for additional information.

Legal Professionals

 

     
    Three months ended September 30,     Nine months ended September 30,  
                Change                 Change  
(millions of U.S. dollars, except margins)   2022     2021     Total     Constant
Currency
    Organic     2022     2021     Total     Constant
Currency
    Organic  

Recurring revenues

    658       634       4%       6%       6%       1,967       1,881       5%       6%       6%  

Transactions revenues

    43       48       (10%)       (10%)       (7%)       132       142       (7%)       (6%)       (3%)  

Revenues

    701       682       3%       5%       6%       2,099       2,023       4%       5%       6%  

Segment adjusted EBITDA

    324       288       13%       14%         933       852       9%       11%    

Segment adjusted EBITDA margin

    46.2%       42.3%       390bp       380bp               44.5%       42.1%       240bp       220bp          

Revenues increased in total, constant currency and on an organic basis in both periods. Organic revenues, which grew 6% for the sixth consecutive quarter, increased in both periods due to growth in recurring revenues (94% of the Legal Professionals segment in the third quarter) driven by Practical Law, Westlaw, HighQ and our Government business. Transactions revenues on an organic basis (6% of the Legal Professionals segment in the third quarter) declined in both periods.

Segment adjusted EBITDA and the related margins increased in both periods due to higher revenues and lower expenses, which reflected cost savings from our Change Program. Foreign currency benefited the year-over-year change in segment adjusted EBITDA margin by 10bp and 20bp in the third quarter and nine-month period, respectively.

Corporates

 

     
    Three months ended September 30,     Nine months ended September 30,  
               

Change

 

               

Change

 

 
(millions of U.S. dollars, except margins)   2022     2021     Total     Constant
Currency
     Organic     2022     2021     Total     Constant
Currency
    Organic  

Recurring revenues

    330       307       8%       9%        9%       968       898       8%       9%       9%  

Transactions revenues

    43       47       (9%)       (7%)        (7%)       189       184       3%       4%       4%  

Revenues

    373       354       5%       7%        7%       1,157       1,082       7%       8%       8%  

Segment adjusted EBITDA

    147       130       13%       13%          443       403       10%       10%    

Segment adjusted EBITDA margin

    39.2%       36.7%       250bp       180bp                38.2%       37.2%       100bp       50bp          

Revenues increased in total, constant currency and on an organic basis in both periods. The increase in organic revenues in the third quarter was due to growth in recurring revenues (89% of the Corporates segment in the third quarter) driven by Practical Law, CLEAR, Direct Tax and HighQ. On the same basis, transactions revenues (11% of the Corporates segment in the third quarter) declined, as expected, reflecting a lower number of software implementations. In the nine-month period, revenues increased due to higher recurring and transactions revenues. The increase in transactions revenues was driven by Trust, Confirmation, and the segment’s businesses in Asia & Emerging Markets.

Segment adjusted EBITDA and the related margins increased in both periods as higher revenues more than offset higher expenses, which were mitigated by cost savings from our Change Program. Foreign currency benefited the year-over-year change in segment adjusted EBITDA margin by 70bp and 50bp in the third quarter and nine-month period, respectively.

 

 

 

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Tax & Accounting Professionals

 

     
    Three months ended September 30,     Nine months ended September 30,  
                Change                 Change  
(millions of U.S. dollars, except margins)   2022     2021     Total     Constant
Currency
     Organic     2022     2021     Total     Constant
Currency
    Organic  

Recurring revenues

    158       149       6%       8%        9%       507       463       9%       10%       10%  

Transactions revenues

    32       28       11%       12%        12%       153       140       9%       9%       9%  

Revenues

    190       177       7%       8%        9%       660       603       9%       10%       10%  

Segment adjusted EBITDA

    59       50       17%       15%          262       223       18%       17%    

Segment adjusted EBITDA margin

    31.0%       28.5%       250bp       170bp                39.7%       36.9%       280bp       230bp          

Revenues increased in total, constant currency and on an organic basis in both periods. Organic revenues increased in both periods due to growth in recurring revenues (83% of the Tax & Accounting Professionals segment in the third quarter) and transactions revenues (17% of the Tax & Accounting Professionals segment in the third quarter). The segment’s UltraTax product contributed to both recurring and transactions revenue growth. The increase in recurring revenues also included growth in the segment’s businesses in Latin America. The increase in transactions revenues included higher training revenues and, in the nine-month period, growth in Confirmation.

Segment adjusted EBITDA and the related margins increased in both periods as higher revenues more than offset higher expenses, which were mitigated by cost savings from our Change Program and a benefit from lower reserves for accounts receivable. Foreign currency benefited the year-over-year change in segment adjusted EBITDA margin by 80bp and 50bp in the third quarter and nine-month period, respectively.

Tax & Accounting Professionals is a more seasonal business relative to our other businesses, with a higher percentage of its segment adjusted EBITDA historically generated in the fourth quarter and to a slightly lesser extent, the first quarter, due to the release of certain tax products. Small movements in the timing of revenues and expenses can impact quarterly margins.

Reuters News

 

     
    Three months ended September 30,     Nine months ended September 30,  
                Change                 Change  
(millions of U.S. dollars, except margins)   2022     2021     Total     Constant
Currency
     Organic     2022     2021     Total     Constant
Currency
    Organic  

Recurring revenues

    152       148       2%       6%        6%       459       446       3%       5%       5%  

Transactions revenues

    19       21       (10%)       (4%)        (4%)       76       61       26%       31%       31%  

Revenues

    171       169       1%       5%        5%       535       507       5%       9%       9%  

Segment adjusted EBITDA

    33       25       37%       22%          114       88       31%       21%    

Segment adjusted EBITDA margin

    19.7%       14.5%       520bp       230bp                21.4%       17.3%       410bp       200bp          

Revenues increased in total, constant currency and on an organic basis in both periods. In the third quarter, the increase in organic revenues was primarily driven by higher revenues in the segment’s Agency business and from its news and editorial agreement with the Refinitiv business of LSEG, which more than offset lower transactions revenues. The increase in organic revenues in the nine-month period was driven by growth across all of the segment’s businesses.

Reuters News and the Refinitiv business of LSEG have an agreement pursuant to which Reuters News supplies news and editorial content to Refinitiv through October 1, 2048. Reuters News recorded revenues of $90 million (2021 – $85 million) and $270 million (2021 — $254 million) in the third quarter and nine-month period of 2022, respectively, under this agreement.

Segment adjusted EBITDA and the related margins increased in both periods reflecting the favorable impact of foreign currency due to the strengthening of the U.S dollar against most major currencies, as well as higher revenues. Expenses also benefited from cost savings associated with our Change Program. Foreign currency benefited the year-over-year change in segment adjusted EBITDA margin by 290bp and 210bp in the third quarter and nine-month period, respectively.

 

 

 

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Global Print

 

     
   

Three months ended September 30,

 

   

Nine months ended September 30,

 

 
                Change                 Change  
(millions of U.S. dollars, except margins)   2022     2021     Total     Constant
Currency
    Organic     2022     2021     Total     Constant
Currency
    Organic  

Revenues

    146       149       (3%)       —         —         430       439       (2%)       (1%)       (1%)  

Segment adjusted EBITDA

    50       52       (4%)       (1%)         153       165       (7%)       (5%)    

Segment adjusted EBITDA margin

    34.4%       35.0%       (60)bp       (10)bp               35.6%       37.5%       (190)bp       (190)bp          

Revenues decreased in total, but were essentially unchanged in constant currency and on an organic basis in the third quarter. Revenues declined on all three bases in the nine-month period. The performance in both periods was better than the mid-single digit declines we expected due to improved customer retention, timing of new sales, and higher third-party revenues for printing services. In the fourth quarter of 2022, we expect a larger revenue decline as the favorable timing experienced in the third quarter should normalize.

Segment adjusted EBITDA and the related margins decreased in the third quarter primarily due to the impact of foreign currency. In the nine-month period, both metrics declined due to lower revenues and the dilutive effect of third-party print revenues. Foreign currency negatively impacted the year-over-year change on segment adjusted EBITDA margin by 50bp in the third quarter and had no impact in the nine-month period.

