Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Q4 2018 Earnings Presentation
33 slides from Thomson Reuters's earnings presentation, Feb 26, 2019
Slide 1: Thomson Reuters 2018 Fourth-Quarter & Full-Year Results
REUTERS / Vasily Fedosenko REUTERS / Mike Blake Leonhard Foeger THOMSON REUTERS 2018 FOURTH-QUARTER & FULL-YEAR RESULTS February 26, 2019
Slide 2: Agenda
Agenda Welcome / Introduction Frank Golden 2018 Fourth-Quarter & Full-Year Results Jim Smith 2019 & 2020 Outlook Financial Review - Fourth-Quarter 2018 Stephane Bello Q&A 2
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: Thomson Reuters 2018 Highlights & Fourth-Quarter Results
THOMSON REUTERS 2018 HIGHLIGHTS & FOURTH-QUARTER RESULTS JIM SMITH PRESIDENT & CEO 4
Slide 5: 2018 – A Watershed Year for Thomson Reuters
2018 – A Watershed Year for Thomson Reuters Completed Three Key Objectives in 2018 1. Closed transaction with Blackstone / solidified capital structure / separated F&R from TR • Returned $10 billion to shareholders • Repaid $4 billion of debt with $2.7 billion cash on balance sheet • Increased divid
Slide 6: Q4 2018 – Consolidated Results
Q4 2018 – Consolidated Results (Excludes Refinitiv) Change at Constant Reported Currency Revenues vs prior-year period Up 7% Up 9% Adjusted EBITDA Down 30% Down 33% Q4 2018 Margin: 18.8% Down 1010 bp Down 1120 bp Adjusted EPS Down 9% Down 18% Q4 2018: $0.20 Down $0.02 Down $0.04 6 Sensitivity: Confi
Slide 7: Full-Year 2018 Revenue Growth by Segment
Full-Year 2018 Revenue Growth by Segment Revenues up 4% to $5.5 billion Organic revenues up 3% Tax Corporates Reuters News Global Print Professionals Legal Tax Corporates Reuters News Global Print Professionals Professionals Revenues $2.4B $1.2B $0.8B $0.4B $0.7B & +4% +5% +6% +24% -3% % Growth 80%
Slide 8: Full-Year 2018 Results vs 2018 Outlook
Full-Year 2018 Results vs 2018 Outlook Achieved or exceeded each guidance target 2018 Outlook(1) 2018 Results Before Currency Before Currency Revenue Growth Low single digit(2) 2.5%(2) Adjusted EBITDA ~$1.3 billion $1.3 billion (previously $1.2B - $1.3B) Corporate Costs (3) $500 - $600 million $499
Slide 9: 2019 & 2020 Outlook
2019 & 2020 OUTLOOK 9
Slide 10: The “New” Thomson Reuters Key Priorities
The “New” Thomson Reuters 5 Key Priorities 1. Deliver Higher Revenue Growth – 3.5% to 4.5% by 2020 • Programmatic approach to acquiring new customers, increasing cross-selling, optimizing pricing & improving retention 2. Create a Customer Focused Organization • Deliver an unmatched customer experien
Slide 11: 2019 - 2020 Outlook
2019 - 2020 Outlook 2018 2019 Outlook 2020 Outlook Reported Before Currency Before Currency Revenue Growth 4%(1) 7% - 8.5%(2) 3.5% - 4.5% Adjusted EBITDA $1.4 billion $1.4 - $1.5 billion(3) 30.0% - 31.0%(3) ($1.3 billion before currency) (1) 2018 Organic revenue growth was 2.5% (2) 2019 Organic reve
Slide 12: 2019 Dividend Increased $0.04 Per Share to $1.44
2019 Dividend Increased $0.04 Per Share to $1.44 Announced $250 million share buyback program 26 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 $0.00 2010 2011 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Slide 13: Financial Review
FINANCIAL REVIEW STEPHANE BELLO CHIEF FINANCIAL OFFICER 13
Slide 14: Consolidated Results
Consolidated Results (Excludes Refinitiv) ($ millions) Fourth-Quarter Full-Year Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 1,519 1,414 +7% +9% 5,501 5,297 +4% +4% Recurring 1,172 1,042 +12% +14% 4,139 3,884 +7% +7% Transactions 145 153 -5% -3% 636 649 -2
Slide 15: Impact of Reuters News Contract with Refinitiv & Integration Point Acquisition
Impact of Reuters News Contract with Refinitiv & Integration Point Acquisition on 2019 Revenue Growth Rate Reuters News contract with Refinitiv will distort reported revenue growth rate from Q4 2018 to Q3 2019 The contract is low margin and will be dilutive to Adj. EBITDA margin Impact of Reuters Ne
Slide 16: Full Year 2018 Adjusted EBITDA Margin Results
Full Year 2018 Adjusted EBITDA Margin Results 0.4% 1.7% 4.3% $2M 1.6% $239M $87M 31.2% 30.0% - 31.0% 29.5% 24.8% FY 2018 Stranded 1x Costs Refinitiv News FY 2018 2019 Impact of FY 2018 Proforma FY 2020 Reported Costs License Pro Forma Refinitiv News (Incl full year Target (one quarter) Contract & Re
Slide 17: Legal Professionals
