Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Investor Day (December 2018)
99 slides from Thomson Reuters's investor day presentation, Dec 4, 2018
Slide 1: Thomson Reuters Investor Day 2018
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS INVESTOR DAY 2018 December 4, 2018
Slide 2: Welcome
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS WELCOME Frank Golden Senior Vice President, Investor Relations Investor Day 2018
Slide 3: 2018 Investor Day Agenda
Thomson Reuters 2018 Investor Day Agenda Welcome & Introduction Frank Golden SVP, Investor Relations The “New” Thomson Reuters Jim Smith President & CEO Go-To-Market & Growth Strategy Brian Peccarelli Co-Chief Operating Officer Enabling Sustainable & Neil Masterson Co-Chief Operating Officer Scalabl
Slide 4: Special Note: Safe Harbor / Forward-Looking Statements
Special Note Safe Harbor / Forward-Looking Statements 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 and discussion are forward-looking, including, but
Slide 5: The "New" Thomson Reuters
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS THE “NEW” THOMSON REUTERS Jim Smith President & CEO Investor Day 2018
Slide 6: 2018 - A Watershed Year for Thomson Reuters
TR | Tax | Corporates | Legal 2018 - A Watershed Year for Thomson Reuters We Completed Three Key Objectives This Year 1. Closed the transaction with Blackstone & the related separation of F&R from TR • Returned ~$10 billion to shareholders 2. Restructured Thomson Reuters into the new Customer-Focuse
Slide 7: The "New" Thomson Reuters - Investment Highlights
TR | Tax | Corporates | Legal The “New” Thomson Reuters - Investment Highlights 1 • Currently operate in an est. $32B market segment growing at 3-4% Attractive Industry • Potential market segment of ~$44B growing at 5-6% through multiple adjacent expansion opportunities 2 • #1 or #2 positions in key
Slide 8: TR Operates in Large Global Market Segments with Significant Growth Potential
TR | Tax | Corporates | Legal TR Operates in Large Global Market Segments with Significant Growth Potential Opportunity to expand our market segment reach by offering more software & solutions Content & Software Solutions Market Segment (2017, $ billions / Estimated 5-yr forward CAGR, %) Est. $44B G
Slide 9: Macro Factors Driving Changes in the Way our Customers Do Business
TR | Tax | Corporates | Legal Macro Factors Driving Changes in the Way our Customers Do Business Our customers are responding to trends by… ÿ Increased regulation Investing in regulatory & compliance processes with more technology & people resources Changing business Cost pressures driving more auto
Slide 10: Well Positioned to Help Our Customers Succeed
The “New” Thomson Reuters TR | Tax | Corporates | Legal Well Positioned to Help Our Customers Succeed 1. Our Businesses are Leaders in their Market Segments • Unique, accurate, comprehensive, must have information • Technology – our customers depend on us for solutions & software – we are a key part
Slide 11: The "New" Thomson Reuters Operating Structure
The “New” Thomson Reuters TR | Tax | Corporates | Legal Operating Structure Thomson Reuters $5.3 billion (2017) Legal Tax Reuters Corporates Global Print Professionals Professionals News Legal Tax Reuters Corporates Global Print Professionals Professionals News Revenues $2.3B $1.2B $0.8B $0.3B $0.8B
Slide 12: The "New" Thomson Reuters Key Priorities
TR | Tax | Corporates | Legal The “New” Thomson Reuters has 5 Key Priorities 1. Create a Customer Centric Organization • Deliver an unmatched customer experience 2. Deliver Higher Revenue Growth • Take a pan-TR programmatic approach to acquiring new customers, increase cross-selling, optimize pricin
Slide 13: Go-To-Market & Growth Strategy
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS GO-TO-MARKET & GROWTH STRATEGY Brian Peccarelli Co-Chief Operating Officer Investor Day 2018
Slide 14: Key Strengths & Highlights