Corporate costs

 

     
   

Three months ended September 30,

 

   

Nine months ended September 30,

 

 
   (millions of U.S. dollars)   2022     2021     2022     2021  

   Corporate costs

 

 

78

 

 

 

87

 

 

 

209

 

 

 

213

 

Corporate costs decreased in both the three and nine-month periods. We incurred Change Program expenses of $47 million (2021 — $53 million) and $111 million (2021 — $105 million) in the third quarter and nine-month period of 2022, respectively.

 

 

 

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Liquidity and Capital Resources

We have historically maintained a disciplined capital strategy that balances growth, long-term financial leverage, credit ratings and returns to shareholders. We are focused on having the investment capacity to drive revenue growth, both organically and through acquisitions, while also maintaining our long-term financial leverage and credit ratings and continuing to provide returns to shareholders. Our principal sources of liquidity are cash and cash equivalents and cash provided by operating activities. From time to time, we also issue commercial paper, borrow under our credit facility and issue debt securities. Our principal uses of cash are for debt repayments, debt servicing costs, dividend payments, capital expenditures, share repurchases and acquisitions.

Our capital strategy approach has provided us with a strong capital structure and liquidity position. At September 30, 2022, we had $459 million of cash on hand, and none of our debt securities are scheduled to mature until the fourth quarter of 2023. Our disciplined approach and cash generative business model have allowed us to weather economic volatility in recent years caused by the COVID-19 pandemic and other macroeconomic and geopolitical factors, while continuing to invest in our business. While we are closely monitoring the global disruption caused by Russia’s invasion of Ukraine in February 2022, our operations in the region are not material to our business.

We expect that the operating leverage of our business will increase our free cash flow if we increase revenues as contemplated by our outlook. We target a maximum leverage ratio of 2.5x net debt to adjusted EBITDA and have set a target to pay out 50% to 60% of our expected free cash flow as dividends to our shareholders. As of September 30, 2022, we repurchased $698 million of our common shares under our plan to repurchase up to $2.0 billion of our common shares announced in June 2022 (see the “Share Repurchases – Normal Course Issuer Bid (NCIB)” section below). We plan to complete our $2.0 billion share repurchase program early in the second quarter of 2023. In the future, we expect that proceeds from sales of LSEG shares after the expiration of the applicable contractual lock-up provisions will provide us with further options for investment and returns to shareholders.

Our net debt to adjusted EBITDA leverage ratio as of September 30, 2022 was approximately 1.8:1, which is lower than our target of 2.5:1. As calculated under our credit facility covenant, our net debt to adjusted EBITDA leverage ratio at September 30, 2022 was 1.7:1, which is well below the maximum leverage ratio allowed under the credit facility of 4.5:1.

We believe that our existing sources of liquidity will be sufficient to fund our expected cash requirements in the normal course of business for the next 12 months.

Cash flow

Summary of consolidated statement of cash flow

 

     
    

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 

   (millions of U.S. dollars)

  

2022

    

2021

    

$ Change

    

2022

    

2021

    

$ Change

 

   Net cash provided by operating activities

  

 

531

 

  

 

534

 

  

 

(3)

 

  

 

1,239

 

  

 

1,376

 

  

 

(137)

 

   Net cash used in investing activities

  

 

(93)

 

  

 

(545)

 

  

 

452

 

  

 

(526)

 

  

 

(205)

 

  

 

(321)

 

   Net cash used in financing activities

  

 

(436)

 

  

 

(817)

 

  

 

381

 

  

 

(1,024)

 

  

 

(1,444)

 

  

 

420

 

   Translation adjustments

  

 

(4)

 

  

 

(3)

 

  

 

(1)

 

  

 

(8)

 

  

 

(3)

 

  

 

(5)

 

   Decrease in cash and cash equivalents

  

 

(2)

 

  

 

(831)

 

  

 

829

 

  

 

(319)

 

  

 

(276)

 

  

 

(43)

 

   Cash and cash equivalents at beginning of period

  

 

461

 

  

 

2,342

 

  

 

(1,881)

 

  

 

778

 

  

 

1,787

 

  

 

(1,009)

 

   Cash and cash equivalents at end of period

  

 

459

 

  

 

1,511

 

  

 

(1,052)

 

  

 

459

 

  

 

1,511

 

  

 

(1,052)

 

   Non-IFRS Financial Measure(1)

                 

   Free cash flow

  

 

386

 

  

 

383

 

  

 

3

 

  

 

814

 

  

 

1,001

 

  

 

(187)

 

 

(1)

Refer to Appendices A and B of this management’s discussion and analysis for additional information and reconciliations of our non-IFRS financial measures to the most directly comparable IFRS financial measure.

Operating activities. Net cash provided by operating activities decreased in both periods as unfavorable movements in working capital, which included higher payments associated with our Change Program, essentially offset the cash benefits from higher operating profit. The decrease in the nine-month period also reflected higher annual incentive plan bonus payments.

 

 

 

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Investing activities. In 2022, net cash used in investing activities included $152 million and $460 million of capital expenditures and $19 million and $190 million of acquisition spending in the third quarter and nine-month period, respectively. These outflows were partly offset by $49 million and $111 million of dividends from YPL in the third quarter and nine-month period, respectively, a portion of which was related to YPL’s participation in LSEG’s share buyback program. Both periods also included the proceeds from the sale of certain non-core businesses. In the nine-month period, acquisition spending primarily included the April 2022 acquisition of ThoughtTrace, a business that uses artificial intelligence and machine learning to read, organize and manage document workflows.

In the third quarter of 2021, net cash used in investing activities included $218 million of taxes paid related to the sale of Refinitiv and the subsequent sale of LSEG shares. The discontinued operations portion of investing activities included $210 million of tax assessments related to our former Financial & Risk business (see the “Contingencies – Uncertain Tax Position” sections of this management’s discussion and analysis). Capital expenditures were $131 million.

In the nine-month period of 2021, net cash used in investing activities included $662 million of taxes paid related to the sale of Refinitiv and the subsequent sale of LSEG shares. The discontinued operations portion of investing activities included $252 million of tax assessments related to our former Financial & Risk business. Capital expenditures were $364 million. These outflows were partly offset by $1,045 million of dividends received from LSEG, which included $994 million in connection with the sale of 10.1 million LSEG shares.

Financing activities. Net cash used in financing activities in both periods of 2022 included borrowings under our commercial paper program, as well as dividends paid to our common shareholders and share repurchases totaling $712 million and $1,325 million in the third quarter and nine-month period, respectively. In 2021, net cash used in financing activities included dividends paid to our common shareholders and share repurchases totaling $797 million and $1,385 million in the third quarter and nine-month period, respectively. Refer to the “Commercial paper program”, ”Dividends” and “Share repurchases” subsections below for additional information.

Cash and cash equivalents. Cash and cash equivalents as of September 30, 2022 were lower compared to the beginning of the year as cash generated from operating activities and proceeds from our commercial paper borrowings were more than offset by acquisitions, capital expenditures, share repurchases and dividends to common shareholders. The September 30, 2021 balance included a portion of the $994 million of cash received from a YPL dividend following the sale of 10.1 million LSEG shares.

Free cash flow. Free cash flow, which included normal course dividends from our LSEG investment, increased slightly in the third quarter. Free cash flow decreased in the nine-month period due to lower cash flows from operating activities and higher capital expenditures, primarily associated with the Change Program.

Additional information about our debt and credit arrangements, dividends and share repurchases is as follows:

 

   

Commercial paper program. Our $1.8 billion commercial paper program provides cost-effective and flexible short-term funding. We had $370 million of outstanding commercial paper at September 30, 2022. Issuances of commercial paper reached a peak of $400 million during the third quarter of 2022.

 

   

Credit facility. We have a $1.8 billion syndicated credit facility agreement which matures in December 2024 and may be used to provide liquidity for general corporate purposes (including acquisitions or support for our commercial paper program). There were no outstanding borrowings under the credit facility at September 30, 2022. Based on our current credit ratings, the cost of borrowing under the facility is priced at LIBOR/EURIBOR plus 112.5 basis points. We have the option to request an increase, subject to approval by applicable lenders, in the lenders’ commitments in an aggregate amount of $600 million for a maximum credit facility commitment of $2.4 billion. If our debt rating is downgraded by Moody’s or S&P, our facility fees and borrowing costs may increase, although availability would be unaffected. Conversely, an upgrade in our ratings may reduce our facility fees and borrowing costs. We also monitor the lenders that are party to our facility and believe they continue to be able to lend to us.

