Thomson Reuters Corp Net Income surged on 147% in 2016 and Revenue decreased slightly on 0.81%
09.02.2017 • About Thomson Reuters Corp (
$TRI) • By InTwits
Thomson Reuters Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Thomson Reuters Corp has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.9%. At the same time it's in pair with industry average of 6.8%.
- CAPEX is quite volatile: 3,797 in 2016, 4,468 in 2015, 11,398 in 2014, 7,211 in 2013, 6,104 in 2012
- The company has potentially unprofitable business model: ROIC is at 6.2%
- It operates with high leverage: Net Debt/EBITDA is 1.7x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Thomson Reuters Corp ($TRI) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 13,132 | 12,702 | 12,607 | 11,257 | 11,166 | -0.8% |
| SG&A | 9,710 | 9,554 | 9,209 | 8,162 | 8,232 | 0.9% |
| EBITDA | 4,305 | 3,346 | 4,367 | 3,108 | 2,942 | -5.3% |
| Net Income | 1,989 | 137 | 1,909 | 1,255 | 3,098 | 146.9% |
Balance Sheet
|
|---|
| Cash | 1,283 | 1,316 | 1,018 | 966 | 2,368 | 145.1% |
| Short Term Debt | 1,008 | 596 | 534 | 1,595 | 1,111 | -30.3% |
| Long Term Debt | 6,223 | 7,470 | 7,576 | 6,829 | 6,278 | -8.1% |
Cash flow
|
|---|
| Capex | 964 | 1,004 | 968 | 951 | 905 | -4.8% |
Ratios
|
|---|
| Revenue growth | -4.9% | -3.3% | -0.7% | -10.7% | -0.8% | |
| EBITDA growth | 328.8% | -22.3% | 30.5% | -28.8% | -5.3% | |
| EBITDA Margin | 32.8% | 26.3% | 34.6% | 27.6% | 26.3% | -1.3% |
| Net Income Margin | 15.1% | 1.1% | 15.1% | 11.1% | 27.7% | 16.6% |
| SG&A, % of revenue | 73.9% | 75.2% | 73.0% | 72.5% | 73.7% | 1.2% |
| CAPEX, % of revenue | 7.3% | 7.9% | 7.7% | 8.4% | 8.1% | -0.3% |
| ROIC | 9.9% | 5.8% | 10.1% | 6.5% | 6.2% | -0.3% |
| ROE | 11.9% | 0.8% | 12.7% | 9.4% | 24.6% | 15.2% |
| Net Debt/EBITDA | 1.4x | 2.0x | 1.6x | 2.4x | 1.7x | -0.7x |
Thomson Reuters Corp ($TRI) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,793 | 2,769 | 2,744 | 2,860 | -1.0% | -1.2% | -0.1% | -0.9% |
| EBITDA | 688 | 785 | 768 | 701 | -11.2% | 5.2% | -1.4% | -13.2% |
| Net Income | 262 | 337 | 273 | 2,226 | -14.1% | 28.6% | -2.5% | 445.6% |
Balance Sheet
|
|---|
| Cash | 869 | 686 | 831 | 2,368 | 13.0% | -39.1% | 17.0% | 145.1% |
| Short Term Debt | 2,543 | 1,904 | 2,855 | 1,111 | 186.1% | 21.7% | 76.3% | -30.3% |
| Long Term Debt | 6,379 | 6,870 | 6,307 | 6,278 | -14.3% | -1.4% | -8.2% | -8.1% |
Ratios
|
|---|
| EBITDA Margin | 24.6% | 28.3% | 28.0% | 24.5% | -2.8% | 1.7% | -0.4% | -3.5% |
| Net Income Margin | 9.4% | 12.2% | 9.9% | 77.8% | -1.4% | 2.8% | -0.2% | 63.7% |
Revenue and profitability
Thomson Reuters Corp's Revenue decreased slightly on 0.81%. Revenue decline showed acceleration in 16Q4 - it was 0.9% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.4 pp from 50.9% to 54.3% in 2016.
SG&A as a % of Revenue increased slightly on 1.2 pp from 72.5% to 73.7% in 2016.
Net Income marign jumped on 16.6 pp from 11.1% to 27.7% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 8.1%. Thomson Reuters Corp's CAPEX/Revenue showed almost no change from 2013 to 2016. Average CAPEX/Revenue for the last three years was 8.1%.
Return on investment
The company operates at good ROE (24.60%) while ROIC is low (6.24%). ROIC showed almost no change in 2016. ROE jumped on 15.2 pp from 9.4% to 24.6% in 2016.
Leverage (Debt)
Debt level is 1.7x Net Debt / EBITDA and 2.5x Debt / EBITDA. Net Debt / EBITDA dropped on 0.7x from 2.4x to 1.7x in 2016. Debt dropped on 12.3% while cash surged on 145%.