The “New” Thomson Reuters TR | Tax | Corporates | Legal Key Strengths & Highlights Attractive End Markets Leadership Position Focused on Accelerating Growth ✓ Est. $32B global market segment Est. +$12B adjacent opportunity ✓ #1 position in the US & Canada ✓ Focused organic & selective inorganic inve
Slide 15: New Operating & Reporting Structure
TR | Tax | Corporates | Legal Thomson Reuters New Operating & Reporting Structure 2017 Revenue & Organic Growth 2017 Revenue & Organic Growth by Historic Business Unit by New Customer Segment Reuters Reuters News News $0.3B Global $0.3B -3% Print -3% $0.8B -6% Tax & $1.6B $2.3B Legal Accounting +6%
Slide 16: Customer Segment Highlights
The “New” Thomson Reuters TR | Tax | Corporates | Legal Customer Segment Highlights $5.3 Billion Revenues (1) Legal Professionals Corporates Tax Professionals $2.3B – 43% of Revenue $1.2B – 23% of Revenue $0.8B – 14% of Revenue + • 2% revenue growth - 2017 • 6% revenue growth - 2017 • 8% revenue gro
Slide 17: Product Realignment – Cross-Sell Opportunities
TR | Tax | Corporates | Legal Organizing Around the Customer REORIENT TO CUSTOMERS Product Realignment – Cross-Sell Opportunities Legal Professionals Corporates Tax Professionals Westlaw / Westlaw Edge Practical Law CLEAR Checkpoint FindLaw Tracker Onvio / OnBalance Elite Legal Managed Services CS P
Slide 18: Four Levers to Drive Organic Revenue Growth
TR | Tax | Corporates | Legal Go-To-Market & Growth Strategy Four Levers to Drive Organic Revenue Growth 1. Sell more to existing customers • Grow by increasing cross-selling & up-selling to existing customers • Drive additional sales by increasing penetration of Westlaw Edge / Practical Law & expan
Slide 19: Levers to Drive Organic Revenue Growth
TR | Tax | Corporates | Legal Go-To-Market & Growth Strategy REORIENT TO CUSTOMERS Levers to Drive Organic Revenue Growth Reorienting around the customer with specific initiatives + Legal Tax Corporates Professionals Professionals Revenue $2.3B $1.2B $800M (2017) #1 - Cross-sell & up-sell software s
Slide 20: Levers to Drive Organic Revenue Growth
TR | Tax | Corporates | Legal Go-To-Market & Growth Strategy Levers to Drive Organic Revenue Growth Organic Growth Target ~50 - 75bps ~3.5% - 4.5% ~50 - 75bps ~50 - 100bps 2% 2017 Up-sell and cross-sell New Customer Retention & 2020 Acquisition Commercial Levers 20 Sensitivity: Confidential
Slide 21: Go-To-Market & Growth Strategy Key Takeaways
TR | Tax | Corporates | Legal Go-To-Market & Growth Strategy Key Takeaways 1• Our go-to-market channels have been organized to better align with customers, enabling us to better understand & serve them 2• While some products are targeted to particular customer segments, we have assets that reach dif
Slide 22: Enabling Sustainable & Scalable Growth
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS ENABLING SUSTAINABLE & SCALABLE GROWTH Neil Masterson Co-Chief Operating Officer Investor Day 2018
Slide 23: The Operations & Enablement Organization
TR | Tax | Corporates | Legal The Operations & Enablement Organization DIGITAL & data-driven SECURITY at the heart Operations & Enablement The Engine that AGILE& fast-paced Powers TR SERVICE resilience CLOUD-based ~7,200 employees I ~$1.4 billion of total operating expense COMMERICAL TECHNOLOGY CONT
Slide 24: The Mission for the New TR
TR | Tax | Corporates | Legal The Mission for the New TR is to… Reorient around the Customer Shift from Content to Software Run Leaner 24 Sensitivity: Confidential
Slide 25: Transforming Into A Leaner More Focused Enterprise
TR | Tax | Corporates | Legal Transforming Into A Leaner More Focused Enterprise Achievements Over the Past 4 Years ✓ Reduced locations from 328 to 209 ✓ Cost savings of more than $500m from transformation ✓ Completed 77% of platform simplifications ✓ Simplified technology base ✓ Platform refreshmen
Slide 26: Runway to Further Reduce Expenses by 2020
TR | Tax | Corporates | Legal RUN Runway to Further Reduce Expenses by 2020 LEANER Fewer locations enables a more agile organization designed to drive productivity & organic growth Flatter, simpler organization Fewer Locations FTE Reduction of ~12% TR Offices Reduction of ~30% 30,000 600 ~27,000 517