 

 

The U.K. Financial Conduct Authority, which regulates LIBOR, phased out the majority of LIBOR rates globally at the end of 2021. We have no material agreements with third parties that use or reference LIBOR, except for the LIBOR-based benchmarks in our external credit facility, for which adequate LIBOR benchmarks will remain in effect until June 2023.

 

 

We guarantee borrowings by our subsidiaries under the credit facility. We must also maintain a ratio of net debt as defined in the credit agreement (total debt after swaps less cash and cash equivalents) as of the last day of each fiscal quarter to EBITDA as defined in the credit agreement (earnings before interest, income taxes, depreciation and amortization and other modifications described in the credit agreement) for the last four quarters ended of not more than 4.5:1. If we complete an acquisition with a purchase price of over $500 million, the ratio of net debt to EBITDA would temporarily increase to 5.0:1 for three quarters after completion, at which time the ratio would revert to 4.5:1. As of September 30, 2022, we were in compliance with this covenant as our ratio of net debt to EBITDA, as calculated under the terms of our syndicated credit facility, was 1.7:1.

 

 

 

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Long-term debt. We did not issue notes or make any debt repayments in the nine months ended September 30, 2022. In June 2022, we filed a new base shelf prospectus pursuant to which Thomson Reuters Corporation and one of its U.S. subsidiaries, TR Finance LLC, may collectively issue up to $3.0 billion of unsecured debt securities from time to time through July 29, 2024. Any debt securities issued by TR Finance LLC will be fully and unconditionally guaranteed on an unsecured basis by Thomson Reuters Corporation and three U.S. subsidiary guarantors, which are also indirect 100%-owned and consolidated subsidiaries of Thomson Reuters Corporation. Except for TR Finance LLC and the subsidiary guarantors, none of Thomson Reuters Corporation’s other subsidiaries have guaranteed or would otherwise become obligated with respect to any issued TR Finance LLC debt securities. Neither Thomson Reuters Corporation nor TR Finance LLC has issued any debt securities under the prospectus. Please refer to Appendix D of this management’s discussion and analysis for condensed consolidating financial information of the Company, including TR Finance LLC and the subsidiary guarantors.

 

   

Credit ratings. Our access to financing depends on, among other things, suitable market conditions and the maintenance of suitable long-term credit ratings. Our credit ratings may be adversely affected by various factors, including increased debt levels, decreased earnings, declines in customer demand, increased competition, a deterioration in general economic and business conditions and adverse publicity. Any downgrades in our credit ratings may impede our access to the debt markets or result in higher borrowing rates.

 

 

The following table sets forth the credit ratings from rating agencies in respect of our outstanding securities as of the date of this management’s discussion and analysis:

 

     

Moody’s

  

S&P Global Ratings

  

DBRS Limited

  

Fitch

   Long-term debt

  

Baa2

  

BBB

  

BBB (high)

  

BBB+

   Commercial paper

  

P-2

  

A-2

  

R-2 (high)

  

F1

   Trend/Outlook

  

Positive

  

Stable

  

Stable

  

Stable

 

 

These credit ratings are not recommendations to purchase, hold, or sell securities and do not address the market price or suitability of a specific security for a particular investor. Credit ratings may not reflect the potential impact of all risks on the value of securities. We cannot assure you that our credit ratings will not be lowered in the future or that rating agencies will not issue adverse commentaries regarding our securities.

 

   

Dividends. Dividends on our common shares are declared in U.S. dollars. In February 2022, we announced a 10% or $0.16 per share increase in the annualized dividend rate to $1.78 per common share (beginning with the common share dividend we paid in March 2022). In our consolidated statement of cash flow, dividends paid on common shares are shown net of amounts reinvested in our company under our dividend reinvestment plan (DRIP). Registered holders of common shares may participate in our DRIP, under which cash dividends are automatically reinvested in new common shares. Common shares are valued at the weighted-average price at which the shares traded on the Toronto Stock Exchange (TSX) during the five trading days immediately preceding the record date for the dividend.

 

 

Details of dividends declared per common share and dividends paid on common shares are as follows:

 

     

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 

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

  

        2022        

    

        2021        

    

        2022        

    

        2021        

 

   Dividends declared per share

  

$

0.445        

 

  

$

0.405        

 

  

$

1.335        

 

  

$

1.215        

 

   Dividends declared

  

 

215        

 

  

 

200        

 

  

 

648        

 

  

 

600        

 

   Dividends reinvested

  

 

(7)        

 

  

 

(6)        

 

  

 

(21)        

 

  

 

(18)        

 

   Dividends paid

  

 

208        

 

  

 

194        

 

  

 

627        

 

  

 

582        

 

 

   

Share repurchases – Normal Course Issuer Bid (NCIB). We buy back shares (and subsequently cancel them) from time to time as part of our capital strategy. In June 2022, we announced that we plan to repurchase up to $2.0 billion of our common shares. Share repurchases are typically executed under a NCIB. Under the current NCIB, we may repurchase up to 24 million common shares between June 13, 2022 and June 12, 2023 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 we receive an issuer bid exemption order in the future from applicable securities regulatory authorities in Canada for such purchases.

 

 

 

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Details of share repurchases were as follows:

 

     

 

Three months ended September 30,

 

    

 

Nine months ended September 30,

 

 
     

        2022        

    

        2021        

    

        2022        

    

        2021        

 

   Share repurchases (millions of U.S. dollars)

  

 

504        

 

  

 

603        

 

  

 

698        

 

  

 

803        

 

   Shares repurchased (number in millions)

  

 

4.6        

 

  

 

5.2        

 

  

 

6.5        

 

  

 

7.7        

 

   Share repurchases – average price per share in U.S. dollars

  

$

109.98        

 

  

$

116.15        

 

  

$

106.92        

 

  

$

105.01        

 

 

 

Decisions regarding any future repurchases will depend on certain factors, such as market conditions, share price and other opportunities to invest capital for growth. We may elect to suspend or discontinue share repurchases at any time, in accordance with applicable laws. From time to time when we do not possess material nonpublic information about ourselves or our securities, we may enter into an automatic share purchase plan with our broker to allow for the repurchase of shares at times when we ordinarily would not be active in the market due to our own internal trading blackout periods, insider trading rules or otherwise. Any such plans entered into with our 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.

Financial position

Our total assets were $21.2 billion at September 30, 2022, compared to $22.1 billion at December 31, 2021. The decrease was driven by lower cash and cash equivalents and foreign currency impacts from the strengthening of the U.S. dollar.

At September 30, 2022, our current liabilities exceeded our current assets primarily because current liabilities include a significant amount of deferred revenue, which arises from the sale of subscription-based products and services that many customers pay for in advance. The cash received from these advance payments is used to currently fund the operating, investing and financing activities of our business. However, for accounting purposes, these advance payments must be deferred and recognized over the term of the subscription. As such, we typically reflect a negative working capital position in our consolidated statement of financial position. In the ordinary course of business, deferred revenue does not represent a cash obligation, but rather an obligation to perform services or deliver products, and therefore when we are in that situation, we do not believe it is indicative of a liquidity issue, but rather an outcome of the required accounting for our business model.

Net debt and leverage ratio of net debt to adjusted EBITDA

 

     
    

September 30,

    

December 31,

 

   (millions of U.S. dollars)

  

2022

    

2021

 

   Current indebtedness

  

 

370

 

  

 

 

   Long-term indebtedness

  

 

3,700

 

  

 

3,786

 

   Total debt

  

 

4,070

 

  

 

3,786

 

   Swaps

  

 

(31)

 

  

 

(99)

 

   Total debt after swaps

  

 

4,039

 

  

 

3,687

 

   Remove fair value adjustments for hedges(1)

  

 

11

 

  

 

(10)

 

   Total debt after currency hedging arrangements

  

 

4,050

 

  

 

3,677

 

   Remove transaction costs, premiums or discounts included in the carrying value of debt

  

 

29

 

  

 

33

 

   Add: Lease liabilities (current and non-current)

  

 

226

 

  

 

261

 

   Less: cash and cash equivalents(2)

  

 

(459)

 

  

 

(778)

 

   Net debt(3)

  

 

3,846

 

  

 

3,193

 

   Leverage ratio of net debt to adjusted EBITDA

     

   Adjusted EBITDA(3)

  

 

2,148

 

  

 

1,970

 

   Net debt / adjusted EBITDA(3)

  

 

1.8:1

 

  

 

1.6:1

 

 

(1)

Represents the interest-related fair value component of hedging instruments that are removed to reflect net cash outflow upon maturity.

