Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Q4 2020 Earnings Presentation
43 slides from Thomson Reuters's earnings presentation, Feb 23, 2021
Slide 1: 2020 Fourth-Quarter & Full-Year Results
REUTERS / Pascal Rossignol REUTERS / Firstname Lastname Thomson Reuters 2020 FOURTH-QUARTER & FULL-YEAR RESULTS February 23, 2021 THOMSON REUTERS ?
Slide 2: Agenda
Agenda • Welcome / Introduction Frank Golden • Fourth-Quarter & Full-Year 2020 Results Steve Hasker Accelerating to 3.0 - Change Program • Financial Review Mike Eastwood Fourth-Quarter & Full-Year 2020 Outlook - 2021, 2022 & 2023 • Q&A 2 THOMSON REUTERS ?
Slide 3: Special Note
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: Fourth-Quarter & Full-Year 2020 Highlights
THOMSON REUTERS Fourth-Quarter & Full-Year 2020 Highlights Steve Hasker President & CEO 4 THOMSON REUTERS
Slide 5: Fourth-Quarter 2020 Consolidated Results
Fourth-Quarter 2020 Consolidated Results IFRS Financial Measures ($ millions) 2020 2019 Change Revenues $1,616 $1,583 Up 2% Operating profit $956 $216 Up 343% Diluted earnings per share (EPS) $1.13 $2.64 Down 57% Cash flow from operations $566 $355 Up 60% Change at Constant Organic Non-IFRS Financia
Slide 6: Fourth-Quarter 2020 Revenue Growth by Segment
Fourth-Quarter 2020 Revenue Growth by Segment Reported Revenues up 2% to $1.6 billion Organic revenues up 2% Organic recurring revenues up 5% Tax Corporates Reuters News Global Print Professionals Legal Tax & Accounting Corporates Reuters News Global Print Professionals Professionals $0.7B $0.3B $0.
Slide 7: Full-Year 2020 Consolidated Results
Full-Year 2020 Consolidated Results IFRS Financial Measures ($ millions) 2020 2019 Change Revenues $5,984 $5,906 Up 1% Operating profit $1,929 $1,199 Up 61% Diluted earnings per share (EPS) $2.25 $3.11 Down 28% Cash flow from operations $1,745 $702 Up 148% Change at Constant Organic Non-IFRS Financi
Slide 8: FY 2020 Actual Results vs. Updated Q3 2020 Guidance
FY 2020 Actual Results vs. Updated Q3 2020 Guidance Met or Exceeded All Guidance Metrics Provided with Q3 2020 Earnings Total Thomson Reuters 2020 Outlook 2020 Outlook 2020 Results 2020 Before Currency Before Currency Reported Total Revenue Growth 1.0% - 2.0% 2.1% 1.3% Organic Revenue Growth 0% - 1.
