Thomson Reuters Corporation (TRI) Q1 2016 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Thomson Reuters First Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Senior Vice President, Investor Relations, Frank Golden. Please go ahead, sir.

Good morning and thank you for joining us as we report our financial results for the first quarter of the year. Our CEO Jim Smith will start today's discussion, followed by Stephane Bello, our CFO. Following their presentations, we'll open the call for questions. We would appreciate if you would limit yourselves to one question each in order to enable us to get to as many questions as possible. Now several items to point out before we get started. First, a reminder that throughout today's presentation, 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 our business. Second, we are pursuing the sale of IP & Science as you know, so its results are now classified as discontinued operations and are no longer in our reported results except for free cash flow. As a reminder IP & Science is not included in our 2016 guidance. Again except for free cash flow. And third on our website today, we have posted quarterly 2015 restated results as well as full year 2013 and 2014 excluding, again IP & Science. 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 regulatory agencies. You can access these documents on our website or by contacting our Investor Relations department and with that, I'd like to turn it over to Jim Smith.

Thank you, Frank, and thanks to those of you on the call for joining us. As I stated on our fourth quarter earnings call in February 2015, was a milestone year for Thomas Reuters. Today's results reflect the progress, we continue to make building from that foundation. Yes, market conditions were turbulent to start the year and many companies were understandably cautious in the face of so much uncertainly. This was reflected in longer lead times to close deals. We will have to see, whether this period of uncertainty persists in the coming months or whether confidence returns along with the improving market conditions, we've seen over the past few months. As I've said before, we're ideally positioned to take advantage of global trends impacting the industries we serve, at the intersection of commerce and regulation. Therefore, we continue to ramp up our efforts and our investment to help our customers be more efficient, reduce their overall cost and deal with the increasing burden of regulatory compliance. That means, we will continue executing and focusing on everything in our control. If we do that well, the results will follow. Now to the results, of the quarter. Our highlight both our reported results and our results before currency, so you can see the underlying progress we're making. You'll note, that currency had a far less impact on our reported results than in the prior year period. First, the reported results. Reported revenues were down 1%, as currency had a 200 basis point negative impact. Reported EBITDA increased 2% with the margin up 80 basis points. And underlying operating profit was up 8%, with the margin up 150 basis points. Adjusted EPS increased 23% to $0.48, that's $0.09 better than Q1, 2015. Currency benefited EPS by only $0.01. Moving to the underlying results or results before currency. Underlying revenues were up 1% and EBITDA increased 1%. With the margin up 10 basis points, driven primarily by continued progress in our financial segment. Underlying operating profit was up 6%, with the margin up a healthy 80 basis points. Stephane will take you through the details in a moment. Given our start to the year, we're reaffirming our full year 2016 outlook. Now to some of the highlights for each of our businesses. Revenues for the financial business decreased 1% for the quarter as expected, due to 13% decline in recoveries revenues and ongoing commercial pricing adjustments, both of which are expected to completed later this year. Excluding these two items, the underlying revenue growth was approximately 2%. Net sales for the first quarter were again positive, marking the eighth consecutive quarter of positive net sales. On a separate note, I'm pleased to announce that end-of-life notices were sent to customers on March 31, informing them that legacy Thomson ONE asset management products will be sunset in March, 2017. As the functionality of 14 individual products is now fully available in our Eikon for Research and Advisory offering. This represents our last major migration from legacy platforms to the open platform, continued progress and a significant accomplishment. Turning to legal, revenues grew 2% a bit better than expected. Importantly, US online revenues grew 2% about 200 basis point improvement from Q1 last year. It's very encouraging to have legal's most profitable segment back to growth, as we look through the balance of 2016 and 2017. Legal's improving performance is partly reflective of a slightly healthier overall legal market as compared to softness in the past few years. Demand for legal services was up a little more than 1% in first quarter, as the best quarter since Q1, 2012. Too early to call it a trend, but nevertheless a hopeful sign. Tax and accounting continues to execute very well. It had another strong quarter with revenues up 8% against the top first quarter, 2015 comparative, when revenues grew 10%. Despite, a difficult macroeconomic condition in several emerging markets, our GGO revenue grew 2% and would have been up 7% excluding recoveries in pricing adjustments. And finally, the confidential information memorandum related to the sale of IP & Science went out earlier this month to parties who have expressed interest, we're working toward a sale and closing in the second half of the year. We were pleased with the good performance of IP & Science in Q1, with revenue growth of 4% compared to the same period last year. So let me conclude with the three priorities we're executing against this year. And the slide that you have seen before at our Q4 earnings presentation. Accelerating organic revenue growth involves prioritizing our efforts toward the big levers that we can pull to accelerate our journey, the long-term sustainable revenue and profit growth. We're confident, these investments and market segments shown on the slide will drive stronger revenue growth and margin expansion in 2017, as we work to return the company to mid single-digit growth. In addition, applying world-class go-to-market capabilities, to fuel growth by improving both retention and sales, is also essential. Improving customer satisfaction and employing engagement scores are critical components of this approach and we're investing in both of them. We've proven over the past several years that we can improve profitability. In the next critical step along that path, is achieving our 2017 EPS targets. We are working to get there, by continuing to ramp up our efforts to transform the business under, an enterprise model to drive growth, efficiency and profitability. Its early days, by the pivot toward enterprise is uncovering new opportunities for growth and savings in many ways. One; its allowing us to become more nimble in reallocating resources to growth opportunities. Two; we're building our technology infrastructure once and for the whole enterprise. And thirdly, we continue to find opportunities to consolidate things like real estate locations. Since I became CEO, we've reduced the number of office locations from more than 500 to about 300 today and we expect to be below 250 by the end of this year. This is requiring new ways of thinking and working and we're confident, we're on the right path. And we continue to execute a consistent capital strategy by balancing opportunities to invest in the business against the value created by returning capital to our shareholders. All the while, remaining within our leverage target. We bought back approximately $430 million of stock in the first quarter and we expect to use the proceeds from the IP & Science sale, for general corporate purposes including investing in the core business, repaying debt and buying back more shares. With that, let me turn it over to Stephane.