 

(2)

Includes cash and cash equivalents of $85 million and $70 million at September 30, 2022 and December 31, 2021, respectively, held in subsidiaries which have regulatory restrictions, contractual restrictions or operate in countries where exchange controls and other legal restrictions apply and were therefore not available for general use by our company.

 

(3)

Represent non-IFRS financial measures. For additional information about our liquidity, we provide our leverage ratio of net debt to adjusted EBITDA. Refer to Appendices A and B of this management’s discussion and analysis for additional information of our non-IFRS financial measures and reconciliations to the most comparable IFRS measure.

 

 

 

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At September 30, 2022, our total debt position (after swaps) was $4.0 billion. The maturity dates for our term debt are well balanced with no significant concentration in any one year. At September 30, 2022, the average maturity of our term debt was approximately eight years at an average interest rate (after swaps) of slightly over 4%, all of which is fixed. Our leverage ratio of net debt to adjusted EBITDA was below our target ratio of 2.5:1. The increase in our net debt is primarily due to the increase in current indebtedness, which includes our commercial paper borrowings, and a decrease in our cash and cash equivalents (refer to the “Cash Flow” section of this management’s discussion and analysis for additional information).

Off-balance sheet arrangements, commitments and contractual obligations

See the “Contingencies” section of this management’s discussion and analysis below for information on guarantees and other credit support provided by our company to 3 Times Square Associates LLC (3XSQ Associates) in connection with a loan facility 3XSQ Associates obtained in the second quarter of 2022. For a summary of our other off-balance sheet arrangements, commitments and contractual obligations, please see our 2021 annual management’s discussion and analysis. There were no other material changes to these arrangements, commitments and contractual obligations during the nine months ended September 30, 2022.

Contingencies

Lawsuits and legal claims

We are engaged in various legal proceedings, claims, audits and investigations that have arisen in the ordinary course of business. These matters include, but are not limited to, employment matters, commercial matters, defamation claims and intellectual property infringement claims. The outcome of all of the matters against us is subject to future resolution, including the uncertainties of litigation. Based on information currently known to us and after consultation with outside legal counsel, management believes that the ultimate resolution of any such matters, individually or in the aggregate, will not have a material adverse impact on our financial condition taken as a whole.

Uncertain tax positions

We are subject to taxation in numerous jurisdictions and we are routinely under audit by many different taxing authorities in the ordinary course of business. There are many transactions and calculations during the course of business for which the ultimate tax determination is uncertain, as taxing authorities may challenge some of our positions and propose adjustments or changes to our tax filings.

As a result, we maintain provisions for uncertain tax positions that we believe appropriately reflect our risk. These provisions are made using our best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. When appropriate, we perform an expected value calculation to determine our provisions. We review the adequacy of these provisions at the end of each reporting period and adjust them based on changing facts and circumstances. Due to the uncertainty associated with tax audits, it is possible that at some future date, liabilities resulting from such audits or related litigation could vary significantly from our provisions. However, based on currently enacted legislation, information currently known to us and after consultation with outside tax advisors, management believes that the ultimate resolution of any such matters, individually or in the aggregate, will not have a material adverse impact on our financial condition taken as a whole.

Prior to 2022, we paid $379 million of tax as required under notices of assessment issued by the U.K. tax authority, HM Revenue & Customs (HMRC), under the Diverted Profits Tax (DPT) regime. In February 2022, HMRC issued DPT notices aggregating $74 million, which we paid in March 2022. These assessments collectively related to the 2015, 2016, 2017 and 2018 taxation years of certain of our current and former U.K. affiliates. In May 2022, HMRC issued additional DPT notices aggregating $9 million related to the 2016 tax year, which we paid.

HMRC continues to have the statutory authority to amend the above assessments for the 2017 and 2018 taxation years by issuing DPT supplementary notices for each year. Based on recent discussions with HMRC, management believes that HMRC may issue supplementary notices for these years within the next six months that would be almost entirely related to businesses we have sold, which are subject to indemnity arrangements. If that occurs, we will be required to pay additional taxes to HMRC shortly thereafter that could be as much as $350 million in aggregate (largely related to the 2018 taxation year).

As we do not believe these current and former U.K. affiliates fall within the scope of the DPT regime, we will continue contesting these assessments (including any amended by HMRC) through all available administrative and judicial remedies and intend to vigorously defend our position. Payments made by us are not a reflection of our view on the merits of the case. As the assessments largely relate to businesses that we have sold, the majority are subject to indemnity arrangements under which we have been or will be required to pay additional taxes to HMRC or the indemnity counterparty.

 

 

 

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Because we believe that our position is supported by the weight of law, we do not believe that the resolution of this matter will have a material adverse effect on our financial condition taken as a whole. As we expect to receive refunds of substantially all of the aggregate of amounts paid and potential future payments pursuant to these notices of assessment, we expect to continue recording substantially all of these payments as non-current receivables from HMRC or the indemnity counterparty on our financial statements. We expect that our existing sources of liquidity (as discussed earlier in this section) will be sufficient to fund any required additional payments if HMRC issues further notices.

Guarantees

We have an investment in 3XSQ Associates, an entity jointly owned by one of our subsidiaries and Rudin Times Square Associates LLC (Rudin), that owns and operates the 3 Times Square office building (the building) in New York, New York. In June 2022, 3XSQ Associates obtained a $415 million, 3-year term loan facility to refinance existing debt, fund the building’s redevelopment, and cover interest and operating costs during the redevelopment period. The building is pledged as loan collateral. We and Rudin each guarantee 50% of (i) certain principal loan amounts and (ii) interest and operating costs. We and Rudin also jointly and severally guarantee (i) completion of commenced works and (ii) lender losses arising from disallowed acts, environmental or otherwise. To minimize economic exposure to 50% for the joint and several obligations, we and a parent entity of Rudin entered a cross-indemnification arrangement. We believe the value of the building is expected to be sufficient to cover obligations that could arise from the guarantees. The guarantees do not impact our ability to borrow funds under our $1.8 billion syndicated credit facility or the related covenant calculation.

For additional information, please see the “Risk Factors” section of our 2021 annual report, which contains further information on risks related to legal and tax matters.

Outlook

The information in this section is forward-looking and should be read in conjunction with the section entitled “Additional Information – Cautionary Note Concerning Factors That May Affect Future Results”.

On November 1, 2022, we announced we are maintaining our outlook for the full year 2022 and 2023, as updated in August 2022. Our outlook incorporates the forecasted impacts associated with our Change Program, assumes constant currency rates relative to 2021 and does not factor in the impact of any acquisitions or divestitures that may occur in future periods. We believe this type of guidance provides useful insight into the anticipated performance of our business.

Relative to our 2022 outlook, we believe:

 

   

organic revenue growth is trending slightly above approximately 6%;

   

adjusted EBITDA margin is trending slightly below 35%, as we invest in our business and absorb heightened inflationary pressures;

   

accrued capital expenditures as a percentage of revenues is trending toward the upper end of the 7.5% — 8.0% range; and

   

the effective tax rate is trending toward the lower end of the 19% — 21% target range.

Relative to our 2023 outlook, we believe:

 

   

adjusted EBITDA margin is trending toward the lower end of the 39% — 40% range reflecting the inflationary environment and investments we are making to grow our businesses;

   

accrued capital expenditures as a percentage of revenues is trending toward the upper end of 6.0% - 6.5% range; and

   

our 2023 effective tax rate will be approximately consistent with 2022.

We are maintaining our previously announced outlooks on the basis of information and assumptions that we believe are reasonable. We intend to revisit our 2023 outlook in the first quarter of 2023 and provide an update in connection with our fourth-quarter and full-year 2022 earnings release in early February 2023, after we complete our annual planning process, assess our fourth quarter 2022 recurring net sales, and evaluate the impact of other macro-economic factors including inflation.