Slide 27: Drive Efficiency & Growth with Shared Platforms & Integrated Products
TR | Tax | Corporates | Legal RUN Drive Efficiency & Growth with Shared Platforms & Integrated Products LEANER 1 Connect workflows of Professional firms with their Corporate Customers Legal Professionals Corporates Tax Professionals Westlaw/ WestlawEdge Practical Law 2 Integrate CLEAR products to Ch
Slide 28: Leaner Organization with More Efficient Capital Allocation
TR | Tax | Corporates | Legal RUN Leaner Organization with More Efficient Capital Allocation LEANER Targeting to reduce Capex as percent of revenue to 7%-8% in 2020 Capital Expenditures as Percent of Revenue 1• Composition across Ongoing vs. One-time Costs Platform Consolidation >10% 7%-8% Putting m
Slide 29: 2020 Operational Efficiency Targets
TR | Tax | Corporates | Legal RUN 2020 Operational Efficiency Targets LEANER TR Today By 2020 # of Employees ~27,000 -12% ~23,800 # of Products ~350 -11% ~310 Optimize Operational # of Locations 188 -30% 133 Footprint Org Structure ~10 layers -40% ~6 layers Capex as % of ~10% -30% 7-8% Revenue 29 Se
Slide 30: TR Operates in Large Global Market Segments with Significant Growth Potential
TR | Tax | Corporates | Legal TR Operates in Large Global Market Segments with Significant Growth Potential Opportunity to expand our market segment reach by offering more software & solutions Content & Software Solutions Market Segment (2017, $ billions / Estimated 5-yr forward CAGR, %) Est. $44B G
Slide 31: Organic Investment Based on Disciplined Capital Allocation
TR | Tax | Corporates | Legal SHIFT TO Organic Investment Based on Disciplined Capital Allocation SOFTWARE Early Stage Mature 1. Seed 2. Scale 3. Grow 4. Compete 5. Optimize Enterprise Initiatives (e.g., Digital, Cloud, Security) 31 Sensitivity: Confidential
Slide 32: Supplementing Organic Growth with Inorganic Accelerators
TR | Tax | Corporates | Legal SHIFT TO Supplementing Organic Growth with Inorganic Accelerators SOFTWARE Integration Point acquisition exemplifies type of acquisitions we IntegrationPoint GlobalTradeSoftware are looking to make with $2 billion investment fund Significantly increases Global Trade ✓ C
Slide 33: Levers to Drive Organic Revenue Growth
TR | Tax | Corporates | Legal Go-To-Market & Growth Strategy REORIENT TO CUSTOMERS Levers to Drive Organic Revenue Growth Reorienting around the customer with specific initiatives + Legal Tax Corporates Professionals Professionals Revenue $2.3B $1.2B $800M (2017) #1 - Cross-sell & up-sell software s
Slide 34: Levers to Drive Organic Revenue Growth
TR | Tax | Corporates | Legal Go-To-Market & Growth Strategy Levers to Drive Organic Revenue Growth Organic Growth Target ~50 - 75bps ~3.5% - 4.5% ~50 - 75bps ~50 - 100bps 2% 2017 Up-sell and cross-sell New Customer Retention & 2020 Acquisition Commercial Levers 34 Sensitivity: Confidential
Slide 35: Digital will be a Critical Enabler to Increasing Organic Growth
TR | Tax | Corporates | Legal REORIENT TO CUSTOMERS Digital will be a Critical Enabler to Increasing Organic Growth Digital Go-to-Market Enablers New Customer Acquisition 1 • Digital marketing & sales capabilities to reach long-tail of small customers Cross-sell / Up-Sell 2 • Predictive cross-sell/u
Slide 36: Our Capabilities will Enable us to Provide More Value to More Customers
TR | Tax | Corporates | Legal REORIENT TO Our Capabilities will Enable us to Provide More Value to More Customers CUSTOMERS m Understand & target More customers who Easier to do business with customers better buy more products • Streamlined sales operations • Advanced customer analytics • Increased
Slide 37: Enabling Sustainable & Scalable Growth Key Takeaways
TR | Tax | Corporates | Legal Enabling Sustainable & Scalable Growth Key Takeaways RUN LEANER A clear pathway to drive down Corporate costs by 2020 SHIFT FROM CONTENT TO SOFTWARE Accelerating shift from content to content-enabled software REORIENT AROUND THE CUSTOMER Building capabilities to provide