Management team
The company's CEO James Clifton Smith "Jim" is a founder and has spent 6 years at the company. Thomson Reuters Corp's CFO Stephane Bello has spent 10 years at the company.
Appendix 1: Peers in Communications
Below we provide Thomson Reuters Corp benchmarking against other companies in Communications industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| AcuityAds Holding Inc ($AT) | | | | 51.6% | 91.4% |
| Shopify Inc ($SH) | | 111.9% | 109.0% | 95.4% | 89.7% |
| Gaming Nation Inc ($FAN) | | | | | 46.6% |
| Tucows Inc ($TC) | | 13.3% | 13.6% | 17.1% | 9.8% |
| Points International Ltd ($PTS) | | 45.1% | 26.0% | 16.2% | 8.6% |
| |
|---|
| Median (25 companies) | 13.1% | 4.4% | 3.1% | 4.3% | 2.4% |
|---|
| Thomson Reuters Corp ($TRI) | | -3.3% | -0.7% | -10.7% | -0.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wanted Technologies Corp ($WAN) | 90.5% | 93.2% | 94.3% | 95.6% | |
| NeuLion Inc ($NLN) | 53.6% | 63.8% | 70.2% | 81.1% | 81.6% |
| TeraGo Inc ($TGO) | 62.9% | 61.8% | 59.8% | 77.2% | 77.2% |
| ICTV Brands Inc ($ITV) | 67.4% | 71.9% | 69.6% | 68.1% | |
| Platinum Communications Corp ($PCS) | 67.4% | 67.1% | 60.2% | 60.5% | |
| |
|---|
| Median (23 companies) | 44.2% | 42.8% | 45.3% | 46.4% | 41.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BCE Inc ($BCE) | 38.8% | 37.7% | 38.4% | 37.7% | 39.8% |
| Rogers Communications Inc ($RCI.A) | 37.3% | 38.4% | 37.9% | 36.9% | 32.5% |
| Quebecor Inc ($QBR.B) | 27.5% | 36.3% | 35.5% | 34.2% | 35.5% |
| TELUS Corp ($T) | 35.3% | 35.2% | 35.1% | 34.1% | 33.0% |
| ZoomerMedia Ltd ($ZUM) | 32.6% | 33.8% | 29.3% | 29.1% | 27.1% |
| |
|---|
| Median (29 companies) | 14.4% | 7.7% | 8.8% | 9.4% | 7.3% |
|---|
| Thomson Reuters Corp ($TRI) | 32.8% | 26.3% | 34.6% | 27.6% | 26.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TELUS Corp ($T) | 17.9% | 17.8% | 19.8% | 20.2% | 21.5% |
| Rogers Communications Inc ($RCI.A) | 17.2% | 17.6% | 18.4% | 18.2% | 17.2% |
| Quebecor Inc ($QBR.B) | 16.7% | 15.4% | 17.9% | 17.5% | 17.6% |
| BCE Inc ($BCE) | 17.6% | 17.5% | 17.7% | 16.9% | 17.4% |
| TeraGo Inc ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
| |
|---|
| Median (28 companies) | 2.6% | 2.8% | 2.2% | 2.2% | 2.9% |
|---|
| Thomson Reuters Corp ($TRI) | 7.3% | 7.9% | 7.7% | 8.4% | 8.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tucows Inc ($TC) | 17.7% | 22.5% | 35.4% | 51.4% | 58.4% |
| BCE Inc ($BCE) | 14.1% | 12.6% | 12.6% | 12.3% | 12.6% |
| Quebecor Inc ($QBR.B) | 7.9% | 9.6% | 8.4% | 8.4% | 10.1% |
| MDC Partners Inc ($MDZ.A) | -3.1% | -6.3% | 14.2% | 13.7% | 10.1% |
| TELUS Corp ($T) | 12.4% | 13.0% | 13.0% | 11.5% | 9.6% |
| |
|---|
| Median (28 companies) | 8.0% | 8.2% | 7.1% | 2.0% | -0.1% |
|---|
| Thomson Reuters Corp ($TRI) | 9.9% | 5.8% | 10.1% | 6.5% | 6.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Intertain Group Ltd/The ($IT) | | | | 9.4x | |
| MDC Partners Inc ($MDZ.A) | 12.4x | 112.6x | 4.6x | 5.5x | 9.6x |
| Quebecor Inc ($QBR.B) | 3.7x | 3.9x | 4.2x | 4.8x | 4.3x |
| Rogers Communications Inc ($RCI.A) | 2.3x | 2.4x | 3.2x | 3.6x | 3.8x |
| Newfoundland Capital Corp Ltd ($NCC.B) | 1.4x | 1.3x | 3.3x | 3.2x | |
| |
|---|
| Median (20 companies) | 1.4x | 1.2x | 1.5x | 1.5x | 1.8x |
|---|
| Thomson Reuters Corp ($TRI) | 1.4x | 2.0x | 1.6x | 2.4x | 1.7x |