 

 

 

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The Change Program is expected to be largely complete by the end of 2022 and is projected to require an investment of $600 million. We invested $295 million in 2021 and plan to invest approximately $305 million in 2022. We expect to expense approximately 60% of the investments and to capitalize approximately 40% of the investments, which will be amortized over future periods. By 2023, we believe the financial benefits that will result from these initiatives include:

 

   

Organic revenue growth of 5.5% — 6.0% including additional annual revenues of $100 million;

   

Adjusted EBITDA margin of 39% — 40%;

   

Free cash flow of $1.9 billion — $2.0 billion;

   

Annual operating expense savings of $600 million, of which $200 million is expected to be reinvested in growth initiatives; and

   

Accrued capital expenditures as a percentage of revenues between 6.0% — 6.5%.

Our full-year 2022 business outlook was originally communicated in February 2022. In both May and August of 2022, we updated our full-year 2022 revenue growth outlook while all other measures in our 2022 outlook remained unchanged. On November 1, 2022, we maintained our full-year outlook, as updated in August. The following table summarizes the changes in our 2022 full-year revenue growth outlook that occurred during 2022.

 

Thomson Reuters 2022 Full-Year Revenue Growth Outlook  
           
Total Thomson Reuters    February 2022    May 2022     

 

   August 2022       

 

 

Revenue growth    

  

Approximately 5.0%

  

Approximately 5.5%

    

 

Approximately 6.0%

 

 

Organic revenue growth(1)

  

Approximately 5.0%

  

Approximately 5.5%

      

 

Approximately 6.0%

 

       
           
“Big 3” Segments(1)    February 2022    May 2022     

 

   August 2022       

 

 

Revenue Growth    

  

6.0% - 6.5%

  

Approximately 6.5%

    

 

Approximately 7.0%

 

 

Organic revenue growth

  

6.0% - 6.5%

  

Approximately 6.5%

      

 

Approximately 7.0%

 

       

Our 2022 outlook (as updated in August 2022) along with our 2021 actual results are presented in the table below, which includes non-IFRS financial measures.

 

           
Total Thomson Reuters    2021 Actual    2022 Outlook     

 

     2023 Outlook     

 

 

Revenue growth

  

6.1%

  

Approximately 6.0%

    

5.5% - 6.0%

 

Organic revenue growth(1)

  

5.2%

  

Approximately 6.0%

          

5.5% - 6.0%

       

Adjusted EBITDA margin(1)

  

31.0%

  

Approximately 35%

          

39% - 40%

       

Corporate costs

  

$325 million

  

$280 million - $330 million

    

$110 million - $120 million

 

Core corporate costs

   $142 million    $120 million - $130 million      $110 million - $120 million  

Change Program operating expenses

   $183 million    $160 million - $200 million            $0        

Free cash flow(1)

  

$1.3 billion

  

Approximately $1.3 billion

          

$1.9 billion - $2.0 billion

       

Accrued capital expenditures as a percentage of revenues(1)

  

8.5%

  

7.5% - 8.0%

    

6.0% - 6.5%

 

Change Program accrued capital expenditures

   $112 million    $100 million - $140 million            $0        

Depreciation and amortization of computer software

  

$651 million

  

$620 million - $645 million

          

$580 million - $605 million

       

Interest expense

  

$196 million

  

$190 million - $210 million

          

$190 million - $210 million

       

Effective tax rate on adjusted earnings(1)

  

13.9%

  

19% - 21%

          

n/a

       
           
“Big 3” Segments(1)    2021 Actual    2022 Outlook     

 

     2023 Outlook     

 

 

Revenue growth

  

6.9%

  

Approximately 7.0%

    

6.5% - 7.0%

 

Organic revenue growth

  

6.2%

  

Approximately 7.0%

          

6.5% - 7.0%

       

Adjusted EBITDA margin

  

38.8%

  

Approximately 42%

          

44% - 45%

       

 

(1)

Non-IFRS financial measures. Refer to Appendices A and B of this management’s discussion and analysis for additional information and reconciliations of our non-IFRS financial measures to the most directly comparable IFRS financial measures.

We expect fourth-quarter 2022 revenue growth and adjusted EBITDA margin to be approximately in line with our full-year 2022 outlook.

 

 

 

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The following table summarizes our material assumptions and material risks that may cause actual performance to differ from our expectations underlying our financial outlook.

 

 

 

   Revenues

 

   Material assumptions

 

  

   Material risks

 

 Uncertain macroeconomic and geopolitical conditions will continue to disrupt the economy and cause periods of volatility.

 

 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 for cloud-based digital tools that drive productivity

 

 Continued ability to deliver innovative products that meet evolving customer demands

 

 Acquisition of new customers through expanded and improved digital platforms, simplification of the product portfolio and through other sales initiatives

 

 Improvement in customer retention through commercial simplification efforts and customer service improvements

  

 Global economic uncertainty due to the Russia-Ukraine conflict and related government sanctions, the ongoing COVID-19 pandemic, regulatory reform as well as changes in the political environment or other events may exacerbate global inflation, supply chain issues and macroeconomic factors, creating unprecedented economic conditions that may last substantially longer than expected. These conditions could lead to limited business opportunities for our customers, creating significant cost pressures for some of them and potentially constraining the number of professionals employed, which could lead to lower demand for our products and services

 

 Business disruptions associated with the COVID-19 pandemic, including government enforced quarantines and stay-at-home orders, may continue longer than we expect or may be more restrictive in the event of future outbreaks and resurgences of the virus, delaying the anticipated recovery of the global economy

 

 Demand for our products and services could be reduced by changes in customer buying patterns, or our inability to execute on key product design or customer support initiatives

 

 Competitive pricing actions and product innovation could impact our revenues

 

 Our sales, commercial simplification and product design initiatives may be insufficient to retain customers or generate new sales

 

 

 

   Adjusted EBITDA margin

 

 

   Material assumptions

 

  

   Material risks

 

 Our ability to achieve revenue growth targets

 

 Business mix continues to shift to higher-growth product offerings

 

 Change Program expenses of $160 million to $200 million in 2022

 

 Change Program investments drive higher adjusted EBITDA margin through higher revenues and efficiencies by 2023

  

 Same as the risks above related to the revenue outlook

 

 The costs to execute our Change Program may be higher than current expectations, or the expected benefits by 2023 may be lower than current expectations

 

 Acquisition and disposal activity may dilute adjusted EBITDA margin

 

 

 

   Free Cash Flow

 

   Material assumptions

 

  

   Material risks

 

 Our ability to achieve our revenue and adjusted EBITDA margin targets

 

 Accrued capital expenditures expected to be between 7.5% and 8.0% of revenues in 2022 and between 6.0% and 6.5% of revenues in 2023

  

 Same as the risks above related to the revenue and adjusted EBITDA margin outlook

 

 A weaker macroeconomic environment could negatively impact working capital performance, including the ability of our customers to pay us

 

 Accrued capital expenditures may be higher than currently expected

 

 The timing and amount of tax payments to governments may differ from our expectations

 

 

 

   Effective tax rate on adjusted earnings

 

   Material assumptions

 

  

   Material risks

 

 Our ability to achieve our adjusted EBITDA target

 

 The mix of taxing jurisdictions where we recognized pre-tax profit or losses in 2021 does not significantly change

 

 Minimal changes in tax laws and treaties within the jurisdictions where we operate

 

 No significant gains that will prevent the imposition of certain minimum taxes

 

 No significant benefits from the finalization of prior tax years

 

 Depreciation and amortization of computer software between $620 million and $645 million in 2022

 

 Interest expense between $190 million and $210 million in 2022

 

  

 Same as the risks above related to adjusted EBITDA

 

 A material change in the geographical mix of our pre-tax profits and losses

 

 A material change in current tax laws or treaties to which we are subject, and did not expect

 

 Depreciation and amortization of computer software as well as interest expense may be significantly higher or lower than expected

 

 

 

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Our outlook contains various non-IFRS financial measures. We believe that providing reconciliations of forward-looking non-IFRS financial measures in our 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, we are unable to reconcile these measures to the most comparable IFRS measures because we cannot predict, with reasonable certainty, the impact of changes in foreign exchange rates which impact (i) the translation of our results reported at average foreign currency rates for the year; and (ii) other finance income or expense related to intercompany financing arrangements and foreign exchange contracts. Additionally, we cannot reasonably predict (i) our share of post-tax earnings or 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, which generally arise from business transactions we do not currently anticipate.

