Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Q1 2020 Earnings Presentation
32 slides from Thomson Reuters's earnings presentation, May 5, 2020
Slide 1: Thomson Reuters 2020 First-Quarter Results
REUTERS / Vasily Fedosenko REUTERS REUTERS REUTERS // Mike / Marcos Mike Segar Blake Brindicci Leonhard Foeger THOMSON REUTERS 2020 FIRST-QUARTER RESULTS May 5, 2020
Slide 2: Agenda
Agenda Welcome / Introduction Frank Golden First-Quarter 2020 Results & 2020 Updated Outlook Steve Hasker Financial Review Mike Eastwood Q&A 2
Slide 3: Special Note Regarding Forward-Looking Statements
Special Note Special Note Regarding Forward-Looking Statements, Material Risks and Material Assumptions This presentation consists of these slides and the associated remarks and comments, which are related and intended to be presented and understood together. Certain statements in this presentation
Slide 4: First-Quarter 2020 Highlights & Updated 2020 Outlook
THOMSON REUTERS First-Quarter 2020 Highlights & Updated 2020 Outlook Steve Hasker President & CEO 4
Slide 5: First-Quarter 2020 Consolidated Results
First-Quarter 2020 Consolidated Results IFRS Financial Measures ($ millions) 2020 2019 Change Revenues $1,520 $1,487 Up 2% Operating profit $290 $274 Up 6% Diluted earnings per share (EPS) $0.39 $0.20 Up 95% Cash flow from operations $176 $(30) n/m Change at Constant Organic Non-IFRS Financial Measu
Slide 6: First-Quarter 2020 Revenue Growth by Segment
First-Quarter 2020 Revenue Growth by Segment Reported Revenues up 2% to $1.5 billion Organic revenues up 2% Organic recurring revenues up 4% Tax Corporates Reuters News Global Print Professionals Legal Tax & Accounting Corporates Reuters News Global Print Professionals Professionals $0.6B $0.4B $0.2
Slide 7: Supporting Our Customers in Challenging Times
Supporting Our Customers in Challenging Times Historically Resilient Business 7
Slide 8: Thomson Reuters 2019 Revenues $5.9 Billion
Thomson Reuters 2019 Revenues Reuters News 11% of revenues Global $0.6B +2% Print 12% of $0.7B Legal revenues -3% Professionals $2.4B 41% of $5.9 Billion +4% revenues +4% FY 2019 Corporates 22% of $1.3B +6% revenues “Big 3” $0.8B +8% 78% of revenues Tax & Accounting +5% organically Professionals 14%
Slide 9: Leadership Positions in Historically Stable & Attractive Markets
Thomson Reuters Leadership Positions in Historically Stable & Attractive Markets Segments $5.9 Billion - 2019 Revenues Legal Professionals Corporates Tax & Accounting Professionals $2.4B – 41% of Revenues $1.3B – 22% of Revenues ÿ $0.8B – 14% of Revenues • 4% organic revenue growth - 2019 • 6% organ
Slide 10: Opportunities - The Right Solutions at the Right Time (Legal)
Opportunities - The Right Solutions at the Right Time Legal: Well Positioned to Help Law Firms Effectively Manage Through the Current Environment Westlaw Practical Law HighQ Elite 3E Cloud Government The Original Virtual How-To Solutions A No-code solution to 3E leads the way to Inertia was biggest
Slide 11: Opportunities - The Right Solutions at the Right Time (Tax & Accounting)
Opportunities - The Right Solutions at the Right Time Tax & Accounting: Responding to Customer Needs to Effectively Manage Through the Current Environment Across Tax & Accounting Content Software • COVID-19 Tax and Accounting updates • Complimentary access to the new • TR cloud solutions like Onvio,
Slide 12: Organic Revenue Historical Performance 2008 - 2011
Organic Revenue Historical Performance 2008 - 2011 Legal and Tax & Accounting Legal (excl. Print) grew between 2% to 6% (est.) and Tax & Accounting grew between 3% to 11% from 2008 to 2011 11% 11% 10% 7% 6% 6% Tax & Accounting 5% 5% 4% Legal excl. Print (est.) 3% 3% Legal 2% 2% 0% 0% 2007 2008 2009
Slide 13: Legal and Tax & Accounting 2008 vs. 2020
Legal and Tax & Accounting 2008 vs. 2020 2008 2020 Legal Legal Solutions • Usage-driven pricing / lack of multi-dimensional pricing • More diverse & integrated portfolio of businesses ‒ Westlaw Edge, Quick Check, Practical Law, HighQ, • Little pricing transparency for customers = uncertainty Contrac
Slide 14: Updated 2020 Outlook
Updated 2020 Outlook 14
Slide 15: 2020 Updated Outlook
2020 Updated Outlook Total Thomson Reuters 2020 Outlook 2019 Original Updated (2) Reported 2020 Outlook 2020 Outlook(2) Total Revenue Growth 7.4%(1) 4.5% - 5.5% 1.0% - 2.0% Organic Revenue Growth 3.7% 4.0% - 4.5% 0% - 1.0% Adjusted EBITDA Margin 25.3% 31.5% - 32.0% 31.0% - 32.0% Free Cash Flow $159
Slide 16: Financial Review
Financial Review Mike Eastwood Chief Financial Officer 16
Slide 17: First-Quarter 2020 Revenues - Legal, Corporates, Tax & Accounting
