Thomson Reuters (TRI)
Q1 2010 Earnings Call
May 04, 2010 8:30 am ET
Frank Golden - Senior Vice President of Investor Relations
Thomas Glocer - Chief Executive Officer and Director
Robert Daleo - Chief Financial Officer and Executive Vice President
Paul Steep - Scotia Capital Inc.
Randal Rudniski - Crédit Suisse First Boston, Inc.
Patrick Wellington - Morgan Stanley
Phillip Huang - UBS Investment Bank
Colin Tennant - Nomura Securities Co. Ltd.
Drew McReynolds - RBC Capital Markets Corporation
Tim Casey - BMO Capital Markets Canada
Vince Valentini - TD Newcrest Capital Inc.
Mark Braley - Deutsche Bank AG
Brian Karimzad - Goldman Sachs Group Inc.
David Lewis - JP Morgan Chase & Co
William Bird - BofA Merrill Lynch
Paul Sullivan - Barclays Capital
Previous Statements by TRI
» Thomson Reuters Q4 2009 Earnings Call Transcript
» Thomson Reuters Corporation Q3 2009 Earnings Call Transcript
» Thomson Reuters Corporation Q2 2009 Earnings Call Transcript
Ladies and gentlemen, thank you for standing by. Welcome to the Thomson Reuters Full Year and First Quarter 2010 Earnings Call [Operator Instructions] I would now like to turn the conference over to our host, Frank Golden, Senior Vice President Investor Relations.
Thank you. Good morning, and thank you for joining us today. We will begin today with Thomson Reuters' CEO Tom Glocer who will be followed by our CFO, Bob Daleo. Following Tom's and Bob's presentations, we'll open the call for questions. I ask that you please limit yourselves to one question each so that we can get to as many questions as possible.
Let me point out, prior to our presentation, that we made a revenue reclassification between our business segments and the markets division this quarter. We moved communications and professional publishing-related revenues. The net results in 2009 was an increase of $87 million to our Sales & Trading unit with the related reductions to the other segments. On our website, you'll find an updated set of figures for 2008 and 2009 reflecting this change.
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 is now my pleasure to introduce the Chief Executive Officer of Thomson Reuters, Tom Glocer.
Thanks, Frank, and thank you all for joining us today. I plan to cover three topics. First, I'll discuss our Q1 results. Second I'll provide you with selected highlights for the quarter. And third, I'll discuss our market position and our expectations for the balance of the year given the positive momentum building in our fourth and our first quarters.
Now as I discuss our first quarter results, keep in mind that when we compare performance period-on-period, we look at revenue growth before currency as we believe this provides the best basis to measure the underlying performance of the business.
I'm pleased with the first quarter results, which were in line, actually a little bit ahead of our expectations. As I stated last quarter, and is even more clearer today given these results, we're past the bottom in terms of real economic activity although we're likely to report negative year-on-year results for the first half of 2010 given the subscription nature of our business model.
First quarter revenues were down 2% as the impact from last year's negative net sales took hold. From a net sales standpoint, we hit bottom in Q2 of last year, and trends have continued to improve since then with both Q4 and Q1 of this year positive on a consolidated basis.
Even the hard-hit markets division recorded positive net sales in two of the three months this quarter although still a bit negative for the quarter as a whole on an average monthly basis. The professional division revenues rose 1%, which we believe to be a good performance compared to our peers and the industry as a whole.
Professional division growth was driven by the Tax & Accounting and Healthcare & Science businesses, up 7% combined. Legal was down 3% overall but subscription revenues, which comprise 70% of its total revenues, were up 3%, reflecting what we believe were share gains.
The Markets division 4% period-on-period decline was due to last year's negative net sales, which will continue to impact our second quarter. However, as I mentioned, net sales trends have improved each quarter since the second quarter of last year, a very encouraging sign for us.
Underlying operating profit margin declined 120 basis points as expected due to revenue declines and ongoing investments in the businesses, including the new product launches this year which I highlighted on our Q4 call. We continue to make good progress with our integration program, with run-rate savings of $1.2 billion by quarter end, and we remain confident that we'll achieve our total savings program's target of $1.6 billion by year-end 2011. And adjusted earnings per share for the quarter was $0.36 compared to $0.40 in the prior period due to lower underlying operating profit and higher integration related expenses. Lastly, we are affirming our full year 2010 outlook given the first quarter results and the favorable trends in the business.
Now speaking of trends in the business, let me share a few specifics. Q1 marked the second consecutive quarter of positive consolidated net sales. Customers are still cautious when it comes to spending, but things are definitely picking up. Financial services firms have hired in three of the last four months, and the increase in returns across global stock markets over the past year has led to a substantial increase in assets under management.