Slide 38: Tax Professionals
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS TAX PROFESSIONALS Charlotte Rushton President, Tax Professionals Investor Day 2018
Slide 39: Tax Professionals Segment
TR | Tax | Corporates | Legal Tax Professionals Segment Reuters News Global $0.3B Print -3% $0.8B -6% $2.3B Legal 2017 Revenue +2% Professionals $5.3 Billion $1.2B +2% Corporates +6% $0.8B +8% Tax Professionals 39 Sensitivity: Confidential
Slide 40: Tax Professionals Segment Revenues
TR | Tax | Corporates | Legal Tax Professionals Segment Revenues Small Firms Mid-Sized Firms (21% of Revenue) (58% of Revenue) Products Products Checkpoint Checkpoint CS Professional Suite CS Professional Suite UltraTax CS UltraTax CS Onvio / OnBalance Onvio / OnBalance Government (6% of Revenue) 20
Slide 41: Tax Professionals Segment Products, Position & Business Strengths
TR | Tax | Corporates | Legal Tax Professionals Segment Products, Position & Business Strengths Our solutions simplify the lives of tax & accounting professionals Our research & software solutions help tax & accounting practitioners deliver tax compliance, accounting, audit & payroll services to ind
Slide 42: Tax Professionals Segment Key Highlights
TR | Tax | Corporates | Legal Tax Professionals Segment Key Highlights Attractive End Markets Leadership Position Focused on Accelerating Growth ✓ ✓ ✓ #1 position in the US & Latin 70% software concentrated Est. $6B global market segment business focused on America market segment improving customer
Slide 43: Tax Professionals Market Segment & Top Competitors
TR | Tax | Corporates | Legal Tax Professionals Segment Market Segment & Top Competitors Operate in an est. $6B global market segment serving Tax, Audit & Accounting Professionals & Government Customers challenged to keep up with a changing regulatory environment & new technologies Global Addressabl
Slide 44: Tax Professionals Segment Customers
TR | Tax | Corporates | Legal Tax Professionals Segment Customers Top Segments Customers Customer Dynamics CohnReznick AGSUOY ASSURAHCE- TAX • Offer breadth of premium accounting services to diverse client base Large Firms CPAs&Advisors (30+ professionals) ANDERSENTAX.• Need solutions that can deal
Slide 45: Organizing Around the Customer Product Realignment
TR | Tax | Corporates | Legal Organizing Around the Customer Product Realignment Legal Professionals Corporates Tax Professionals Westlaw / Westlaw Edge Practical Law CLEAR Checkpoint FindLaw Tracker Onvio / OnBalance Elite Legal Managed Services CS Professional Suite Government / Regulatory Intelli
Slide 46: Tax Professionals Levers to Drive Organic Revenue Growth
TR | Tax | Corporates | Legal Tax Professionals Segment Levers to Drive Organic Revenue Growth W Onvio Cloud Software Digital Channels Cross-sell / Up-Sell Geographic Expansion • Deliver next gen cloud- • Investing to increase • Significant % of • Expand Onvio & digital based tax, accounting digital
Slide 47: Tax Professionals Segment Key Takeaways
TR | Tax | Corporates | Legal Tax Professionals Segment Key Takeaways 1• We are the leading solutions provider in the US & Latin American Tax Professionals market segment 2• We are harmonizing our approach & knowledge of the customer is unlocking additional opportunity 3• Change is on the horizon in
Slide 48: Corporates
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS CORPORATES Piotr Marczewski President, Corporates Investor Day 2018
Slide 49: Corporates Segment
TR | Tax | Corporates | Legal Corporates Segment Reuters News Global $0.3B Print -3% $0.8B -6% $2.3B Legal 2017 Revenue +2% Professionals $5.3 Billion Corporates $1.2B +2% +6% $0.8B +8% Tax Professionals 49 Sensitivity: Confidential
Slide 50: Corporates Market Segment & Top Competitors
TR | Tax | Corporates | Legal Corporates Segment Market Segment & Top Competitors We help our customers succeed in a fast growing global market segment Global Addressable Key Trends & Top Competitors Market Segment Customer Implications Traditional Competitors ~$55B Segment Est.$14B Market market Gr
