Slide 1: Thomson Reuters 2018 Third-Quarter Results
REUTERS / Vasily Fedosenko REUTERS / Mike Blake Leonhard Foeger THOMSON REUTERS 2018 THIRD-QUARTER RESULTS November 6, 2018
Slide 2: Agenda
Agenda Welcome / Introduction Frank Golden Third-Quarter 2018 Highlights Jim Smith Update on Refinitiv Partnership Financial Review - Third-Quarter 2018 Stephane Bello Q&A 2
Slide 3: 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 4: Third-Quarter 2018 Highlights
THOMSON REUTERS THIRD-QUARTER 2018 HIGHLIGHTS JIM SMITH PRESIDENT & CEO 4
Slide 5: Refinitiv Strategic Partnership
Refinitiv Strategic Partnership Closed Transaction October 1st • Sold 55% interest in Financial & Risk business • TRI received $17 billion of cash proceeds • TRI retains significant stake with upside potential • 45% equity stake in a well positioned financial business with a strong strategic partner
Slide 6: Q3 2018 – Consolidated Results
Q3 2018 – Consolidated Results (Excludes Financial & Risk which was classified as a discontinued operation) Change at Constant Reported Currency Revenues vs prior-year period Up 2% Up 3% Adjusted EBITDA Down 22% Down 21% Q3 2018 Margin: 23.4% Down 710 bp Down 710 bp Adjusted EPS Down 59% Down 59% Q3
Slide 7: The "New" Thomson Reuters
THE “NEW” THOMSON REUTERS 7
Slide 8: Preview of New Operating / Reporting Structure - January 1, 2019
Preview of New Operating / Reporting Structure - January 1, 2019 2017 Revenue & Organic Growth 2017 Revenue & Organic Growth by Current Business Unit by New Customer Segment Reuters Reuters News News $0.3B Global $0.3B -3% -3% Print $0.8B -6% Tax & $1.6B Accounting +6% $2.3B Legal $5.3 Billion $5.3
Slide 9: The "New" Thomson Reuters
The “New” Thomson Reuters Well Positioned 1. We are Adapting & Changing to Better Serve Our Customers to Empower Their Success • Centering the company around customers not products • Aligning resources toward growth & closer to the customer • Operating with greater speed 2. Our Customers Trust Us •
Slide 10: Financial Review
FINANCIAL REVIEW STEPHANE BELLO CHIEF FINANCIAL OFFICER 10
Slide 11: Consolidated Results
Consolidated Results (Excludes Financial & Risk which is now classified as a discontinued operation) ($ millions) Third-Quarter Nine-Months Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 1,292 1,272 +2% +3% 3,982 3,883 +3% +3% Adjusted EBITDA 302 388 -22% -2
Slide 12: Q3 2018 Results
Q3 2018 Results DISCONTINUED OPERATION Thomson Reuters F&R (excluding F&R) Reported Revenue Growth: +2%* +1% Revenue Growth at Constant Currency: +3% +2% Recoveries Print +0% / $0.1B -3% / $0.2B Recurring Recurring (Ex. Recoveries) +5% / $1.0B +2% / $1.2B Transactions Transactions +5% / $0.2B +1% /
Slide 13: Q3 EBITDA Margin
Q3 2018 Results Q3 EBITDA Margin ~$20 million ~$90 million 13
Slide 14: Legal
Legal ($ millions) Third-Quarter Nine-Months Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 883 860 +3% +4% 2,637 2,559 +3% +3% Recurring 649 618 +5% +5% 1,926 1,835 +5% +5% Transactions 78 74 +5% +7% 233 228 +2% +2% Print 156 168 -7% -4% 478 496 -4% -4% Adj
Slide 15: Legal Revenue by Segment
Legal Revenue by Segment Global Solutions +9% Global Print -4% (-6% Organic) $361 million (41% of Revenue) $156 million (18% of Revenue) Recurring: +9% (82% of revenue) Transactions: +10% (18% of revenue) Third-Quarter Revenues $0.9 billion / +4% (excluding Global Print +5%) U.S. Online Legal Inform
Slide 16: Tax & Accounting