Slide 9: Accelerating To 3.0 - Change Program
Accelerating To 3.0 - Change Program 9 THOMSON REUTERS
Slide 10: Key Takeaways
Key Takeaways Our Businesses are Well Positioned for a Post-COVID World 1. Robust & Growing Legal, Tax, and Government (Risk, Fraud & Compliance) Businesses • Demand for TR’s advanced, trusted & branded “how-to” products is increasing • Deep, long-term customer relationships provide advantaged posit
Slide 11: Professional Services Markets in Transition
Professional Services Markets in Transition Prevailing Tailwinds Provide New Growth Opportunities Growth Drivers 1 • Shift to virtual working environments & dispersed teams Customers Seeing • Significant shifts in customer spend away from real estate & headcount into information & Fundamental Shifts
Slide 12: Change Program Lever #1 - Holding Company to Operating Company
Thomson Reuters Change Program Lever #1 - Holding Company Structure to an Operating Company Structure Holding Company Operating Company Big 3 Big 3 Customer Global Reuters Global Reuters Customer Print News Segments* Print News Segments* Go to Go to Go to Market Go to Market Go to Market Achieving G
Slide 13: Change Program Lever #2 - Content Company to Content-Driven Technology Company
1 TR Markets & Customers Seeing Fundamental Shifts in Ways of Working Thomson Reuters Change Program Lever #2 - Content Company to a Content-Driven Technology Company Adding essential capabilities to serve customers Building on our traditional strengths… how, when & where they want to be served Uniq
Slide 14: We Will Transform the Customer Experience
2 TR has Opportunity to Better Serve Customers & Access New Customer Thomson Reuters Change Program Groups We Will Transform the Customer Experience 2021 EXECUTION 2023 – End Result 4 Focus Areas Priority Work Streams Operating Company • Modern digital self-serve approach for the long-tail enabling
Slide 15: 7 Strategic Investment Priorities
3 TR has Advantaged Exposure to High 7 Strategic Investment Priorities Growth Verticals Strong Growth Verticals Accelerating Organic Growth Strategic Priorities 2020 Revenue THOMSONREUTERS 1 ~$400M Practical Law" THOMSON REUTERS (1) Legal 2 THOMSON REUTERS ~$200M HighQ CONTRACTE EXPRESS 3 THOMSONREU
Slide 16: Have Begun to Implement a 24-month Program
Thomson Reuters Change Program Have Begun to Implement a 24-month Program 1. Estimated investment of $500 - $600 million (2021 & 2022) • Will accelerate organic revenue growth, reduce operating costs, significantly increase margins, lower Capex intensity & increase free cash flow 2. Estimated to gen
Slide 17: 2021 - 2023 Outlook
2021 - 2023 Outlook 17 THOMSON REUTERS
Slide 18: 2021 - 2023 Outlook: Faster Growth, Higher Margins, Record Free Cash Flow
2021 - 2023 Outlook Faster Growth, Higher Margins, Record Free Cash Flow & FCF per Share 2020 2021 2022 2023 Organic Growth • Total TR ÿ 1.2% 3% - 4% 4% - 5% 5% - 6% • Big 3 Segments 3.8% 4.5% - 5.5% 5.5% - 6.5% 6% - 7% Adj. EBITDA 33.0% 30% - 31% 34% - 35% 38% - 40% Margin $1.3B $1.0B - $1.1B $1.2B
Slide 19: Thomson Reuters in 2023
Thomson Reuters in 2023 A Leading Content-Driven Technology Company 1. Leader in Each Market Where We Operate 2. Acknowledged by Customers as a Product Innovator & Builder 3. Delivering a Seamless Customer Experience 4. LSEG Interest Provides Substantial Optionality to Further Strengthen Our Positio
Slide 20: Financial Review
Financial Review Mike Eastwood Chief Financial Officer 20 THOMSON REUTERS
Slide 21: Legal, Corporates, Tax & Accounting Professionals Revenues
Fourth-Quarter & Full-Year 2020 Legal, Corporates, Tax & Accounting Professionals Revenues ($ millions) Fourth Quarter Full Year Constant Constant Revenues 2020 2019 Total Currency Organic 2020 2019 Total Currency Organic Legal Professionals 653 621 +5% +5% +4% 2,535 2,433 +4% +4% +3% Corporates 338
Slide 22: Consolidated Revenues
Fourth-Quarter & Full-Year 2020 Consolidated Revenues ($ millions) Fourth Quarter Full Year Constant Constant Revenues 2020 2019 Total Currency Organic 2020 2019 Total Currency Organic Reuters News 164 164 +0% -1% -3% 628 630 +0% +0% -5% Global Print 177 196 -10% -10% -10% 620 693 -11% -10% -10% Eli
Slide 23: Q4 2020 vs. Q4 2019 Organic Revenue Growth
Fourth-Quarter 2020 vs. Fourth-Quarter 2019 Organic Revenue Growth Recurring Recurring Revenue down 30 bps organically 13% Big 3 Total Company Organic Revenue Organic Revenue 9% down 120 bps down 180 bps Total 6% 6% 6% 6% 5% 5% 5% 12% 4% 8% Legal Prof. Corporates Tax & Acct. Big 3 Total TR 6% 5% 5%
Slide 24: Big 3 Adjusted EBITDA
Fourth-Quarter & Full-Year 2020 Legal, Corporates, Tax & Accounting Professionals Adjusted EBITDA ($ millions) Fourth Quarter Full Year Constant Constant Adjusted EBITDA 2020 2019 Total Currency 2020 2019 Total Currency Legal Professionals 245 215 +14% +13% 1,001 895 +12% +12% Margin 37.5% 34.5% 39.