Related Party Transactions

As of November 1, 2022, our principal shareholder, Woodbridge, beneficially owned approximately 68% of our common shares.

Transactions with 3XSQ Associates

We follow the equity method of accounting for our investment in 3XSQ Associates. In the nine months ended September 30, 2022, we contributed $10 million in cash pursuant to capital calls and made a $15 million in-kind contribution representing the fair value of guarantees provided in connection with a $415 million loan facility obtained by 3XSQ Associates (see the “Liquidity and Capital Resources – Contingencies ” section of this management’s discussion and analysis for additional information). We also paid approximately $5 million of rent to 3XSQ Associates for office space in the building.

Transactions with YPL

In the nine months ended September 30, 2022, we received dividends from YPL of $87 million reflecting our portion of dividends related to our LSEG investment and $24 million in connection with YPL’s participation in LSEG’s share buyback program (see the “Results of Operations – Share of post-tax (losses) earnings in equity method investments” section of this management’s discussion and analysis for additional information). In October 2022, we received an additional $9 million in connection with YPL’s participation in LSEG’s share buyback program.

Except for the above transactions, there were no new significant related party transactions during the first nine months of 2022. Refer to the “Related Party Transactions” section of our 2021 annual management’s discussion and analysis, which is contained in our 2021 annual report, as well as note 31 of our 2021 annual consolidated financial statements for information regarding related party transactions.

Subsequent Events

There were no material events occurring after September 30, 2022 through the date of this management’s discussion and analysis.

Changes in Accounting Policies

Please refer to the “Changes in Accounting Policies” section of our 2021 annual management’s discussion and analysis, which is contained in our 2021 annual report, for information regarding changes in accounting policies. Since the date of our 2021 annual management’s discussion and analysis, there have not been any significant changes to our accounting policies.

Critical Accounting Estimates and Judgments

The preparation of financial statements requires management to make estimates and judgments about the future. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Please refer to the “Critical Accounting Estimates and Judgments” section of our 2021 annual management’s discussion and analysis, which is contained in our 2021 annual report, for additional information. Since the date of our 2021 annual management’s discussion and analysis, there have not been any significant changes to our critical accounting estimates and judgments.

We continue to operate in an uncertain macroeconomic and geopolitical environment. To combat high inflation, central banks are aggressively raising short-term borrowing rates. Lingering COVID-19 impacts, supply chain disruptions and the Russian military invasion of Ukraine are additional factors creating stress on economic growth and financial markets. We are closely monitoring the evolving macroeconomic and geopolitical conditions to assess potential impacts on our businesses. Due to the significant uncertainty created by these circumstances, some of management’s estimates and judgments may be more variable and may change materially in the future.

 

 

 

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Additional Information

Basis of presentation

Revision to segment results

In the first quarter of 2022, we made two changes to our segment reporting to reflect how we currently manage our businesses. The changes (i) reflect the transfer of certain revenues from our Corporates business to our Tax & Accounting Professionals business where they are better aligned; and (ii) record intercompany revenue in Reuters News for content-related services that it provides to Legal Professionals, Corporates and Tax & Accounting Professionals. Previously, these services had been reported as a transfer of expense from Reuters News to these businesses. These changes impact the financial results of our segments, but do not change our consolidated financial results. The table below summarizes the changes for the three and nine months ended September 30, 2021.

 

     
    Three months ended September 30, 2021     Nine months ended September 30, 2021  
   (millions of U.S. dollars)   As Reported     Adjustments     As Revised     As Reported     Adjustments     As Revised  

   Revenues

           

   Legal Professionals

    682       -       682       2,023       -       2,023  

   Corporates

    356       (2)       354       1,088       (6)       1,082  

   Tax & Accounting Professionals

    175       2       177       597       6       603  

   “Big 3” Segments Combined(1)

    1,213       -       1,213       3,708       -       3,708  

   Reuters News

    164       5       169       492       15       507  

   Global Print

    149       -       149       439       -       439  

   Eliminations/Rounding

    -       (5)       (5)       (1)       (15)       (16)  

   Revenues

    1,526       -       1,526       4,638       -       4,638  

   Adjusted EBITDA

           

   Legal Professionals

    288       -       288       852       -       852  

   Corporates

    131       (1)       130       407       (4)       403  

   Tax & Accounting Professionals

    49       1       50       219       4       223  

   “Big 3” Segments Combined(1)

    468       -       468       1,478       -       1,478  

   Reuters News

    25       -       25       88       -       88  

   Global Print

    52       -       52       165       -       165  

   Corporate costs

    (87)       -       (87)       (213)       -       (213)  

   Adjusted EBITDA(1)

    458       -       458       1,518       -       1,518  

 

(1)

Non-IFRS financial measures. Refer to Appendices A and B of this management’s discussion and analysis for additional information and reconciliations of our non-IFRS financial measures to the most directly comparable IFRS financial measures.

Disclosure controls and procedures

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in applicable U.S. and Canadian securities law) as of the end of the period covered by this management’s discussion and analysis, have concluded that our disclosure controls and procedures were effective to ensure that all information that we are required to disclose in reports that we file or furnish under the U.S. Securities Exchange Act and applicable Canadian securities law is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and Canadian securities regulatory authorities; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

There was no change in our internal control over financial reporting during the third quarter of 2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

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Share capital

As of November 1, 2022, we had outstanding 479,394,746 common shares, 6,000,000 Series II preference shares, 2,105,961 stock options and a total of 2,276,182 time-based restricted share units and performance restricted share units. We have also issued a Thomson Reuters Founders Share which enables Thomson Reuters Founders Share Company to exercise extraordinary voting power to safeguard the Thomson Reuters Trust Principles.

Public securities filings and regulatory announcements

You may access other information about our company, including our 2021 annual report (which contains information required in an annual information form) and our other disclosure documents, reports, statements or other information that we file with the Canadian securities regulatory authorities through SEDAR at www.sedar.com and in the United States with the Securities and Exchange Commission (SEC) at www.sec.gov.

Cautionary note concerning factors that may affect future results

Certain statements in this management’s discussion and analysis are forward-looking, including, but not limited to, our quarterly and two-year business outlook, our expectations related to the Change Program, statements regarding the Company’s intention to target a dividend payout ratio of between 50% to 60% of its free cash flow, statements regarding the expected future growth of our customer segments or businesses, the Company’s expectations regarding the impact of changes in Canadian tax legislation, the Company’s expectations regarding share repurchases, and expectations regarding the receipt and amount of supplementary DPT notices from the HMRC. The words “will”, “expect”, “believe”, “target”, “estimate”, “could”, “should”, “intend”, “predict”, “project” and similar expressions identify forward-looking statements. While we believe that we have a reasonable basis for making forward-looking statements in this management’s discussion and analysis, they are not a guarantee of future performance or outcomes or that any other 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. In particular, during the last quarter, the global economy has experienced substantial disruption due to concerns regarding economic effects associated with the macroeconomic backdrop and ongoing geopolitical risks. Any worsening of the global economic or business environment could impact the Company’s ability to achieve its outlook and affect its results and other expectations.

Certain factors that could cause actual results or events to differ materially from current expectations are discussed in the “Outlook” section above. Additional factors are discussed in the “Risk Factors” section of our 2021 annual report and in materials that we from time to time file with, or furnish to, the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. Many of those risks are, and could be, exacerbated by a worsening of the global geopolitical, business and economic environments. There is no assurance that any forward-looking statement will materialize.

The Company’s two-year 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 Russia- Ukraine conflict, the ongoing COVID-19 pandemic), as well as other factors that the Company believes are appropriate under the circumstances.

The Company has provided a business 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 management’s discussion and analysis. Except as may be required by applicable law, Thomson Reuters disclaims any obligation to update or revise any forward-looking statements.

 

 

 

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Appendix A

Non-IFRS Financial Measures

We use non-IFRS financial measures, which include ratios that incorporate one or more non-IFRS financial measures, as supplemental indicators of our operating performance and financial position as well as for internal planning purposes, our management incentive programs and our business outlook. These measures do not have any standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies.