Slide 51: Corporates Segment Customers
TR | Tax | Corporates | Legal Corporates Segment Customers We serve diverse customer needs through segmented coverage Top Segment customers Customer Dynamics • Investing in new technology for automation, exploring new growth verticals Global Firms (G7) The Big Four • Utilize tax software to serve th
Slide 52: Corporates Segment Revenues
TR | Tax | Corporates | Legal Corporates Segment Revenues International Products Large Corporates (8% of Revenue) Mastersaf, Softway, ONESOURCE (68% of Revenue) Global Firms Products Products (7% of Revenue) Knowledge Solutions Knowledge Solutions ONESOURCE ONESOURCE Tracker Emerging Corporates West
Slide 53: Organizing Around the Customer Product Realignment
TR | Tax | Corporates | Legal Organizing Around the Customer Product Realignment Legal Professionals Corporates Tax Professionals Westlaw / Westlaw Edge Practical Law CLEAR Checkpoint FindLaw Tracker Onvio / OnBalance Elite Legal Managed Services CS Professional Suite Government / Regulatory Intelli
Slide 54: Corporates Products, Position & Model Strengths
TR | Tax | Corporates | Legal Corporates Segment Products, Position & Model Strengths Our products simplify the work of professionals in Corporate Tax, Legal, and Compliance THOMSONREUTERS THOMSONREUTERS THOMSON REUTERS THOMSON REUTERS ONESOURCE" CHECKPOINT' LEGAL TRACKER Practical Law Connect TM TM
Slide 55: Corporates Segment Key Highlights
TR | Tax | Corporates | Legal Corporates Segment Key Highlights Attractive End Markets Leadership Position Focused on Accelerating Growth ✓ Est. $14 billion global market segment ✓ Deep relationships with 93,000 customers ✓ Bringing more value to customers across workflows ✓ Est. 5-6% market segment
Slide 56: Path to Sustainable High Single Digit Growth
TR | Tax | Corporates | Legal Corporates Segment Path to Sustainable High Single Digit Growth Grow Within Departments Grow Across Departments Partners & New Customers • Optimize Tax workflows with • Corporates procuring only Tax • Tax & trade compliance is ONESOURCE suite solutions have unmet needs
Slide 57: Cross-selling Opportunities with Corporate Customers
TR | Tax | Corporates | Legal Corporates Segment Cross-selling Opportunities with Corporate Customers ACME Corp. General Counsel • Westlaw Edge / Practical Law • Legal Managed Services • CLEAR • Tracker Officer • ONESOURCE Tax & Trade Tax • Checkpoint Full kitbag of products Compliance Officer • Reg
Slide 58: Corporates Segment Key Takeaways
TR | Tax | Corporates | Legal Corporates Segment Key Takeaways 1• Continued enforcement and changes to regulatory frameworks drive continued growth in our markets 2• We are the leading provider of Tax, Legal & Compliance technology solutions to a broad base of Corporate customers, with a compelling
Slide 59: Legal Professionals
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS LEGAL PROFESSIONALS Brian Peccarelli Co-Chief Operating Officer Investor Day 2018
Slide 60: Legal Professionals Segment
TR | Tax | Corporates | Legal Legal Professionals Segment Reuters News Global $0.3B Print -3% $0.8B -6% Legal 2017 Revenue $2.3B Professionals +2% $5.3 Billion $1.2B +2% Corporates +6% $0.8B +8% Tax Professionals 60 Sensitivity: Confidential
Slide 61: Legal Professionals Segment Revenues
TR | Tax | Corporates | Legal Legal Professionals Segment Revenues International US Mid-Sized Law Firms (16% of Revenue) (21% of Revenue) Products Westlaw Practical Law Elite Governments (14% of Revenue) Products US Small Law Firms CLEAR 2017 Revenues (26% of Revenue) Court Management Solutions West
Slide 62: Legal Professionals Products, Position & Model Strengths
TR | Tax | Corporates | Legal Legal Professionals Segment Products, Position & Model Strengths We help customers practice law & manage their practice with leading solutions powered by content, software & domain expertise leading to high retention due to deep & broad industry knowledge, proprietary d
