Thomson Reuters Corporation (
TRI)
Q3 2009 Earnings Call Transcript
November 5, 2009 8:30 a.m. ET
Executives
Frank Golden – Senior Vice President, Investor Relations
Thomas Henry Glocer – Chief Executive Officer
Robert D. Daleo – Executive Vice President and Chief Financial officer
Analysts
Paul Steep – Scotia Capital
Vince Valentini – TD Newcrest
Patrick Wellington – Morgan Stanley
Drew McReynolds – RBC Capital Markets
Thomas Singlehurst – Citigroup
Randal Rudniski – Credit Suisse
Mark O’Donnell – JPMorgan
Mark Braley – Deutsche Bank Securities
Presentation
Frank Golden
Good morning and thank you for joining us. We will begin today with Thomson Reuters’ CEO, Tom Glocer, who will be followed by our CFO, Bob Daleo. Following Tom and Bob’s presentations, we will open the call for questions. Before we begin, I’m pleased to point out that for the first time since the Reuters acquisition, we are reporting actual growth rates for the quarter, not pro forma results – something I’m sure will please you as much as it has our accounting group.
Now, today’s presentation contains forward-looking statements. Actual results may differ materially due to a number of risks and uncertainties discussed in reports and filings that we provide to the regulatory agencies. You can access these documents on our website or by contacting our investor relations department.
It’s now my pleasure to introduce the Chief Executive Officer of Thomson Reuters, Tom Glocer.
Thomas Henry Glocer
Thank you, Frank and thank you for joining us this morning. I plan to cover two topics today. First, I’ll discuss our results for the quarter and second, I’ll provide an update on current trading.
Three-quarters of the way through the year, we continue to perform well in what remains a challenging environment. Our Tax & Accounting and Healthcare & Science businesses continue to perform well and the recurring subscription parts of our Legal and Markets divisions held up well. And across the business, sequential quarterly net sales have improved, though they are still negative in Markets.
Now, although we believe that we’re past the bottom in terms of real economic activity, our reported year-on-year growth figures have gone negative, but we expect this dip to be shallow and limited to the next few quarters. And this is the direct result of the mathematics of the subscription model, which I discussed on last quarter’s call and at our recent Investor Day in Toronto.
Let’s now look at the results for the third quarter, keeping in mind that when we compare performance period-on-period, we look at revenue growth rates before currency, as we believe this provides the best basis to measure the underlying performance of the business.
I’m never pleased with performance when the numbers are preceded by a minus sign, but compared to our peers and the industry as a whole, I believe that Thomson Reuters performed well in the third quarter.
Total revenues declined 2%, with the Professional division up 2% and the Markets division down 4%. Markets’ recurring subscription revenues excluding recoveries were down less than 1% and Legal’s recurring subscription revenues grew 6% and together these categories represent over 60% of total company revenues.
The more resilient Professional division performed well, given the challenging economic environment and tough year-ago comps, when revenues exceeded 10% that period. Our Professional products remain in demand, as evidenced by growth of 8% in each of Tax & Accounting and Healthcare & Science and good growth in Legal subscription revenues.
Markets revenues were down 4% for the quarter, again against a tough third-quarter ‘08 comp when they were up 5%. And I will come back to this in a moment.
On a consolidated basis, the whole company, underlying profit was up 3% and the margin was up 140 basis points, despite the decline in the top-line growth. And this was driven by integration-related savings, strong cost controls across the company and the benefit of currency.
The integration and legacy efficiency programs continue to go very well, having achieved run-rate savings of $975 million for the first nine months of the year. And we continue to expect run-rate savings of at least $1 billion by year-end 2009. And adjusted earnings per share for the quarter were $0.43 per share compared to $0.47.