As of December 31, 2021, we changed the basis of capital expenditures used in certain of our non-IFRS financial measures. Historically, we used capital expenditures paid from our consolidated statement of cash flow, as measured under IFRS. However, as we manage capital expenditures on an accrual basis, which includes capital expenditures that remain unpaid at the reporting date, we believe it is more appropriate to use accrued capital expenditures in these measures. The change results in a new non-IFRS financial measure called “Accrued capital expenditures as a percentage of revenues”. We have revised the amounts for the third quarter of 2021 in our management’s discussion & analysis.    

As of September 30, 2022, we amended our definition for adjusted EBITDA and adjusted earnings to exclude the impact from having to fair value acquired deferred revenue. Under IFRS rules, when a business is acquired, a purchaser cannot recognize in its post-acquisition income statement the full amount of deferred revenue originally recorded by the seller. This requirement creates distortions in comparability from period to period. We believe that these changes to our metrics will eliminate these distortions. Prior period amounts were not revised as the impact was negligible.

The following table sets forth our non-IFRS financial measures including an explanation of why we believe they are useful measures of our performance. Reconciliations to the most directly comparable IFRS measure are reflected in Appendix B and the “Liquidity and Capital Resources” section of this management’s discussion and analysis.

 

     

 

How We Define It

  

 

Why We Use It and Why It Is Useful to
Investors

  

 

Most Directly Comparable
IFRS Measure

 

 

  Adjusted EBITDA and the related margin

 

Represents 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, our share of post-tax earnings or losses in equity method investments, other operating gains and losses, certain asset impairment charges and fair value adjustments, including those related to acquired deferred revenue.

 

The related margin is adjusted EBITDA expressed as a percentage of revenues. For purposes of this calculation, revenues are before fair value adjustments to acquired deferred revenue.

 

  

 

Provides a consistent basis to evaluate operating profitability and performance trends by excluding items that we do not consider to be controllable activities for this purpose.

 

Also represents a measure commonly reported and widely used by investors as a valuation metric, as well as to assess our ability to incur and service debt.

  

 

Earnings (loss) from continuing operations

  Adjusted EBITDA less accrued capital expenditures and the related margin

 

Represents adjusted EBITDA less accrued capital expenditures, where accrued capital expenditures include amounts that remain unpaid at the reporting date.

 

The related margin is adjusted EBITDA less accrued capital expenditures expressed as a percentage of revenues. For purposes of this calculation, revenues are before fair value adjustments to acquired deferred revenue.

 

  

 

Provides a basis for evaluating the operating profitability and capital intensity of a business in a single measure. This measure captures investments regardless of whether they are expensed or capitalized, and reflects the basis on which management measures capital spending.

  

 

Earnings (loss) from continuing operations

  Accrued capital expenditures as a percentage of revenues

 

Accrued capital expenditures expressed as a percentage of revenues. For purposes of this calculation, revenues are before fair value adjustments to acquired deferred revenue.

  

 

Reflects the basis on how we manage capital expenditures for internal budgeting purposes.

  

 

Capital expenditures

 

 

 

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How We Define It

  

 

Why We Use It and Why It Is Useful to
Investors

  

 

Most Directly Comparable
IFRS Measure

 

  Adjusted earnings and adjusted EPS

 

Net earnings or loss including dividends declared on preference shares but excluding the post-tax impacts of fair value adjustments, including those related to acquired deferred revenue, amortization of other identifiable intangible assets, other operating gains and losses, certain asset impairment charges, other finance costs or income, our share of post-tax earnings or losses in equity method investments, discontinued operations and other items affecting comparability.

 

The post-tax amount of each item is excluded from adjusted earnings based on the specific tax rules and tax rates associated with the nature and jurisdiction of each item.

  

 

Provides a more comparable basis to analyze earnings.

 

These measures are commonly used by shareholders to measure performance.

  

 

Net earnings (loss) and diluted earnings (loss) per share

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.

         
 

  Effective tax rate on adjusted earnings

 

 

Adjusted tax expense divided by pre-tax adjusted earnings. Adjusted tax expense is computed as income tax (benefit) expense plus or minus the income tax impacts of all items impacting adjusted earnings (as described above), and other tax items impacting comparability.

  

 

Provides a basis to analyze the effective tax rate associated with adjusted earnings.

  

 

Tax (expense) benefit

In interim periods, we also make an adjustment to reflect income taxes based on the 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 we operate. The non-IFRS adjustment reallocates estimated full-year income taxes between interim periods but has no effect on full-year income taxes.

   Because the geographical mix of pre-tax profits and losses in interim periods may be different from that for the full year, our effective tax rate computed in accordance with IFRS may be more volatile by quarter. Therefore, we believe that using the expected full-year effective tax rate provides more comparability among interim periods.     
 

 

  Net debt and leverage ratio of net debt to adjusted EBITDA

 

Net debt:

 

Total indebtedness (excluding the associated unamortized transaction costs and premiums or discount) plus the currency related fair value of associated hedging instruments, and lease liabilities less cash and cash equivalents.

  

 

Provides a commonly used measure of a company’s leverage.

 

Given that we hedge some of our debt to reduce risk, we include hedging instruments as we believe it provides a better measure of the total obligation associated with our outstanding debt. However, because we intend to hold our debt and related hedges to maturity, we do not consider the interest components of the associated fair value of hedges in our measurements. We reduce gross indebtedness by cash and cash equivalents.

  

 

Total debt (current indebtedness plus long-term indebtedness)

Net debt to adjusted EBITDA:

Net debt is divided by adjusted EBITDA for the previous twelve-month period ending with the current fiscal quarter.

  

Provides a commonly used measure of a

company’s ability to pay its debt. Our non-IFRS measure is aligned with the calculation of our internal target and is more conservative than the maximum ratio allowed under our contractual covenants in our credit facility.

   For adjusted EBITDA, refer to the definition above for the most directly comparable IFRS measure

 

 

 

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How We Define It

  

 

Why We Use It and Why It Is Useful to
Investors

  

 

Most Directly Comparable
IFRS Measure

 

Free cash flow

 

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 our preference shares.

 

  

 

Helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common dividends and fund share repurchases and acquisitions.

  

 

Net cash provided by operating activities

 

Changes before the impact of foreign currency or at “constant currency”

 

Applicable measures where changes are

reported before the impact of foreign currency or at “constant currency”

 

IFRS Measures:

 Revenues

 Operating expenses

 

Non-IFRS Measures and ratios:

 Adjusted EBITDA and adjusted EBITDA margin

 Adjusted EPS

 

Our reporting currency is the U.S. dollar. However, we conduct activities in currencies other than the U.S. dollar. We measure our performance before the impact of foreign currency (or at “constant currency”), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period. To calculate the foreign currency impact between periods, we convert the current and equivalent prior period’s local currency results using the same foreign currency exchange rate.

 

  

 

Provides better comparability of business trends from period to period.

  

 

For each non-IFRS measure and ratio, refer to the definitions above for the most directly comparable IFRS measure.

 

Changes in revenues computed on an “organic” basis

 

Represent 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.

 

 For acquisitions, we calculate organic growth as though we had owned the acquired business in both periods. We compare revenues for the acquired business for the period we owned the business to the same prior-year period revenues for that business, when we did not own it.

 For dispositions, we calculate organic growth as though we did not own the business in either period. We exclude revenues of the disposed business from the point of disposition, as well as revenues from the same prior-year period before the sale.

 

  

 

Provides further insight into the performance of our existing businesses by excluding distortive impacts and serves as a better measure of our ability to grow our business over the long term.

  

 

Revenues

 

“Big 3” segments

 

Our combined Legal Professionals, Corporates and Tax & Accounting Professionals segments. All measures reported for the “Big 3” segments are non-IFRS financial measures.

  

 

The “Big 3” segments comprise approximately 80% of revenues and represent the core of our business information service product offerings.

  

 

Revenues

Earnings (loss) from continuing operations

 

 

 

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Appendix B

This appendix provides reconciliations of certain non-IFRS financial measures to the most directly comparable IFRS measure that are not presented elsewhere in this management’s discussion and analysis for the three and nine months ended September 30, 2022 and 2021 and year ended December 31, 2021.

