Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Q4 2022 Earnings Presentation
33 slides from Thomson Reuters's earnings presentation, Feb 9, 2023
Slide 1: 2022 Fourth-Quarter & Full-Year Results
REUTERS / Ilya Naymushin REUTERS / Mike Hutchings REUTERS/Mike Segar Thomson Reuters 2022 FOURTH-QUARTER & FULL-YEAR RESULTS February 9, 2023 THOMSON REUTERS R
Slide 2: Agenda
Agenda • Welcome / Introduction Gary Bisbee • Fourth-Quarter & Full-Year 2022 Highlights Steve Hasker Change Program and Growth Updates • Financial Review Mike Eastwood Fourth-Quarter & Full-Year 2022 Results Updated 2023 Outlook • Q&A 2 THOMSONREUTERS
Slide 3: Special Note
Special Note Special Note Regarding Forward-Looking Statements, Material Assumptions and Material Risks 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: Fourth-Quarter & Full-Year 2022 Highlights
THOMSON REUTERS Fourth-Quarter & Full-Year 2022 Highlights Steve Hasker President & CEO 4 THOMSONREUTERS
Slide 5: Fourth-Quarter & Full-Year 2022 Highlights
Fourth-Quarter & Full-Year 2022 Highlights 1. Strong 2022 performance met or exceeded outlooks for organic revenue, adjusted EBITDA margin, and FCF • Broad revenue momentum, with both Q4 and FY organic growth of 6%, driven by 7% recurring growth 2. Based on 2022 performance, maintained FY 2023 organ
Slide 6: Fourth-Quarter 2022 Consolidated Results
Fourth-Quarter 2022 Consolidated Results IFRS Financial Measures ($ millions) 2022 2021 Change Revenues $1,765 $1,710 Up 3% Operating profit $631 $257 Up 146% Diluted earnings (loss) per share (EPS) $0.59 ($0.36) n/m Net cash provided by operating activities $676 $397 Up 70% Change at Constant Organ
Slide 7: Fourth-Quarter 2022 Revenue Growth by Segment
Fourth-Quarter 2022 Revenue Growth by Segment Reported revenues up 3% to $1.8 billion Organic revenues up 6% Organic recurring revenues up 7% Tax Corporates Reuters News Global Print Professionals Legal Tax & Accounting Corporates Reuters News Global Print Professionals Professionals $0.7B $0.4B $0.
Slide 8: Full-Year 2022 Consolidated Results
Full-Year 2022 Consolidated Results IFRS Financial Measures ($ millions) 2022 2021 Change Revenues $6,627 $6,348 Up 4% Operating profit $1,834 $1,242 Up 48% Diluted earnings per share (EPS) $2.88 $11.50 Down 75% Net cash provided by operating activities $1,915 $1,773 Up 8% u Change at Constant Organ
Slide 9: FY 2022 Actual Results vs. Updated Q3 2022 Guidance
FY 2022 Actual Results vs. Updated Q3 2022 Guidance 2022 Outlook 2022 Results 2022 Total Thomson Reuters 11.01.22 Before Currency Reported Before Currency Total Revenue Growth ~ 6.0% 6.0% 4.4% Organic Revenue Growth (1) ~ 6.0% 6.5% 6.5% Adjusted EBITDA Margin (1) ~ 35% 34.6% 35.1% Corporate Costs $2
Slide 10: Change Program and Growth Updates
Change Program and Growth Updates 10 THOMSONREUTERS
Slide 11: Thomson Reuters Change Program
Thomson Reuters Change Program 4 Focus Areas 2020 – 2022 Key Accomplishments • 100K+ customers migrated to new Customer Success Platform; Digital and Self-Service contributed Reimagine the to 9% decrease in customer contacts in 2022 Customer • Call center enhancements drove 30% improvement in averag
Slide 12: Change Program a Foundation for Sustainable Growth