Thank you, Jim and good morning or good afternoon, to you all. Before, I begin discussing our first quarter results. I would like to cover two housekeeping items. First, as Frank mentioned when discussing our performance against the prior year. I will be comparing year-on-year results excluding IP & Science, which is now classified as a discontinued operation. These will hold true for all metrics except free cash flow, which includes IP & Science and is not restated as has always been our practice. Second as Jim mentioned, currency had a smaller impact on the results than last year. However and always, I will talk to revenue growth before currency. So onto our results. On a constant currency basis, our first quarter revenues were up 1%. Our financial business was down 1%, while our legal and Tax and Accounting business grew 4% in aggregate during the quarter. Adjusted EBITDA was up 2%, with the margin of 80 basis points to 26.8%. Currency had a 70 basis points favorable impact on the margin. Operating profit was up 8% in the first quarter, with the margin at 17.8%, up 150 basis points, and currency had also 70 basis points favorable impact on the margin. So the pre-currency improvements of 10 basis points at the EBITDA level and 80 basis points at the operating margin level reflected genuine improvement in the underlying performance of the business, as there were no material severance charges taken either in the first quarter last year or this year. Now let me provide you with some additional color on the performance of our individual businesses, starting with legal. Demand for legal services in the US market as measured by Peer Monitor showed a modest improvement in the first three months of the year. As Jim said, it's too early to call this a trend, but it is a positive start of the year nonetheless. During the first quarter, legal grew 2%, an encouraging performance given the difficult year-on-year comparison this segment faced, as legal grew 3% in the prior year period. Transaction revenues for the quarter, which represents 12% of the total, were down 1%, whereas they were up 13% last year. And subscription revenues which accounted for about 74% of the total, were up 3%. The continued strong performance of our subscription revenue base during the quarter is a good indicator of the underlying strength of the business. Turning to profitability metrics, the EBITDA margin was up 160 basis points to 36.3%, while the operating profit margin increased 240 basis points to 29%. Currency, at 120 basis points favorable impact on gross margins. This improvement in margin during the quarter was in part explained by a stronger performance in our US Print business, which was due to timing and I'll come back to this, in a moment. Now here's a more detailed look at the performance from a revenue perspective of the three main sub-segments in our legal business. US online information which was 42% of the total, was up 2% consistent with the performance reporting the previous two quarters. In fact, this marks the fifth consecutive quarter of positive growth for this segment. High on net sales and retention rates were the key contributing factors. US Print revenues were down 3% during the quarter. Now this better than usual performance was timing related and we still expect the full year performance for US Print to be comparable to the 6% reduction, we experienced in 2015. And finally of Solutions Businesses made up 44% of revenues in the first quarter. And revenue growth for the quarter, came in at 3% against a very challenging prior year comparison of 10% growth, which was the high watermark for 2015. The weaker growth performance in Q1 was attributable to the reduction in transaction revenue growth I mentioned earlier, so we continue to expect mid single-digit growth for the Solution Businesses for the full year. Now turning to our Tax and Accounting business. Revenues in the first quarter grew 8%, recurring revenues which were about 82% of the total, grew 11%. From a profit standpoint, EBITDA was 10% lower than the prior year period. With the margin down 450 basis points and excluding currency, the margin was down 580 basis points. Operating profit was down 15%, with the margin down 500 basis points and 620 basis points before currency. Now the key drivers of the contraction in margins are two-fold. First; the first quarter of 2015 included the benefit of several small one-time items, which made it the highest margin quarter of the year, apart from Q4 obviously which is where we report higher revenues due to seasonality and we did not see, these one-time benefit repeat themselves in 2016. Second, we incurred some severance cost and also made some growth investments during the quarter. As discussed earlier, these severance cost were not material enough to call them out of the consolidated level, but they did temporarily impact the margins of our Tax and Accounting business. As we said in the past, small items can have a disproportionate impact on the quality margin performance of this business. And therefore, it is more appropriate to look at the margin performance of Tax and Accounting over the full year. And on the full year basis, we still expect Tax and Accounting to deliver a solid margin performance, while at the same time making the strategic investments required to maintain its revenue growth momentum, beyond 2016. As you can see on