Nov 3 (Reuters) - Thomson Reuters Corp said
third quarter revenue rose on gains in its legal and corporates
divisions and cost cuts helped lift its 2020 free cash flow
outlook, prompting a near 4% rise in its shares on Tuesday.
The news and information company said the results gave it
"increasing confidence" for its full-year financial forecast,
although the course of the COVID-19 pandemic could change this.
Thomson Reuters, which owns Reuters News, said in a
statement that its revenue rose 2% to $1.44 billion in the third
quarter, while its operating profit rose 21% to $318 million.
"Im very pleased to report our markets and businesses
continue to prove resilient in the face of a challenging broader
macro-environment," Chief Executive Steve Hasker said.
The company said its adjusted earnings before interest, tax,
depreciation and amortization (EBITDA) rose by 42% in the third
quarter as a result of higher revenue and a pandemic-related
cost cutting program.
Executives said during an analyst call that Thomson Reuters
had surpassed its cost cutting target by about $30 million to
reach a total of about $130 million, and that the company
planned to reinvest in its core businesses during the fourth
Matt Arnold, an analyst at Edward Jones, said in a research
note that it was a "solid quarter" for Thomson Reuters, that
demonstrated the "resilience of its subscription based model".
Chief Financial Officer Michael Eastwood said in an
interview that Thomson Reuters was still evaluating acquisition
targets and could announce a deal this year or early in 2021.
The company has about $700 million to spend as part of a $2
billion budget to fund expansion in its legal, tax and
Thomson Reuters' adjusted earnings of 39 cents per share
were ahead of the 38 cents analysts expected, according to IBES
data from Refinitiv, while the company's quarterly revenue was
also slightly above Wall Street expectations.
The Legal Professionals, Tax & Accounting Professionals and
Corporates divisions all had higher organic quarterly sales and
Thomson Reuters said its results were boosted by strong
sales from Practical Law, Westlaw Edge and its European and
Canadian businesses and a revenue increase from the tax division
after a U.S. tax filing deadline extension from April to July.
Organic revenues at the Reuters News division slipped 2%,
reflecting a decline in the agency business and the ongoing
impact of the coronavirus crisis on its events business.
Thomson Reuters reaffirmed its full-year guidance of revenue
rising by 1% to 2% and raised its free cash flow forecast to
about $1.1 billion, at the higher end of the previous outlook.
The company also confirmed that London Stock Exchange's
purchase of the Refinitiv data and analytics business is
expected to close in the first quarter of 2021, when it also
expects to incur a tax bill of about $600 million.
Thomson Reuters executives said that the company could fund
the payment through free cash flow, its cash on hand of $1.2
billion or by drawing on credit facilities.
The sale of Thomson Reuters' 45% Refinitiv stake will result
in it holding 15% of the LSE, estimated to be worth some $9
billion, which it plans to sell within five years and use the
proceeds to reinvest in its main businesses.
(Reporting by Kenneth Li;
Editing by Alexander Smith)