Thomson Reuters Corp reports 34.3% Net Income decline and 10.7% Revenue decline
11.02.2016 • About Thomson Reuters Corp (
$TRI) • By InTwits
Thomson Reuters Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Thomson Reuters Corp is a company in decline: 2015 revenue growth was -10.7%, 5 years revenue CAGR was -2.9%
- EBITDA Margin is quite volatile: 27.6% in 2015, 34.6% in 2014, 26.3% in 2013, 32.8% in 2012, 7.3% in 2011
- Thomson Reuters Corp has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.8%. At the same time it's in pair with industry average of 8.1%.
- CAPEX is quite volatile: 516 in FY2015, 539 in FY2014, 404 in FY2013, 222 in FY2012, 231 in FY2011
- The company has potentially unprofitable business model: ROIC is at 6.5%
- It operates with high leverage: Net Debt/EBITDA is 2.4x while industry average is 0.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Thomson Reuters Corp ($TRI) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 13,807 | 13,132 | 12,702 | 12,607 | 11,257 | -10.7% |
| SG&A | 9,997 | 9,710 | 9,554 | 9,209 | 8,162 | -11.4% |
| EBITDA | 1,004 | 4,305 | 3,346 | 4,367 | 3,108 | -28.8% |
| Net Income | -1,390 | 1,989 | 137 | 1,909 | 1,255 | -34.3% |
Balance Sheet
|
|---|
| Cash | 422 | 1,283 | 1,316 | 1,018 | 966 | -5.1% |
| Short Term Debt | 434 | 1,008 | 596 | 534 | 1,595 | 198.7% |
| Long Term Debt | 7,160 | 6,223 | 7,470 | 7,576 | 6,829 | -9.9% |
Cash flow
|
|---|
| Capex | 1,041 | 964 | 1,004 | 968 | 951 | -1.8% |
Ratios
|
|---|
| Revenue growth | 5.6% | -4.9% | -3.3% | -0.7% | -10.7% | |
| EBITDA growth | -66.5% | 328.8% | -22.3% | 30.5% | -28.8% | |
| EBITDA Margin | 7.3% | 32.8% | 26.3% | 34.6% | 27.6% | -7.0% |
| Net Income Margin | -10.1% | 15.1% | 1.1% | 15.1% | 11.1% | -4.0% |
| SG&A, % of revenue | 72.4% | 73.9% | 75.2% | 73.0% | 72.5% | -0.5% |
| CAPEX, % of revenue | 7.5% | 7.3% | 7.9% | 7.7% | 8.4% | 0.8% |
| ROIC | -2.6% | 9.9% | 5.8% | 10.1% | 6.5% | -3.6% |
| ROE | -7.8% | 11.9% | 0.8% | 12.7% | 9.4% | -3.3% |
| Net Debt/EBITDA | 7.1x | 1.4x | 2.0x | 1.6x | 2.4x | 0.8x |
Revenue and profitability
Thomson Reuters Corp's Revenue dropped on 10.7% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.0 pp from 34.6% to 27.6% in 2015.
SG&A as a % of Revenue decreased slightly on 0.54 pp from 73.0% to 72.5% in 2015.
Net Income marign decreased on 4.0 pp from 15.1% to 11.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 8.4%. The company showed small growth in CAPEX/Revenue of 1.1 pp from 7.3% in 2012 to 8.4% in 2015. Average CAPEX/Revenue for the last three years was 8.0%.
Return on investment
The company operates at low ROIC (6.49%) and ROE (9.43%). ROIC decreased on 3.6 pp from 10.1% to 6.5% in 2015. ROE decreased on 3.3 pp from 12.7% to 9.4% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.4x and Debt / EBITDA is 2.7x. Net Debt / EBITDA surged on 0.8x from 1.6x to 2.4x in 2015. Debt increased on 3.9% in 2015 while cash decreased on 5.1% in 2015.
Management team
James Clifton Smith "Jim" is a Thomson Reuters Corp's CEO. James Clifton Smith "Jim" is a founder and has spent 6 years at the company. Stephane Bello is a The company's CFO. Stephane Bello has spent 10 years at the company.