this slide, our Professional and Corporate segments, which represents almost three quarters of the business continued a strong performance, delivering growth of 5% and 17% respectively in the first quarter. Knowledge Solutions revenue grew 1%, while Tax and Accounting small segment, the Government business, so revenue declined by 7%. As we have stated before, revenues for the Government business are less predictable in nature and are more prone to fluctuate quarter-by-quarter. Now turning to a Financial and Risk business. First quarter revenues were down 3% on a reported basis, versus down 6% in the first quarter last year. This currency once again having [ph] an impact. Before currency revenues were down 1% compared to the prior year period. As we have pointed out on prior calls, there are currently two temporary factors that have a dampening impact on F&R's reported growth rate. The first is a decreasing recovery revenues, which negatively impacted F&R's revenue growth by 140 basis points in the first quarter. This was expected, as some of our partners moved to a direct billing arrangement with our customers. And also impacting revenues in Q1 with the ongoing commercial pricing adjustments on our remaining legacy foreign exchange products. Now excluding recoveries in these pricing adjustments. F&R's revenues, would have increased by about 2%, building upon similar performance in the previous two quarters. The foreign exchange commercial pricing adjustments are expected to be completed in the second half of 2016. Turning to the first quarter profitability metrics. EBITDA was up 9% and the reported EBITDA margin for the quarter was up 320 basis points. Excluding currency, the margin was up 260 basis points reflecting the benefit associated with last year's platform closures. As we mentioned during the fourth quarter earnings call, we expect our financial business to show continuing year-on-year improvement in its underlying EBITDA margin this year and this was clearly the case in the first quarter. Operating profit was up 22%, with the reported margin increasing 400 basis points and increasing a solid 380 basis points, before currency. Looking at the Financial and Risk revenue in a bit more detail. You can see that recovering revenues, which were 77% of the total in the first quarter were up 1%, which can be attributed to the annual price increase and to the positive impact of net sales throughout 2015. This is encouraging, as this is the portion of F&R's revenue base that is impacted by the pricing adjustments taking place in our legacy foreign exchange desktops. Now as a reminder, the majority of these pricing adjustments have now been made. Meaning, that the impact on growth is smaller than what we have observed in 2015. Turning to recoveries, these pass-through revenues made up about 9% of the total and they were down 13% in Q1. As we explained on the fourth quarter call, we expect these reductions to have a noticeable impact on revenue growth throughout 2016, but then we'll have no impact on EBITDA or operating profit. Transaction revenues, which is 14% of the total, were down 1% in the first quarter. While volumes in the quarter rebounded somewhat, on what we saw in the fourth quarter. They were not strong enough to put us in positive growth territory versus the prior year period. Now let me update you on our free cash flow and earnings per share performance. And I'll start with free cash flow performance for the first quarter, which we're presenting with and without the contribution of IP & Science. Starting from the bottom of the slide. Free cash flow for Q1 was $223 million compared to negative $65 million in the prior year. The key drivers of this strong performance were working capital improvements, the timing of CapEx and higher EBITDA. Overall, Q1 free cash flow came in quite strong, as we typically are in a negative free cash flow position in the first quarter. Now the IP & Science contribution to free cash flow was $111 million fourth quarter, a $4 million over prior year. As you can see, IP & Science generates a great deal of its free cash flow in the first quarter. So we will expect this divestiture to have a modest impact on free cash flow this year, with the real impact of the sale on our free cash flow performance happening primarily in 2017. To excluding IP & Science the free cash flow generated by our continuing operations was $112 million, an improvement of almost $300 million over the prior year period. Turning to our earnings per share performance, first quarter adjusted EPS increased $0.09 to $0.40 per share, which represents a 23% increase compared to the prior year. $0.03 of this improvement was driven by a stronger underlying profit performance, another $0.02 was due to having a lower share count compared to the prior year period. And by the way, during the first quarter we did buyback 11.7 million shares at a cost of $432 million. And as you can see, the remainder of the improvement was contributed by other factors that are highlighted on this slide. Currency only had $0.01 favorable impact during the quarter, which was a welcomed change from what we experienced throughout 2015. So to wrap up, I would say that we're off to steady start this year. And based on the first quarter results, we're reaffirming our outlook for the full year. With that, let me turn it back over to Frank to take some questions.