Slide 25: Consolidated Adjusted EBITDA
Fourth-Quarter & Full-Year 2020 Consolidated Adjusted EBITDA ($ millions) Fourth Quarter Full Year Constant Constant Adjusted EBITDA 2020 2019 Total Currency 2020 2019 Total Currency Reuters News 6 10 -41% -34% 73 68 +7% -1% Margin 3.9% 6.5% 11.7% 10.9% Global Print 61 77 -21% -22% 242 294 -18% -18%
Slide 26: Full-Year 2020 Adjusted EBITDA Margin Performance
Full-Year 2020 Adjusted EBITDA Margin Performance Underlying Underlying Adj. EBITDA +150 bps Expansion on Adj. EBITDA 31.5% Underlying Adj. EBITDA YOY 33.0% 0.1% 1.4% 0.4% -2.2% 1.8% 4.5% 1x Costs 1.7% Stranded Costs 33.0% +770 bps Expansion on 25.3% Reported Adj. EBITDA YOY FY 2019 Acquisitions & C
Slide 27: Adjusted EPS, Free Cash Flow, Capital Structure
Adjusted Earnings Per Share Free Cash Flow Capital Structure 27 THOMSON REUTERS
Slide 28: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts & share count) Fourth Quarter Full Year % % 2020 Change 2020 Change Change Change Adjusted EBITDA $525 $129 $1,975 $482 Depreciation & Amortization ($163) $4 ($669) ($66) Interest Expense ($49) $2 ($195) ($32) Income Tax ($44) ($
Slide 29: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) Fourth Quarter Full Year 2020 2019 Change 2020 2019 Change Comparable Free Cash Flow (Continuing Operations) $461 $419 $42 $1,301 $1,069 $232 Other Items (Q1-19 pension contribution & Refinitiv separation costs) ($8) ($204) $196 $46 ($746) $792 Free Cash Flow
Slide 30: Significant Financial Capacity - Ready to Put to Work
Significant Financial Capacity - Ready to Put to Work • Capital structure and liquidity position 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 of 1.1x vs. Target of
Slide 31: Long History of Returning Cash to Shareholders
Long History of Returning Cash to Shareholders 28 Consecutive Years of Annual Dividend Increases 2021 Annualized Dividend Increase of $0.10 (+7%) – Largest Increase Since 2008 Annualized Dividend per Common Share $1.80 $1.62 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 1993 1994 1995 1996 1
Slide 32: Ownership Stake in London Stock Exchange Group
Thomson Reuters Ownership Stake in London Stock Exchange Group Significant Store of Value – Provides Substantial Optionality • TRI ownership interest in LSEG currently = 82.5 shares ̶ Current LSEG Value = ~$11.2B / ~$23 value within TRI stock price [LSEG 02/22/21 closing price] ̶ Refinitiv/LSEG tran
Slide 33: 2021 - 2023 Outlook
2021 - 2023 Outlook 33 THOMSON REUTERS
Slide 34: Thomson Reuters & Big 3 Outlook: Higher Organic Revenue Growth
Thomson Reuters & Big 3 Outlook 2021 - 2023 Targeting Higher Organic Revenue Growth Forecasting 2021 Total TR and Big 3 Organic Revenue Growth to Rebound to 2019 levels Forecasting Consistent Revenue Growth – 2023 TR Revenue Growth of 5% to 6% & Big 3 Growth of 6% to 7% 5% - 6% 4% - 5% 3.7% 3% - 4%