Appendix 1: Peers in Communications
Below you can find Thomson Reuters Corp benchmarking vs. other companies in Communications industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Telehop Communications Inc ($HOP) | -11.7% | -13.1% | -7.8% | 105.7% | |
| Wi2Wi Corp ($YTY) | | | 11.5% | 100.3% | |
| BSM Technologies Inc ($GPS) | | | 39.1% | 55.5% | 2.7% |
| Plaintree Systems Inc ($NPT) | | 14.5% | 9.1% | 50.8% | -7.1% |
| Aimia Inc ($AIM) | 2.9% | 6.3% | -25.6% | 47.5% | |
| |
|---|
| Median (49 companies) | 10.2% | 5.0% | 2.1% | 3.1% | 2.7% |
|---|
| Thomson Reuters Corp ($TRI) | | -4.9% | -3.3% | -0.7% | -10.7% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wanted Technologies Corp ($WAN) | 86.6% | 90.5% | 93.2% | 94.3% | 95.6% |
| CounterPath Corp ($CCV) | 74.1% | 80.0% | 85.1% | 80.9% | 81.5% |
| Mediagrif Interactive Technologies Inc ($MDF) | 78.2% | 79.8% | 79.8% | 78.8% | 80.1% |
| NeuLion Inc ($NLN) | 45.2% | 53.6% | 63.8% | 70.2% | |
| Sangoma Technologies Corp ($STC) | 74.5% | 68.8% | | 66.9% | 67.2% |
| |
|---|
| Median (41 companies) | 43.2% | 43.0% | 42.6% | 41.9% | 48.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Manitoba Telecom Services Inc ($MBT) | 33.7% | 34.3% | 33.7% | 47.4% | 42.3% |
| Cogeco Cable Inc ($CCA) | 45.8% | 46.0% | 44.9% | 43.8% | 46.2% |
| Cogeco Inc ($CGO) | 28.1% | 43.2% | 43.5% | 43.3% | 44.3% |
| Shaw Communications Inc ($SJR.B) | 43.3% | 42.7% | 43.3% | 42.1% | 44.6% |
| BCE Inc ($BCE) | 37.0% | 38.8% | 37.7% | 38.4% | 37.7% |
| |
|---|
| Median (49 companies) | 16.4% | 13.5% | 14.1% | 11.7% | 18.2% |
|---|
| Thomson Reuters Corp ($TRI) | 7.3% | 32.8% | 26.3% | 34.6% | 27.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newfoundland Capital Corp Ltd ($NCC.B) | | 8.7% | 5.5% | 76.8% | |
| Axia NetMedia Corp ($AXX) | 10.7% | 30.8% | 27.2% | 27.0% | |
| UrtheCast Corp ($UR) | | | | 26.5% | |
| TeraGo Inc ($TGO) | 21.6% | 20.9% | 21.5% | 23.1% | |
| Manitoba Telecom Services Inc ($MBT) | 16.3% | 19.8% | 18.1% | 22.4% | 22.9% |
| |
|---|
| Median (52 companies) | 4.3% | 2.2% | 3.0% | 2.1% | 2.3% |
|---|
| Thomson Reuters Corp ($TRI) | 7.5% | 7.3% | 7.9% | 7.7% | 8.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wi2Wi Corp ($YTY) | -28.5% | -166.9% | | 136.7% | |
| Tucows Inc ($TC) | 12.8% | 17.7% | 22.5% | 35.4% | 51.4% |
| Asian Television Network International Ltd ($SAT) | 102.7% | 34.6% | 23.6% | 23.4% | |
| Points International Ltd ($PTS) | 20.7% | 14.9% | 15.0% | 21.2% | |
| NeuLion Inc ($NLN) | -62.1% | -55.8% | -10.3% | 18.5% | |
| |
|---|
| Median (53 companies) | 7.2% | 8.0% | 8.3% | 8.0% | 3.8% |
|---|
| Thomson Reuters Corp ($TRI) | -2.6% | 9.9% | 5.8% | 10.1% | 6.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Plaintree Systems Inc ($NPT) | 0.7x | | | 124.2x | 3.9x |
| Advantex Marketing International Inc ($ADX) | | 4.8x | 2.2x | 5.0x | |
| MDC Partners Inc ($MDZ.A) | 7.3x | 12.4x | 112.6x | 4.6x | |
| Quebecor Inc ($QBR.B) | 2.0x | 3.7x | 3.9x | 4.2x | |
| Postmedia Network Canada Corp ($PNC.B) | 2.9x | 3.3x | 3.4x | 4.2x | |
| |
|---|
| Median (41 companies) | 0.9x | 1.4x | 1.3x | 1.4x | 1.8x |
|---|
| Thomson Reuters Corp ($TRI) | 7.1x | 1.4x | 2.0x | 1.6x | 2.4x |