Thanks very much, Stephane. And now we would like to open the call for questions. So operator, if we could have the first question, please.

[Operator Instructions] ladies and gentlemen, our first question comes from the line of Vincent Valentini with TD Securities. Your line is open.

Two things, mostly related to Tax and Accounting. One, you haven't provided any exclusion of acquisitions in your revenue number this quarter, so nothing organic. Does that imply that, there was no material contribution from acquisitions and does that apply in the Tax and Accounting segment as well because it has been still been somewhat material there in recent quarters? And just slightly related to that, the growth rate in Tax and accounting, it seems very strong still but yet you're taking severance charges. So I wonder if you can just explain that, a little bit, why business is growing, so much would be doing that kind of cost cutting? Thanks.

Sure, Vincent. Good morning and let me take your questions. On your first question, there has been virtually no impact from acquisitions on our reported growth rates and that's why we didn't distinguish between organic growth and total revenue growth rate. If there were meaningful difference, we would continue to report it, but that was not the case and the case of our Tax and Accounting business. I think there was no impact whatsoever from acquisition actually, so the number that you see is really that organic growth performance from the business. And on your second question, in every single business we continue to look at opportunities to always streamline the business and there's always some parts of the business, where we find opportunities to do that and that was the case in our Tax and Accounting business. It happened mostly in the Knowledge Solution segment of the business and we did at the beginning of the year, as part of the run rate of the business essentially.

I think if I might add Jim here, Vince. You see that's a good question, I think it's a good example when we talk about refocusing our resources and our efforts on those areas that have the greatest opportunity for us to grow and we continue to manage the businesses with a keen eye on the cost line, in areas where we think we have opportunities to take cost out, at the same time we're investing then disproportionately in the areas that can grow. So we would have actually added, well at the same time, we've taken some severance to right-size the business in certain parts of Tax and Accounting. We've actually increased headcount in other areas that we think can grow, that are, as we say right at that intersection of regulation and commerce. Particularly outside United States and you've seen the rapid growth of our Tax and Accounting business, outside The United States over the last few years and we're continuing to support that. But that's a big part of the pivot that's ongoing as we look, at our transformation efforts to take cost out of the business, so that we can, yes improve profitability, but more importantly redirect them to growth efforts that are more important.

Thanks.

Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open, go ahead.

Just wondering, just a big picture of question on the industry. I'm just wondering are you expecting that the financial terminals industry becomes more fragmented in the next five to 10 years. And if so, how would you adapt your strategy to sort of gain market share in that type of environment? Thanks.

Sure, Toni. Our belief has been for the past several years and the strategy we've been executing I guess, is to believe that open wins. So we've actively embraced in open world. We've tried to create an open platform, where a number of our customers and our colleagues and third-party partners can innovate on our platform and we've been open to connecting with other platforms. And I think, we will continue to see a great deal of shifting in the financial services market and in those of us, who serve that market. So we've been very open in our embraced and support for in open world and we think that's ultimately going to be the solution, as one that we think, we can thrive in.