Change Program a Foundation for Sustainable Growth Organic revenue growth has tripled from the 2009 – 2020 average of 2% to 6% in 2022 Key Change Program outcomes provide a foundation for improved, sustainable growth Change Program Outcomes Benefit Organic Revenue Growth History Growth Potential ZL
Slide 13: Strategic Investment Priorities
7 Strategic Investment Priorities Strong Growth Verticals Accelerating Organic Growth Strategic Priorities FY 2022 Revenue THOMSONREUTERS 1 ~ $500M Practical Law THOMSONREUTERS Legal(1) ~ $250M THOMSONREUTERS 2 Highc nQ EXPRESS CONTRACTI THOMSONREUTERS 3 WESTLAW ~ $1,700M(4) Revenue growth Governmen
Slide 14: Product Innovation & New Initiatives are Contributing to Growth
Product Innovation & New Initiatives are Contributing to Growth • Six new capabilities: Precision Research, KeyCite Cited with, Keycite Overruled in Part, Graphical History, Keep / Hide Details, THOMSON REUTERS Outline Builder. WESTLAW • Increased efficiency: More granular Case Law markup significan
Slide 15: TR Acquisition Playbook and Areas of Focus
TR Acquisition “Playbook” and Areas of Focus Focus Areas for M&A TR’s Proven Acquisition “Playbook” • Acquire high quality assets in our areas of expertise Legal Workflow • Invest in acquired offerings and new capabilities in combination ÿ with existing TR offerings Leverage our leading position in
Slide 16: SurePrep Acquisition: Strong Fit and Growth Accretive
SurePrep Acquisition: Strong Fit and Growth Accretive SurePrep’s end-to-end software system automates many tasks in the tax preparation workflow for US tax and accounting firms, reimagining the experience for both tax professionals and their clients SurePrep addresses each part of the tax preparatio
Slide 17: Financial Review
Financial Review Fourth-Quarter & Full-Year 2022 Results Updated 2023 Outlook Mike Eastwood Chief Financial Officer 17 THOMSONREUTERS
Slide 18: Legal Professionals, Corporates, Tax & Accounting Professionals Revenues
Fourth-Quarter & Full-Year 2022 Legal Professionals, Corporates, Tax & Accounting Professionals Revenues ($ millions) Fourth Quarter Full Year Constant Constant Revenues 2022 2021 Total Currency Organic 2022 2021 Total Currency Organic Legal Professionals 704 689 +2% +4% +5% 2,803 2,712 +3% +5% +6%
Slide 19: Legal Professionals 2022 Organic Growth by Quarter
Legal Professionals 2022 Organic Growth by Quarter Legal Professionals Q4 organic growth moderation was driven by the Elite and Government businesses; Remaining Legal businesses, including Westlaw, accelerated in Q4 Total Legal Professionals Legal Excluding Elite & Govt 76% of FY Legal Revenue 6% 7%
Slide 20: Fourth-Quarter & Full-Year 2022 Consolidated Revenues
Fourth-Quarter & Full-Year 2022 Consolidated Revenues ($ millions) Fourth Quarter Full Year Constant Constant Revenues 2022 2021 Total Currency Organic 2022 2021 Total Currency Organic LegalProfessionals 704 689 +2% +4% +5% 2,803 2,712 +3% +5% +6% Corporates 379 358 +6% +7% +9% 1,536 1,440 +7% +8% +
Slide 21: Fourth-Quarter & Full-Year 2022 Consolidated Adjusted EBITDA
Fourth-Quarter & Full-Year 2022 Consolidated Adjusted EBITDA ($ millions) Fourth Quarter Full Year Constant Constant Adjusted EBITDA 2022 2021 Total Currency 2022 2021 Total Currency Legal Professionals 294 239 +23% +27% 1,227 1,091 +13% +14% Margin 41.7% 34.5% 43.8% 40.2% Corporates 135 93 +45% +46