Slide 63: Legal Professionals Segment Key Highlights
TR | Tax | Corporates | Legal Legal Professionals Segment Key Highlights Attractive End Markets Leadership Position Focused on Accelerating Growth ✓ ✓ ✓ #1 position in the US, UK, Targeted organic investment & Est. $12B global market segment selective inorganic to pursue Canada & Australia, New Zeal
Slide 64: Legal Professionals Market Segment & Top Competitors
TR | Tax | Corporates | Legal Legal Professionals Segment Market Segment & Top Competitors Operate in large market segment helping customers operate efficiently despite significant transformation Global Addressable Key Trends & Top Competitors Market Segment Customer Implications AI, data analytics,
Slide 65: Legal Professionals Segment Customers
TR | Tax | Corporates | Legal Legal Professionals Segment Customers Top Segments Customers Customer Dynamics Global law firms (~AmLaw 200) Skadden • Firms looking to adopt technology to increase productivity (shifting Mc01 g an ewis spending from manual labor to technology) US Mid-sized law KIRKLAND
Slide 66: Organizing Around the Customer Product Realignment
TR | Tax | Corporates | Legal Organizing Around the Customer Product Realignment Legal Professionals Corporates Tax Professionals Westlaw / Westlaw Edge Practical Law CLEAR Checkpoint FindLaw Tracker Onvio / OnBalance Elite Legal Managed Services CS Professional Suite Government / Regulatory Intelli
Slide 67: Legal Professionals Levers to Drive Organic Revenue Growth
TR | Tax | Corporates | Legal Legal Professionals Segment Levers to Drive Organic Revenue Growth ÿ Expand Digital Cross-sell / Up-sell Grow Government Further Enhance Capabilities Existing Customers Business Customer Relationships • Reach new customers in a • Large majority of • Expand presence in h
Slide 68: Legal Professionals Segment Key Takeaways
TR | Tax | Corporates | Legal Legal Professionals Segment Key Takeaways 1• We have the leading position in the Legal Professionals market segment with industry- leading margins 2• We are leading the way in introducing AI & other new technologies & expanding our product offerings in areas that enable
Slide 69: Westlaw Edge
Westlaw Edge Andy Martens Global Head of Product & Editorial - Legal 69
Slide 70: Financial Perspective
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS FINANCIAL PERSPECTIVE Stephane Bello - Chief Financial Officer Mike Eastwood – SVP Corporate Finance Investor Day 2018
Slide 71: Agenda
TR | Tax | Corporates | Legal Agenda 1. Financial Information & Industry Context for Refinitiv Partnership with Blackstone • Strategic Trajectory Optimized • Use of Proceeds • The “New” Thomson Reuters – Capital Strategy 2. Key Value Creation Drivers • Free Cash Flow per Share Growth Objectives • 45
Slide 72: Financial & Risk Recap – An Eventful Decade
TR | Tax | Corporates | Legal Financial & Risk Recap – An Eventful Decade… 2008 – 2011 2012 - 2017 Numerous Challenges Turnaround Years Oct 1, 2018 April 17, 2008 • Global financial crisis of 2008 • Fixed Eikon & began migrations off REFINITIV Reuters legacy platforms Acquisition • Bank closures and
Slide 73: The Refinitiv Partnership with Blackstone
TR | Tax | Corporates | Legal The Refinitiv Partnership with Blackstone What we said Where Refinitiv is today 1. Blackstone is a strategic partner – 1. Goal: Accelerate revenue growth by with deep understanding of financial • Improving retention services ecosystem • Driving commercial price discipli
Slide 74: The "New" Thomson Reuters: What we said, where we are
TR | Tax | Corporates | Legal The “New” Thomson Reuters What we said Where we are today 1. Greater focus on leading positions 1. New structure – 3 core customer we have in Legal and Tax businesses segments 2. Accelerate organic revenue growth: 2. 3% organic revenue growth in Q3 (strongest level sinc
Slide 75: Allocation of $17 Billion Cash Proceeds
TR | Tax | Corporates | Legal Allocation of $17 Billion Cash Proceeds ✓ $1.0B NCIB – November 2 ✓ $6.5B Substantial Issuer Bid – October 9 ✓ $2.3B RoC/Share Consolidation – November 27 Status: ~$10.0B ✓ $0.6B Debt Tender – October 5 Returned to Shareholders ✓ $1.7B Make-Whole – October 5 ✓ $1.7B CP/