First-Quarter 2020 Revenues - Legal, Corporates, Tax & Accounting ($ millions) First Quarter Normalized Constant Organic Revenues 2020 2019 Total Currency Organic Growth Legal Professionals 626 600 +4% +5% +4% Corporates 367 346 +6% +7% +5% Tax & Accounting Professionals 218 222 -2% +0% +0% +6% Big
Slide 18: First-Quarter 2020 Consolidated Revenues
First-Quarter 2020 Consolidated Revenues ($ millions) First Quarter Normalized Constant Organic Revenues 2020 2019 Total Currency Organic Growth Reuters News 155 155 +0% +0% -4% Global Print 155 165 -6% -5% -5% Eliminations / Rounding (1) (1) Total Revenues 1,520 1,487 +2% +3% +2% +3% Normalized org
Slide 19: Thomson Reuters Second-Quarter 2020 Forecast
Thomson Reuters Second-Quarter 2020 Forecast Total Thomson Reuters Big 3 Segments 10% 10% 10% 6% 5% 5% 5% 5% 6% 4% 3% 5% 2.5% - 3.5% 2.5% - 4.5% 0% - 3% 4% 5% 4% 4% 4% -1% - -2% 4% 2.5% - 4.5% 3% 2% 0% - 3% 2% - 3% -2% - -3% Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Q2-2020 H2-2020 Q1-2019 Q2-2019 Q3-
Slide 20: First-Quarter 2020 Adjusted EBITDA - Legal, Corporates, Tax & Accounting
First-Quarter 2020 Adjusted EBITDA - Legal, Corporates, Tax & Accounting ($ millions) First Quarter Constant Adjusted EBITDA 2020 2019 Total Currency Legal Professionals 230 229 +0% +1% Margin 36.7% 38.1% Corporates 117 111 +5% +5% Margin 31.9% 32.1% Tax & Accounting Professionals 84 92 -8% -6% Marg
Slide 21: First-Quarter 2020 Consolidated Adjusted EBITDA
First-Quarter 2020 Consolidated Adjusted EBITDA ($ millions) First Quarter Constant Adjusted EBITDA 2020 2019 Total Currency Reuters News 19 23 -14% -27% Margin 12.6% 14.6% Global Print 63 74 -15% -15% Margin 40.5% 44.7% Corporate Costs (33) (132) Total Adjusted EBITDA 480 397 +21% +22% Margin 31.6%
Slide 22: First-Quarter 2020 Adjusted EBITDA Margin Performance
First-Quarter 2020 Adjusted EBITDA Margin Performance Underlying -150 bps Contraction on Underlying Adj. EBITDA Underlying Adj. EBITDA Adj. EBITDA 33.1% YOY 31.6% -0.4% 0.5% -2.5% 1.0% -0.1% 4.7% 1x Costs 1.7% Stranded Costs 31.6% +490 bps Expansion on 26.7% Reported Adj. EBITDA YOY Q1 2019 Actuals
Slide 23: Adjusted Earnings Per Share, Free Cash Flow, Capital Structure
Adjusted Earnings Per Share Free Cash Flow Capital Structure 23
Slide 24: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts & share count) First Quarter % 2020 Change Change Adjusted EBITDA $480 $83 Depreciation & Amortization ($151) ($12) Interest Expense ($45) ($10) Income Tax ($44) ($3) Dividend declared on preference shares ($1) - Adjusted Earning
Slide 25: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) First Quarter 2020 2019 Change Comparable Free Cash Flow (Continuing Operations) $113 $159 ($46) Other Items (Q1-19 pension contribution & Refinitiv separation costs) ($63) ($279) ($216) Free Cash Flow (Continuing Operations) $50 ($120) $170 Free Cash Flow –
Slide 26: Well Balanced Debt Maturity Ladder with Substantial Access to Liquidity
Well Balanced Debt Maturity Ladder with Substantial Access to Liquidity • Capital structure and liquidity position both remain strong • Principal sources of liquidity: Cash on hand, cash from operations, $1.8B syndicated credit facility and $1.8B CP program • Current Net Debt / Adjusted EBITDA Ratio
Slide 27: Update on Proposed Sale of Refinitiv to London Stock Exchange Group
Update on Proposed Sale of Refinitiv to London Stock Exchange Group • TRI expected ownership interest in LSEG upon transaction closing = ~82.5M shares ̶ Value = ~$7.6B / ~$15 value within TRI stock price [based on LSEG 5/4/20 closing price] ̶ Transaction still expected to close in the second half of
Slide 28: Updated 2020 Outlook
Updated 2020 Outlook 28
Slide 29: Total Revenue Growth Original vs. Updated Outlook
Total Revenue Growth Original Full Year 2020 Outlook vs. Updated Outlook May 5, 2020 ~ -100 bps Primarily Reuters Events ~ -100 bps 4.5% - 5.5% Installation Delays ~ -100 bps ~ -50 bps Lower net sales 1.0% - 2.0% ORIGINAL FULL YEAR Reuters News Transactional Big 3 Global Print UPDATED FULL YEAR 2020
Slide 30: 2020 Updated Outlook
2020 Updated Outlook Total Thomson Reuters 2020 Outlook 2019 Original Updated (2) Reported 2020 Outlook 2020 Outlook(2) Total Revenue Growth 7.4%(1) 4.5% - 5.5% 1.0% - 2.0% Organic Revenue Growth 3.7% 4.0% - 4.5% 0% - 1.0% Adjusted EBITDA Margin 25.3% 31.5% - 32.0% 31.0% - 32.0% Free Cash Flow $159
Slide 31: Conclusion
Conclusion • We will remain focused on supporting our people, customers & communities • We have a strong foundation and businesses that have been resilient • We will control what’s within our control & work to further strengthen our franchises 31 Sensitivity: Confidential
Slide 32: Q&A
Q&A 32