Reconciliation of earnings (loss) from continuing operations to adjusted EBITDA and adjusted EBITDA less accrued capital expenditures

 

       
     Three months ended September 30,      Nine months ended September 30,     Year ended
December 31,
 
(millions of U.S. dollars, except margins)    2022      2021      2022      2021     2021  
Earnings (loss) from continuing operations      265        (241)        1,212        5,864       5,687  
Adjustments to remove:              

Tax expense (benefit)

     8        (161)        156        1,722       1,607  

Other finance income

     (448)        (34)        (862)        (30)       (8)  

Net interest expense

     48        46        145        146       196  

Amortization of other identifiable intangible assets

     25        29        76        90       119  

Amortization of computer software

     119        119        354        356       474  

Depreciation

     34        40        110        128       177  
EBITDA      51        (202)        1,191        8,276       8,252  
Adjustments to remove:              

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

     525        672        552        (6,717)       (6,240)  

Other operating gains, net

     (25)        (4)        (26)        (35)       (34)  

Fair value adjustments(1)

     (16)        (8)        (21)        (6)       (8)  
Adjusted EBITDA      535        458        1,696        1,518       1,970  

Deduct: Accrued capital expenditures

     (144)        (130)        (407)        (364)       (541)  
Adjusted EBITDA less accrued capital expenditures      391        328        1,289        1,154       1,429  
Adjusted EBITDA margin      34.0%        30.0%        34.9%        32.7%       31.0%  
Adjusted EBITDA less accrued capital expenditures margin      24.8%        21.5%        26.5%        24.9%       22.5%  

 

(1)

Fair value adjustments primarily represent gains or losses on intercompany balances that arise in the ordinary course of business due to changes in foreign currency exchange rates, which are a component of operating expenses.

Reconciliation of capital expenditures to accrued capital expenditures

 

       
    Three months ended September 30,     Nine months ended September 30,     Year ended
December 31,
 
(millions of U.S. dollars)   2022     2021     2022     2021     2021  
Capital expenditures     152       131       460       364       487  

Remove: IFRS adjustment to cash basis

    (8)       (1)       (53)       -       54  
Accrued capital expenditures     144       130       407       364       541  
Accrued capital expenditures as a percentage of revenues     n/a       n/a       n/a       n/a       8.5%  

 

 

 

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Reconciliation of net earnings (loss) to adjusted earnings and adjusted EPS

 

       
     Three months ended September 30,      Nine months ended September 30,     Year ended
December 31,
 

(millions of U.S. dollars, except per share amounts and

      share data)

   2022      2021      2022      2021     2021  
Net earnings (loss)      228        (240)        1,120        5,864       5,689  
Adjustments to remove:              

Fair value adjustments(1)

     (16)        (8)        (21)        (6)       (8)  

Amortization of other identifiable intangible assets

     25        29        76        90       119  

Other operating gains, net

     (25)        (4)        (26)        (35)       (34)  

Other finance income

     (448)        (34)        (862)        (30)       (8)  

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

      investments

     525        672        552        (6,717)       (6,240)  

Tax on above items(2)

     (51)        (174)        -        1,616       1,475  

Tax items impacting comparability(2)

     -        (4)        (45)        (15)       (24)  

Loss (earnings) from discontinued operations, net of tax

     37        (1)        92        -       (2)  
Interim period effective tax rate normalization(2)      -        (8)        3        (10)       -  
Dividends declare on preference shares      (1)        (1)        (2)        (2)       (2)  
Adjusted earnings      274        227        887        755       965  
Adjusted EPS      $0.57        $0.46        $1.82        $1.52       n/a  
Diluted weighted-average common shares (millions)(3)      483.9        495.9        486.3        496.6       n/a  

Effective Tax Rate on Adjusted Earnings is computed as follows:

 

   
     Year ended December 31,  
(millions of U.S. dollars, except percentages)    2021  

Adjusted earnings

     965  

Plus: Dividends declared on preference shares

     2  

Plus: Tax expense on adjusted earnings

     156  

Pre-tax adjusted earnings

     1,123  

IFRS tax expense

     1,607  

Remove tax related to:

  

Amortization of other identifiable intangible assets

     26  

Share of post-tax earnings in equity method investments

     (1,497)  

Other operating gains, net

     (9)  

Other items

     5  

Subtotal – tax on pre-tax items removed from adjusted earnings

     (1,475)  

Remove: Tax items impacting comparability

     24  

Total – Remove all items impacting comparability

     (1,451)  

Tax expense on adjusted earnings

     156  

Effective tax rate on adjusted earnings

     13.9%  

 

(1)

Fair value adjustments primarily represent gains or losses on intercompany balances that arise in the ordinary course of business due to changes in foreign currency exchange rates, which are a component of operating expenses.

 

(2)

For three and nine months ended September 30, 2022 and 2021, see the “Results of Operations—Tax expense (benefit)” section of this management’s discussion and analysis for additional information.

 

(3)

For the three months ended September 30, 2021, refer to “Reconciliation of weighted-average diluted shares used in adjusted EPS” in this appendix.

 

 

 

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Reconciliation of net cash provided by operating activities to free cash flow

 

       
     Three months ended September 30,      Nine months ended September 30,      Year ended
December 31,
 
   (millions of U.S. dollars)    2022      2021      2022      2021      2021  

Net cash provided by operating activities

     531        534        1,239        1,376        1,773  

Capital expenditures

     (152)        (131)        (460)        (364)        (487)  

Other investing activities

     25        3        87        56        81  

Payments of lease principal

     (17)        (22)        (50)        (65)        (109)  

Dividends paid on preference shares

     (1)        (1)        (2)        (2)        (2)  

Free cash flow

     386        383        814        1,001        1,256  

 

Reconciliation of changes in revenues to changes in revenues excluding the effects of foreign currency (constant currency) as well as acquisitions/divestitures (organic basis)(1)

 

 

     Three months ended September 30,  
                   Change  
   (millions of U.S. dollars)    2022      2021      Total      Foreign
Currency
     Subtotal
Constant
Currency
     Acquisitions/
Divestitures
     Organic  

   Revenues

                    

   Legal Professionals

     701        682        3%        (2%)        5%        -        6%  

   Corporates

     373        354        5%        (2%)        7%        -        7%  

   Tax & Accounting Professionals

     190        177        7%        (1%)        8%        (1%)        9%  

   “Big 3” Segments Combined

     1,264        1,213        4%        (2%)        6%        -        6%  

   Reuters News

     171        169        1%        (4%)        5%        -        5%  

   Global Print

     146        149        (3%)        (2%)        -        -        -  

   Eliminations/Rounding

     (7)        (5)                                               

   Total revenues

     1,574        1,526        3%        (2%)        5%        -        6%  

   Recurring Revenues

                    

   Legal Professionals

     658        634        4%        (2%)        6%        -        6%  

   Corporates

     330        307        8%        (2%)        9%        -        9%  

   Tax & Accounting Professionals

     158        149        6%        (2%)        8%        (1%)        9%  

   “Big 3” Segments Combined

     1,146        1,090        5%        (2%)        7%        -        8%  

   Reuters News

     152        148        2%        (4%)        6%        -        6%  

   Eliminations/Rounding

     (7)        (5)                                               

   Total recurring revenues

     1,291        1,233        5%        (2%)        7%        -        7%  

   Transactions Revenues

                    

   Legal Professionals

     43        48        (10%)        -        (10%)        (3%)        (7%)  

   Corporates

     43        47        (9%)        (2%)        (7%)        -        (7%)  

   Tax & Accounting Professionals

     32        28        11%        (1%)        12%        -        12%  

   “Big 3” Segments Combined

     118        123        (5%)        (1%)        (4%)        (1%)        (3%)  

   Reuters News

     19        21        (10%)        (6%)        (4%)        -        (4%)  

   Total transactions revenues

     137        144        (5%)        (2%)        (4%)        (1%)        (3%)  

 

(1)

Growth percentages are computed using whole dollars. Accordingly, percentages calculated from reported amounts may differ from those presented, and components of growth may not total due to rounding.

 

 

 

Page 29


LOGO

 

Reconciliation of changes in revenues to changes in revenues excluding the effects of foreign currency (constant currency) as well as acquisitions/divestitures (organic basis)(1)

 

   
     Nine months ended September 30,  
                   Change  
   (millions of U.S. dollars)    2022      2021      Total      Foreign
Currency
     Subtotal
Constant
Currency
     Acquisitions/
Divestitures
     Organic  

   Revenues

                    

   Legal Professionals

     2,099        2,023        4%        (1%)        5%        -        6%  

   Corporates

     1,157        1,082        7%        (1%)        8%        -        8%  

 &nb