Thank you.

Your next question comes from the line of Paul Steep with Scotia Capital. Please go ahead.

Jim, maybe you could talk to in terms of your 2017 plans for driving organic growth, whether you see that as a broad-based initiative, is that's across multiple lines of business or is it narrowed? Does this rely on single set of product introductions or is it improved execution? And then one clarification just as well, on the network infrastructure shutdown. I don't know, if you'd mention that in terms of the dates and the timing there. Thank you.

Let me take the first part of that and then, I'll turn it over to Stephane for the latter part. I think what we're seeing in the business is what we're relying on the trend to be in the future and that's a steady improvement and across the face of the business. And I think, as we've talked in the past, there are certain parts of our business that can continue to grow at disproportionately high rates. We identified those four sectors or four areas that now constitute about a quarter or so the business that are growing double digits, that's really attractive but also equally important is getting all of our businesses on an improving growth trajectory and when you see things like our online legal research business getting back to 2%, that's a big chunk of revenue that's going in the right direction and it's also incredibly profitable. So I think, we see underlying growth opportunities, although of different scale in virtually all of our businesses. There will be couple of places, US Legal Print is one. Where they were will be an inevitable decline. But if you look at the vast majority of our businesses, we're looking for growth from each of them, albeit at the rate, the market will allow.

And Paul just to answer, the other part of your question and build little bit upon, what Jim just said. The continuing improvement in organic growth rate next year is predicated as much as our ability to continue to drive our highest growth businesses like our Solutions Business in the legal segment or Tax and Accounting business or Risk business. As it is frankly, to the gradual elimination of some of these headwinds we've been talking about, like recoveries we said, will have a big impact in 2016, we don't expect the same impact in 2017. The pricing adjustment we said would be largely through them, by the end of the first half of this year. So it's very much a combination of these two factors and I think that, our confidence in the latter is also, driven by the fact that we're now seeing the end of this migration of legacy products we've been talking about for a number years now and that's the answer to your second question. I don't know, your question was related to like the shutdown of the IDN Bond [ph] network that was done in the fourth quarter of last year. With regard to our legacy desktop products, we send end-of-life notices and these end-of-life notices go for one year, so we send them at the end of March. Which means that in March of 2017, we will no longer support the legacy desktop products on the buy side, everything or will be replaced by then, by our Eikon Solution.

Perfect, thank you.

Next question comes from the line of Sara Gubins with Bank of America. Your line is open.

Some margin questions. The F&R margin came in, well above our expectation and I'm wondering if you can help us, with how you're thinking about F&R margins for the year. And then, a bit more holistically, I recognized that there are some timing issues in Legal Print that help margins, this quarter. But overall, I'm wondering as you look at the low end of the operating margin guidance. It strikes me as being somewhat less likely given the trend that we saw in the first quarter and so, I'm wondering if there's something that we should keep in mind aside from Legal Print that might explain how you might end up at the lower end versus the higher end when we look at the full year?

Hi, Sara. It's Stephane, thanks for your question. We still feel pretty good about the guidance we've given for the full year. We always caution everyone not to look at one quarter's performance and extrapolate for the full year. There's always puts and takes in every given quarter. It depends sometimes with timing of the investments that we're making in any given segment. You're right, the improvement in margin for F&R was quite stronger in the first quarter. I would not expect the same kind of basis points improvements pre-currency for the full year. You will see, as we always said, a nice improvement in F&R's margin for the full year but probably not as high as what we've seen in the first quarter. So I wouldn't change anything in terms of our guidance for the full year, that's the one thing as you pointed out, that was. There were two things that were different. Each going in one direction in Q1. I think the Tax and Accountings margin were artificially depressed in Q1, so they like, they were abnormally low and that would expect some of the rebound in the balance of the year and little bit reverse for our legal business because of the lower print decline, we experienced in Q1 versus, what we expect for the balance of the year. But overall, no change in our guidance for the full year.

Thank you.

Your next question comes from the line of Aravinda Galappatthige with Canaccord Genuity. Please go ahead.

Maybe a question for Jim. With respect to the dividend. I mean, obviously you followed a fairly lower growth policy off late, but as we look ahead beyond the sale of IP & Science. You're going to have even better balance sheet. Your payout ratio is now below 60% and with the buybacks that you're doing, your share count is falling and your ability to pay even more dividends, shows up even more. In that backdrop, is there a case to be made to maybe revisit that dividend policy starting next year?