Slide 76: Capital Strategy Principles
TR | Tax | Corporates | Legal Capital Strategy Principles Thomson Reuters approaches capital management and balance sheet strength in a consistent and disciplined manner • Capital Strategy is as critical as the business strategy • Key element in supporting and growing our businesses • Disciplined ap
Slide 77: Strong Capital Structure
TR | Tax | Corporates | Legal Strong Capital Structure $4 Billion of Debt Repaid Leverage Ratio 1.9x (Net Debt / Adjusted EBITDA) - below 2.5x target ~$2 Billion of Cash on Balance Sheet ~12 Yrs 4.3% 4.5% Debt Repayments: ~9 Yrs Repaid CP/revolver $1.7B Redeemed 2019 & 2020 bonds $1.7B Tender for bo
Slide 78: Long Standing History of Returning Cash to Shareholders
TR | Tax | Corporates | Legal Long Standing History of Returning Cash to Shareholders 25 Consecutive Years of Annual Dividend Increases Annualized Dividend per common share $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 2004 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2005 2006 200
Slide 79: Agenda
TR | Tax | Corporates | Legal Agenda 1. Financial Information & Industry Context for Refinitiv Partnership with Blackstone • Strategic Trajectory Optimized • Use of Proceeds • The “New” Thomson Reuters – Capital Strategy 2. Key Value Creation Drivers • Free Cash Flow per Share Growth Objectives • 45
Slide 80: "New" TRI vs. "Old" TRI Key Questions
“New” TRI vs. “Old” TRI TR | Tax | Corporates | Legal 3 Key Questions 1 How fast can TRI overcome the loss of FCF/share resulting from the Refinitiv partnership with Blackstone? 2 What is the value of our 45% stake in Refinitiv? 3 Can we accelerate the growth profile of “New” TRI? Note: Free Cash Fl
Slide 81: How Fast can TRI Overcome the Loss of FCF/share
How Fast can TRI Overcome the Loss of FCF/share Resulting from the Refinitiv Partnership with Blackstone?
Slide 82: Underlying FCF Per Share 2016 to 2020
TR | Tax | Corporates | Legal Reported Underlying FCF FCF PerPer Share Share from - 2016 2016toto2020 2020 Can “New” TR achieve record FCF / Share by 2020? ~$2.40 $2.70 $2.43 $2.32 $1.43 2016 2017 2020 Target Actual Underlying New TR 82 Note: 2016 - 2017 Underlying FCF Per Share exclude the impact o
Slide 83: Drivers of Target FCF Per Share Growth - 2017 to 2020
TR | Tax | Corporates | Legal Drivers of Target FCF Per Share Growth - 2017 to 2020 Completion of F&R Transaction is expected to add an additional ~ $1.10 Reducing Capital Intensity (10% => 7.5%) is expected to generate ~ $0.10 - $0.15 Adj. EBITDA improvement from Revenue growth is expected to gener
Slide 84: Drivers of Variance Between FCF & Adjusted Earnings
TR | Tax | Corporates | Legal Drivers of Variance Between FCF & Adjusted Earnings 2020 FCF is expected to exceed Adjusted Earnings due to Taxes, Non-Cash Charges & Capital vs. D&A $ Millions Factors • Reduction in Capital Intensity has immediate Capital vs. impact on FCF (vs. Depreciation run-off) ~
Slide 85: What is the Value of TRI's 45% Stake in Refinitiv?
What is the Value of TRI’s 45% Stake in Refinitiv?
Slide 86: Significant Value Creation Opportunity for TRI Stake in Refinitiv
TR | Tax | Corporates | Legal Significant Value Creation Opportunity for TRI Stake in Refinitiv We estimate that every $1B of value attributed to the 45% stake in Refinitiv is worth ~$2 per share to TRI Upside Opportunities Strategic / Operational / Financial Levers Value Drivers Future Industry Con
Slide 87: Value of 45% Stake in Refinitiv Based on Constant Multiple of 11x Adj. EBITDA
TR | Tax | Corporates | Legal Value of 45% Stake in Refinitiv Based on Constant Multiple of 11x Adj. EBITDA We estimate that every $1B of value attributed to Refinitiv stake is worth ~$2 / Share for TRI Approx. value today Adj. EBITDA ($B) $1.9 $2.1 $2.3 $2.5 7.0x $7 $8 $8 $9 6.0x $9 $9 $10 $11 Net
Slide 88: Does the Growth Profile of "New" TRI Warrant a Higher Valuation Multiple?