Slide 35: First-Quarter 2021 Forecast
Thomson Reuters First-Quarter 2021 Forecast 2020 FY 2020 FY Total Thomson Reuters Organic = 1.2% Big 3 Segments Organic = 3.8% 3% 3% 3% - 4% 2% 1.5% - 2.5% 5% 4.5% - 5.5% 5% 5% 4% - 5% 3% - 4% 0% 2% 2% 1.5% - 2.5% 5% 4.5% - 5.5% 2% 3% 5% 3.5% - 4.5% 4% (2%) 2% Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021
Slide 36: Outlook 2021-2023: Adj. EBITDA Margin & Free Cash Flow
Thomson Reuters – Outlook 2021- 2023 Targeting Higher Adj. EBITDA Margin & Free Cash Flow Strong Adj. EBITDA Margin Improvement & Free Cash Flow Growth 38% - 40% 34% - 35% 33.0% 30% - 31% 25.3% Total TR Adj. EBITDA Margin 1 2019 2020 2021 2022 2023 $1.8B - $2.0B $1.3B $1.2B - $1.3B $1.0B - $1.1B Tot
Slide 37: 2023 Outlook: Free Cash Flow per Share
Thomson Reuters – 2023 Outlook Free Cash Flow per Share Higher Revenue Growth + Higher Adjusted EBITDA = Record Free Cash Flow per Share ~ $0.70 - $0.90 ~ $0.15 - $0.25 ~ $0.05 - $0.10 ~ ($0.45) – ($0.50) ~ $0.50 - $0.60 $3.60 - $4.00 $2.67 2020 Actual Revenue Growth BAU Adj. EBITDA Lower Capex Inte
Slide 38: Tech Modernization, Product Integration & Focused Capital Agenda
Tech Modernization, Product Integration & Focused Capital Agenda Will Improve Capital Efficiency Targeting to Reduce Capex to 6% - 6.5% of Revenues in 2023 Capital Efficiency Evolution Capital Efficiency Drivers (Capital Expenditures as % of Revenue) >10% 1 Technology Modernization • Modernized & si
Slide 39: Phasing of Change Program Investments
Phasing of Change Program Investments Forecast More Than Half of Change Program Costs Will Be Incurred in 2021 2021 Phasing ~$300M - $350M ~60% ~$185M - $210M ~$115M - $140M ~60% OpEx ~60% ~40% ~40% Capital ~40% H1-2021 H2-2021 FY 2021 39 THOMSON REUTERS ?
Slide 40: Drivers of Variance Between FCF & Adjusted Earnings
Drivers of Variance Between FCF & Adjusted Earnings 2021 FCF is Expected to Exceed Adjusted Earnings Due to Non-Cash Charges & Capital vs. D&A $ Millions Factors • Reduction in Capital Intensity has immediate Capital vs. impact on FCF (vs. Depreciation run-off) ~ $75M - $125M • Operating Leases incl
Slide 41: FY 2021 - 2023 Outlook
FY 2021 - 2023 Outlook 2020 2021 2022 2023 Total Thomson Reuters Reported Outlook(1) Outlook(1) Outlook(1) Total Revenue Growth 1.3% 3.0% - 4.0% 4.0% - 5.0% 5.0% - 6.0% Organic Revenue Growth 1.2% 3.0% - 4.0% 4.0% - 5.0% 5.0% - 6.0% Adjusted EBITDA Margin 33.0% 30% - 31% 34% - 35% 38% – 40% Corporat
Slide 42: Success = Sustainable Value Creation
Success = Sustainable Value Creation Revenue Growth FCF Growth ‒ Prioritize capital to highest growth opportunities ‒ FCF = Lifeblood of future success/growth ‒ Balance organic (~2/3) and acquisition (~1/3) ‒ Margins are an outcome, not a goal growth Organic: 4%-6% 5%-8% 8%-12% Acquisitions: 1%-2% r
Slide 43: Q&A
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