Tax & Accounting ($ millions) Third-Quarter Nine-Months Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 341 341 +0% +3% 1,137 1,108 +3% +4% Recurring 272 267 +2% +5% 859 824 +4% +6% Transactions 56 62 -10% -5% 240 247 -3% -2% Print 13 12 +8% +8% 38 37 +3% +3%
Slide 17: Tax & Accounting Revenue By Segment
Tax & Accounting Revenue By Segment Professional +5% Corporate +3% $85 million (25% of Revenue) $140 million (41% of Revenue) Third-Quarter Revenues $0.3 billion / +3% Knowledge Solutions +2% Government +3% $105 million (31% of Revenue) $11 million (3% of Revenue) 17
Slide 18: Reuters News
Reuters News (Does not include Financial & Risk payment of $325m annually) ($ millions) Third-Quarter Nine-Months Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 71 73 -3% -4% 215 221 -3% -5% Adjusted EBITDA 6 7 -14% -17% 22 29 -24% -29% Adjusted EBITDA Margi
Slide 19: Financial & Risk (Discontinued Operation)
Financial & Risk (Discontinued Operation) ($ millions) Third-Quarter Nine-Months Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 1,541 1,525 +1% +2% 4,677 4,511 +4% +2%(1) Recurring ex. Recoveries 1,186 1,175 +1% +2% 3,595 3,486 +3% +2% Transactions 239 230 +
Slide 20: Adjusted Earnings Per Share, Free Cash Flow, Corporate Costs
ADJUSTED EARNINGS PER SHARE FREE CASH FLOW CORPORATE COSTS 20
Slide 21: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts & share count) Third-Quarter Nine-Months % % 2018 Change 2018 Change Change Change Adjusted EBITDA $302 ($86) $1,080 ($103) Depreciation & Computer Software ($120) ($21) ($377) ($27) Amortization Interest Expense ($82) $7 ($241)
Slide 22: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) Third-Quarter Nine-Months 2018 2017 Change 2018 2017 Change Comparable Free Cash Flow (Continuing Operations) $191 $251 $(60) $488 $574 ($86) Other Items (Q4-16 Charges paid, 2017 $500m pension contribution and $34 $11 ($23) $36 $559 $523 F&R deal/separation
Slide 23: Corporate Costs
Corporate Costs ~$500M - $550M 2018 Full Year: ~$500M-$600M ~$250M - $350M ~$190M $131M $72M $44M Q1-18 Q2-18 Q3-18* Q4-18 2019 2020 Actual Estimate 23 *Includes $7 million of Capital Expenditures
Slide 24: Capital Structure Related
Capital Structure Related 24
Slide 25: Use of $17 Billion of Proceeds from Sale of 55% of F&R
Use of $17 Billion of Proceeds from Sale of 55% of F&R • Allocate to future growth investments • Maintain a strong capital structure (net debt/EBITDA <2.5x) • Return capital to shareholders Paid Down $4B of debt Capital Returned to Shareholders Investment ~$10B Fund: ~$2B $6.5B SIB $2.5B return of c
Slide 26: Strong Capital Structure
Strong Capital Structure $4 Billion of Debt Repaid Leverage Ratio 1.9x (net debt/adj. EBITDA) - well below 2.5x max. target PLUS $2 Billion of Cash on Balance Sheet • Debt Repayments Repaid CP/revolver $1.7B $139 Redeemed 2019 & 2020 bonds $1.7B Tender for bonds $0.6B $600 $350 $483 $500 $500 • Net
Slide 27: Raised Dividend $0.02 Per Share to $1.40 – December 2018
Raised Dividend $0.02 Per Share to $1.40 – December 2018 Long Held Commitment of Returning Cash to Shareholders 25 Consecutive Years of Annual Dividend Increases Annual Dividend per Common Share $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2
Slide 28: 2018 Outlook
2018 Outlook Thomson Reuters 2018 Outlook(1) Restated 2017 Before Currency (excluding F&R) Revenue Growth $5.3 billion Low single digit(2) Adjusted EBITDA $1.6 billion ~$1.3 billion (previously $1.2B - $1.3B) Corporate Costs $244 million $500 - $600 million Depreciation & Amortization of computer so
Slide 29: Q&A
Q&A 29