Does the Growth Profile of “New” TRI Warrant a Higher Valuation Multiple?
Slide 89: Revenue Portfolio – TRI vs Peer Group in 2010
TR | Tax | Corporates | Legal Revenue Portfolio – TRI vs Peer Group in 2010 2010 TRI, RELX and WK all had a significant portion of their total revenues in “Legal & Regulatory” 2010: % of Total Revenue Legal and Tax & Accounting Other 36% 64% 28% 72% 40% 60% 89 Sensitivity: Confidential Source: Publi
Slide 90: Organic Revenue Growth & Margin Comparison – Legal & Tax Segments
TR | Tax | Corporates | Legal Organic Revenue Growth & Margin Comparison – Legal & Tax Segments TRI has outperformed both RELX and WK in Legal and Tax & Accounting segments Organic Revenue Growth Adj. EBIT Margins 2010: % of Total Revenue (Legal and Tax & Accounting) (Legal and Tax & Accounting) Leg
Slide 91: Organic Revenue Growth & Margin Comparison – Other Segments
TR | Tax | Corporates | Legal Organic Revenue Growth & Margin Comparison – Other Segments TRI’s “Other Segments” underperformed RELX’s and Wolters Kluwer’s “Other Segments” Organic Revenue Growth Adj. EBIT Margins 2010: % of Total Revenue (Other Segments) (Other Segments) Legal and Tax & Accounting
Slide 92: Organic Revenue Growth Comparison – Total Company
TR | Tax | Corporates | Legal Organic Revenue Growth Comparison – Total Company As a result, RELX and WK have outperformed TRI’s organic revenue growth on average from 2010 – 2017 by ~250bps & ~125bps, respectively Organic Revenue Growth 3% Q3 2018 5% 4% 4% 4% 3% 3% 3% 3% 3% 3% 3% 3% 2% 2% 2% 2% 1%
Slide 93: Equity Performance in Context
TR | Tax | Corporates | Legal Equity Performance in Context C$ +205% +176% RELX achieves ~3% +58% organic growth; stock price performance of 201% thereafter Day prior to announcement Wolters Kluwer of Thomson Reuters’ achieves ~3% organic strategic F&R partnership growth; stock price transaction wit
Slide 94: Revenue Portfolio – TRI vs Peer Group
TR | Tax | Corporates | Legal Revenue Portfolio – TRI vs Peer Group 2010: % of Total Revenue 2017: % of Total Revenue 2019: % of Total Revenue Legal and Tax & Accounting Other 10% 36% 44% 64% 56% 90% 72% 28% 77% 23% Key Question: Can New TRI deliver consistent mid- single organic revenue growth? 40%
Slide 95: FY 2017 Revenue by Segment
TR | Tax | Corporates | Legal FY 2017 Revenue by Segment 2017 Organic Revenue Growth of 2% driven by Tax & Accounting (6%) & Legal (1%) 3 largest business segments grew 4.4% organically under new organizational structure 2017 Revenue & Organic Growth 2017 Revenue & Organic Growth by by Historic BU N
Slide 96: "New" Thomson Reuters Aspirational Revenue Growth Target
TR | Tax | Corporates | Legal “New” Thomson Reuters Aspirational Revenue Growth Target Accelerated, sustained Organic Revenue Growth is a key priority for “New” TRI 3% Q3 2018 ~0.7% -1.7% 0.6% ~3.5% -4.5% 1.0% 2.2% 1.2% 2017 TR Remove 2017 "New TR" “Gravity” Organic Growth 2020 F&R (higher segments
Slide 97: Agenda
TR | Tax | Corporates | Legal Agenda 1. Financial Information & Industry Context for Refinitiv Partnership with Blackstone • Strategic Trajectory Optimized • Use of Proceeds • The “New” Thomson Reuters – Capital Strategy 2. Key Value Creation Drivers • Free Cash Flow per Share Growth Objectives • 45
Slide 98: "New" TRI – 2020 Goals
TR | Tax | Corporates | Legal “New” TRI – 2020 Goals How fast can TRI overcome the loss of FCF/share resulting from Goal: FCF/share of ~$2.40 in 2020 Refinitiv transaction? Does the growth profile of “New” TRI warrant a Goal: Organic revenue growth of 3.5% to 4.5% in 2020 higher valuation multiple?
Slide 99: Q&A
Q&A 99