Well I think, as we've always said, the dividends is an important part of our total shareholder return and it has been for a couple of decades now. And as we also said, we're comfortable with that kind of dividend payout ratio being in the 40% to 50% free cash flow range and we're not quite there. As we get back to that range, we'll have a conversation with our Board of Director and we'll discuss what our options are, as we do every year, when we assess our capital strategy and we'll obviously reassess as we do every year, in light of the facts where we stand, that is a fair assumption that will be one of things will be on the table, as we get back into that range.

Great. Thank you.

Your next question from line Ato Garrett with Deutsche Bank. Please go ahead.

Just have a question about your thoughts for the balance of the year. You mentioned that the headwinds from the recovery revenue, those are going to be over in the first half of the year as well as the impact of the commercial pricing adjustments. Just want to get your thoughts on whether we could expect kind of organic revenue growth to accelerate from here? And also, how should we think about CapEx. You said that you had a boost free cash flow in the first quarter due to timing of CapEx. Thanks.

Sure. Just to be clear. We do expect there's two different types of headwinds at this point. One is recoveries, the other one is commercial adjustments. We said that, we would expect the impact of a commercial adjustments to be far diminishing in the second half of the year. For recoveries, you're still going to see a fairly significant impact in the second half of the year, maybe not as high as the first, but still a very significant impact in the second half of the year. So, if you combine these two things. We should see all other things being equal. We would expect to see growth to nudge up a slightly in the second half of the year compared to the first half of the year. In terms of your question on CapEx. CapEx can vary from one quarter to the other. We're not changing our guidance for the full year. So I would expect a level of CapEx which is in-line with what we've seen in the prior years in terms of CapEx as a percentage of revenue, no change year-on-year in that regard.

Okay, great. Thanks.

Our next question comes from the line of Andrew Steinerman with JPMorgan. Go ahead.

Could you give an Eikon desktop count and give us the sense of the recent additions in desktops, where are they coming from, are they upgrades from legacy desktop products for Thomson Reuters, are they new desktop users, meaning did they have a competitive product before, are some of them win-aways from competitor products?

The Eikon desktop count, Andrew is at about 130,000 at this time. You know, it's a mix of all the factors that you mentioned. So it's still, the conversion of the legacy product on the buy side that's helping us. We're actually seeing an increase on buy side. Count of Eikon desktops, we do have some initiatives with various large banks about trying to see, if they can use Eikon in areas where more sophisticated or pricier desktop rather or may not be always necessary. So it's really combination of all these factors.

Okay, thank you.

We do have time for one more question. Our last question comes from the line of Drew McReynolds with RBC. Your line is open.

Two questions, if I can squeeze that in. First on the Corporate and Other Cost in the quarter you talked about transformation cost, in there. Just wondering if, Q1 is the run rate for the rest of the year, Stephane. And then secondly, on the FX side we saw a nice boost to margin from FX. If you look at the rest of the year given where exchange rates are today. Do you expect a similar tailwind from FX on margin, just given where all the hedges are at the moment? Thank you.

Sure, Drew. Let me start with the currency question that you have. The reason that, currency had a positive impact on margin in the first quarter was really driven primarily by or over a short position in Pound Sterling and as you know we have a portion of our employee footprint that is based in the UK. So weakening of the Pound Sterling is essentially beneficial from a margin perspective for us because it reduces our cost structure when expressing US Dollar. So it really will depend on what your view is about the Pound Sterling and you know given the level of uncertainty in the UK and the political front right now. It could really go, either way. So I would certainly not venture to make a forecast of where that will go, but that's really what has been driving them in, beneficial impact of currency on margin. And in terms of your questions for Corporate and Other Cost. We would continue for the full year to expect Corporate and Other Cost to be in the $375 million to $400 million area.

Okay, thanks very much.

Operator, we have time for one more question.

Okay. Our next question comes from the line of Andre Benjamin with Goldman Sachs. Your line is open.

You actually answered my question there at the end. I was hoping to get some color on the provided run rate should be corporate and [indiscernible] but this is all I picked up.

Okay, perfect. So that will be our final question and that will conclude our call. So thanks very much for joining us this morning and we will speak to you again on Q2 in July. Have a good day.