Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Q4 2023 Earnings Presentation
30 slides from Thomson Reuters's earnings presentation, Feb 8, 2024
Slide 1: 2023 Fourth-Quarter and Full-Year Results
Photo Credit:Aude Guerrucci Hannibal Hanschkel Thomson Reuters 2023 Fourth-Quarter and Full-Year Results February 8, 2024
Slide 2: Agenda
Agenda • Welcome / Introduction Gary Bisbee • Fourth-Quarter & Full-Year 2023 Highlights Steve Hasker Growth and Innovation Updates • Financial Review Mike Eastwood Fourth-Quarter & Full-Year 2023 Results 2024 Full-Year Outlook and 2025-2026 Financial Framework • Q&A 2
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 2023 Highlights
THOMSON REUTERS Fourth-Quarter & Full-Year 2023 Highlights Steve Hasker President & CEO
Slide 5: Fourth-Quarter & Full-Year 2023 Highlights
Fourth-Quarter & Full-Year 2023 Highlights 1. Good 2023 performance met or exceeded outlooks for organic revenue, adjusted EBITDA margin and FCF • Q4 organic revenue growth of 7% and FY organic revenue growth of 6% • “Big 3” Business Segments (Legal, Corporates and Tax & Accounting) revenues grew 8%
Slide 6: Fourth-Quarter 2023 Consolidated Results
Fourth-Quarter 2023 Consolidated Results IFRS Financial Measures ($ millions) 2023 2022 Change Revenues $1,815 $1,765 Up 3% Operating profit $558 $631 Down 11% Diluted earnings per share (EPS) $1.49 $0.45 Up 231% Cash flow from operations $705 $676 Up 4% Change at Constant Organic Non-IFRS Financial
Slide 7: Fourth-Quarter 2023 Revenue Growth by Segment
Fourth-Quarter 2023 Revenue Growth by Segment Reported revenues up 3% to $1.8 billion Organic revenues up 7% Organic recurring revenues up 7% Tax Corporates Reuters News Global Print Professionals Tax & Legal Corporates Accounting Reuters News Global Print Professionals Professionals $0.7B $0.4B $0.
Slide 8: Full-Year 2023 Consolidated Results
Full-Year 2023 Consolidated Results IFRS Financial Measures ($ millions) 2023 2022 Change Revenues $6,794 $6,627 Up 3% Operating profit $2,332 $1,834 Up 27% Diluted earnings per share (EPS) $5.80 $2.75 Up 111% Cash flow from operations $2,341 $1,915 Up 22% Change at Constant Organic Non-IFRS Financi
Slide 9: Full-Year 2023 Actual Results vs. Updated Guidance
Full-Year 2023 Actual Results vs. Updated Guidance 2023 Outlook 2023 Results 2023 Total Thomson Reuters 11.01.23 Before Currency Reported Before Currency Total Revenue Growth 3.0% - 3.5% 3.0% 2.5% Organic Revenue Growth (1) 5.5% - 6.0% 5.9% 5.9% Adjusted EBITDA Margin (1) ~ 39% 39.1% 39.3% Corporate
Slide 10: Growth and Innovation Updates
Growth and Innovation Updates
Slide 11: Product Innovation and AI Leadership driving Growth
Product Innovation and AI Leadership driving Growth • AI-Assisted Research: The biggest change in legal research since we went from book research to online research Thomson reuters • AI-Assisted Research in Westlaw Precision enables customers to ask complex research questions in natural language, li
Slide 12: Strengthened Portfolio Through Successful Execution of M&A Strategy
Strengthened Portfolio Through Successful Execution of M&A Strategy Since January 2023, we have completed six strategic acquisitions and divested a majority stake in Elite, leaving a stronger, more strategically aligned portfolio with better growth prospects Primary Closed Date Description Purchase
Slide 13: Pagero Acquisition: Strong Strategic Fit and Growth Accretive
Pagero Acquisition: Strong Strategic Fit and Growth Accretive Pagero offers a comprehensive suite of global e-invoicing and indirect tax solutions that ensure compliance and provide workflow automation benefits for customers Through a single, modern and open technology platform, Pagero links Key Fac
Slide 14: Financial Review
Financial Review Fourth-Quarter & Full-Year 2023 Results 2024 Outlook and 2025-2026 Framework Mike Eastwood Chief Financial Officer
Slide 15: Legal, Corporates, Tax & Accounting Professionals Revenues
Fourth-Quarter & Full-Year 2023 Legal, Corporates, Tax & Accounting Professionals Revenues ($ millions) Fourth Quarter Full Year Constant Constant Revenues 2023 2022 Total Currency Organic 2023 2022 Total Currency Organic Legal Professionals 700 704 -1% -1% +7% 2,807 2,803 - - +6% Corporates 402 379