Slide 22: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts & share count) Fourth Quarter Full Year % % 2022 Change Change 2022 Change Change Adjusted EBITDA $633 $181 $2,329 $359 Depreciation & Amortization ($161) $6 ($625) $26 Interest Expense ($51) ($1) ($196) - Income Tax ($68) ($43)
Slide 23: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) Fourth Quarter Full Year 2022 2021 Change 2022 2021 Change Comparable Free Cash Flow (Continuing Operations) $576 $323 $253 $1,731 $1,490 $241 Other Items (Change Program Costs) ($49) ($72) $23 ($324) ($166) ($158) Free Cash Flow (Continuing Operations) $527
Slide 24: Capital Structure and Allocation Updates
Capital Structure and Allocation Updates 24 THOMSONREUTERS
Slide 25: Significant Financial Capacity - Ready to Put to Work
Significant Financial Capacity - Ready to Put to Work Capital structure and liquidity position remain strong: • Capital capacity expected to grow to ~$11B by 2025, after completion of $2B NCIB and acquisition of SurePrep • Expected to provide significant organic and inorganic growth opportunities; c
Slide 26: London Stock Exchange Group Stake – 61.5M Shares Remain
London Stock Exchange Group Stake – 61.5M Shares Remain Thomson Reuters sold 10.5M shares of LSEG to Microsoft in January 2023; Remaining 61.5M shares eligible for monetization in 2023, 2024 and 2025 10.5M ~31M 72.0M 61.5M ~22M ~8M Year End 2022 Sold to Remaining Eligible for Eligible for Eligible f
Slide 27: Balanced Capital Allocation: Buybacks/Return of Capital
Balanced Capital Allocation: Buybacks/Return of Capital Annual Share Buyback / Return of Capital History of Capital Returns • From 2019-2022, returned $3.4B through share repurchases, Return of Capital including $2.7B in 2021-2022 NCIB / Buybacks • Plan to complete existing $2.0B NCIB by April $2.0B
Slide 28: Balanced Capital Allocation: Long History of Dividend Growth
Balanced Capital Allocation: Long History of Dividend Growth 30 Consecutive Years of Annual Dividend Increases 2023 Annualized Dividend Rises $0.18 to $1.96, a Second Consecutive 10% Increase Annualized Dividend per Common Share $2.50 $2.00 $1.96 $1.50 $1.00 $0.50 $0.00 1993 1994 1995 1996 1997 1998
Slide 29: We Will Be Guided By our Value Creation Model
We Will Be Guided By our Value Creation Model Our customer-facing business model creates a virtuous cycle where organic growth leads to increased operating leverage that leads to higher FCF growth, which in turn enables us to provide stronger returns to shareholders while also providing the wherewit
Slide 30: Updated 2023 Outlook
Updated 2023 Outlook 30 THOMSONREUTERS
Slide 31: Updated 2023 Outlook
Updated 2023 Outlook FY 2023 FY 2023 FY 2023 FY 2022 Total Thomson Reuters Outlook(3) Outlook(3) Outlook(3) Reported 2/23/21 2/8/22 2/9/23 Total Revenue Growth 4% 5.0% - 6.0% 5.5% - 6.0% 4.5% - 5.0% (1) Organic Revenue Growth 6% 5.0% - 6.0% 5.5% - 6.0% 5.5% - 6.0% (1) Adjusted EBITDA Margin 35.1% 38
Slide 32: Updated 2023 Outlook, Continued
Updated 2023 Outlook, Continued $1.8 billion 2023 free cash flow outlook includes ~$110 million of investments that are expected to benefit growth and profitability in 2024 and beyond ($40M) ($40M) ($30M) $1.9B $1.8B 2023 Underlying FCF 2022 Divestitures SurePrep & North America 2023 FCF Outlook Tho
Slide 33: Q&A
Q&A ···· 33 THOMSONREUTERS