Slide 16: Fourth-Quarter & Full-Year 2023 Consolidated Revenues
Fourth-Quarter & Full-Year 2023 Consolidated Revenues ($ millions) Fourth Quarter Full Year Constant Constant Revenues 2023 2022 Total Currency Organic 2023 2022 Total Currency Organic Reuters News 220 198 +11% +10% +9% 769 733 +5% +5% +4% Global Print 154 162 -6% -5% -4% 562 592 -5% -4% -3% Elimina
Slide 17: Consolidated Adjusted EBITDA
Fourth-Quarter & Full-Year 2023 Consolidated Adjusted EBITDA ($ millions) Fourth Quarter Full Year Constant Constant Adjusted EBITDA 2023 2022 Total Currency 2023 2022 Total Currency Legal Professionals 298 294 +1% -2% 1,299 1,227 +6% +5% Margin 42.5% 41.7% 46.2% 43.8% Corporates 138 135 +3% +1% 619
Slide 18: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts & share count) Fourth Quarter Full Year 2023 Change % Change 2023 Change % Change Adjusted EBITDA $707 $74 $2,678 $349 Depreciation & Amortization of ($164) ($3) ($628) ($3) Computer Software Add back: Acquired Software Amortizat
Slide 19: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) Fourth Quarter Full Year 2023 2022 Change 2023 2022 Change Comparable Free Cash Flow (Continuing Operations) $633 $576 $57 $1,947 $1,731 $216 Other Items (Change Program Costs) ($10) ($49) $39 ($90) ($324) $234 Free Cash Flow (Continuing Operations) $623 $527
Slide 20: Capital Structure and Allocation Updates
Capital Structure and Allocation Updates
Slide 21: 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 ~$8B by 2026, following completion of current $1B NCIB and ~$800M Pagero acquisition • Expected to provide significant organic and inorganic growth o
Slide 22: London Stock Exchange Group Stake – 16.0M Shares Remain
London Stock Exchange Group Stake – 16.0M Shares Remain • Thomson Reuters sold approximately 56M shares in 2023, primarily via 4 large transactions - a private sale to Microsoft in January and 3 open market block trades (March, May, September) • Of the remaining 16.0M shares, 2.6M shares could be so
Slide 23: Balanced Capital Allocation: Buybacks/Return of Capital
Balanced Capital Allocation: Buybacks/Return of Capital Returned $6.5 billion to shareholders over the past 5 years; Anticipate completion of existing $1.0B NCIB in Q2 Since 2020, share repurchases/return of capital have reduced share count by ~10% Annual Share Buyback / Return of Capital Share Coun
Slide 24: Balanced Capital Allocation: Long History of Dividend Growth
Balanced Capital Allocation: Long History of Dividend Growth 31 Consecutive Years of Annual Dividend Increases 2024 Annualized Dividend Rises $0.20 to $2.16, a Third Consecutive 10% Increase Annualized Dividend per Common Share $2.50 $2.16 $2.00 $1.50 $1.00 $0.50 $0.00 2020 2021 2022 2023 2024 1993
Slide 25: 2024 Outlook, 2025-2026 Financial Framework
2024 Outlook 2025-2026 Financial Framework
Slide 26: 2024 Outlook
2024 Outlook FY 2023 FY 2024 Total Thomson Reuters Outlook Reported 2/8/24 Total Revenue Growth 3% ~ 6.5% Organic Revenue Growth (1) 6% ~ 6% Adjusted EBITDA Margin (1) 39.3% ~ 38% Corporate Costs $115 million $120 - $130 million Free Cash Flow (1) $1.9 billion ~ $1.8 billion Accrued Capex as % of Re
Slide 27: Updated 2024 Outlook, Continued
Updated 2024 Outlook, Continued Higher cash taxes and M&A-related capital spending along with lower LSEG dividends will weigh on 2024 free cash flow ~($90M) ~($90M) ~$150M ~($50M) ~$1.9B ~$1.8B 2023 FCF Higher Cash Higher CapEx Lower LSEG EBITDA 2024 FCF Taxes Dividends Growth & Outlook Other 27
Slide 28: 2025-2026 Financial Framework
2025-2026 Financial Framework Medium Term 2023A 2024E Targets (2025-2026) Organic Growth 6% ~ 6% 6.5% - 8.0% • Total TR ÿ • Big 3 Segments 7% ~ 7.5% 8.0% - 9.0% 75 bps expansion in ‘25; Adj. EBITDA Margin 39.3% ~ 38% 50+ bps expansion in ‘26 Capital Intensity 7.8% ~ 8.5% ~ 8.0% (CapEx as % of Revenu
Slide 29: Proposed Capital Strategy Metrics for 2024 - 2026
Investor Day – Proposed Capital Strategy Metrics for 2024 - 2026 2020 2023 Medium Term Year End Year End Targets Net Debt Leverage 1.1x 0.8x 2.5x Dividend Payout Ratio 55% 47% 50% - 60% Capital Return 70% 215% (2) 75%+ Commitment (1) Return on Invested 10.6% 15.8% 2x WACC Capital (1) Defined as divi
Slide 30: Q&A
Q&A