Legal Professionals ($ millions) Fourth-Quarter Full-Year Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 599 580 +3% +4% 2,373 2,284 +4% +4% Recurring 545 527 +3% +4% 2,159 2,079 +4% +4% Transactions 54 53 +2% +4% 214 205 +4% +5% Adjusted EBITDA 221 185 +19%
Slide 18: Legal Professionals Revenues
Legal Professionals Revenues Global +8% Law Firms +2% (18% of Revenue) (67% of Revenue) Government +10% (15% of Revenue) Fourth-Quarter Revenues $0.6 billion / +4% Above chart reflected at constant currency rates 18 Sensitivity: Confidential
Slide 19: Corporates
Corporates ($ millions) Fourth-Quarter Full-Year Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 315 301 +5% +7% 1,238 1,186 +4% +5% Recurring 262 242 +8% +11% 993 925 +7% +8% Transactions 53 59 -10% -10% 245 261 -6% -6% Adjusted EBITDA 87 99 -12% -13% 395 41
Slide 20: Corporates Revenues
Corporates Revenues Medium Corporates +6% Large Corporates +8% (20% of Revenue) (72% of Revenue) Global -1% (8% of Revenue) Fourth-Quarter Revenues $0.3 billion / +7% Above chart reflected at constant currency rates 20 Sensitivity: Confidential
Slide 21: Tax Professionals
Tax Professionals ($ millions) Fourth-Quarter Full-Year Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 248 239 +4% +8% 794 767 +4% +6% Recurring 221 210 +5% +9% 658 630 +4% +7% Transactions 27 29 -7% -3% 136 137 -1% +1% Adjusted EBITDA 118 97 +22% +21% 273 2
Slide 22: Tax Professionals Revenues
Tax Professionals Revenues Global* +19% Small-Mid-Large Accounting Firms +7% (11% of Revenue) (85% of Revenue) Government -10% (4% of Revenue) Fourth-Quarter Revenues $0.2 billion / +8% 22 *Global includes Latin America & Asia regions Sensitivity: Confidential
Slide 23: Reuters News
Reuters News (Q4 includes Refinitiv quarterly payment) ($ millions) Fourth-Quarter Full-Year Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 155 75 +107% +111% 370 296 +25% +24% Adjusted EBITDA 6 -2 n/m n/m 27 27 +0% -19% Adjusted EBITDA Margin 3.9% -2.7% +66
Slide 24: Global Print
Global Print ($ millions) Fourth-Quarter Full-Year Change Change 2018 2017 Change Before 2018 2017 Change Before Currency Currency Revenues 203 219 -7% -4% 728 764 -5% -3% Adjusted EBITDA 88 94 -6% -5% 320 335 -4% -4% Adjusted EBITDA Margin 43.3% 42.9% +40 bp -50 bp 44.0% 43.8% +20 bp -30 bp 24 Sens
Slide 25: Refinitiv
Refinitiv ($ millions) Fourth-Quarter Change 2018 2017 Change Before (Reported by (Reported Currency Refinitiv) by TR) Revenues 1,550 1,532 +1% +3% Adjusted EBITDA 486 Adjusted EBITDA Margin 31.4% Capital Expenditures $70 Free Cash Flow $210 Debt Outstanding(1) $12,989 Preferred Equity $963 (1) As o
Slide 26: Adjusted Earnings Per Share, Free Cash Flow, Corporate Costs, Capital Structure
ADJUSTED EARNINGS PER SHARE FREE CASH FLOW CORPORATE COSTS CAPITAL STRUCTURE 26
Slide 27: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts & share count) Fourth-Quarter Full-Year % % 2018 Change 2018 Change Change Change Adjusted EBITDA $285 ($123) $1,365 ($226) Depreciation & Amortization ($133) ($13) ($510) ($40) Interest Expense ($19) $68 ($260) $97 Income Tax ($
Slide 28: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) Fourth-Quarter Full-Year 2018 2017 Change 2018 2017 Change Comparable Free Cash Flow (Continuing Operations) $197 $112 $85 $685 $686 ($1) Other Items (Q4-16 Charges paid, 2017 $500m pension contribution and $291 $0 ($291) $327 $559 $232 F&R deal/separation co
Slide 29: Corporate Costs
Corporate Costs ~$570M $499M 2019 Full Year Estimate(2): ~$570 Million ~$330M $272M ~$140M - $190M $87M ~$100M ~$0 - $50M ~$330M ~$240M $140M ~$140M ~$140M 2018 (1) 2019 (2) 2020 H1-2019 H2-2019 One-Time Costs Stranded Costs Core Corporate Costs Total Corp Costs Note: Q1 – Q3 2018 reflects a restate
Slide 30: Year-End 2018 Capital Structure
Year-End 2018 Capital Structure 1) Debt Outstanding = $3.3 billion 2) Cash on Balance Sheet = $2.7 billion 3) Net Debt Leverage Ratio 0.5x (net of cash on balance sheet) • Conservative debt portfolio profile ~12 Yrs ‒ Average maturity ~12 years 4.3% 4.5% ‒ No principal/debt maturities due until 2021
Slide 31: 2019 & 2020 Outlook
2019 & 2020 Outlook 2018 2019 Outlook 2020 Outlook Reported Before Currency Before Currency Revenue Growth 4%(1) 7% - 8.5%(2) 3.5% - 4.5% Adjusted EBITDA $1.4 billion $1.4 - $1.5 billion(3) 30.0% - 31.0%(3) ($1.3 billion before currency) Corporate Costs $499 million ~$570 million $140 - $190 million
Slide 32: Conclusion
Conclusion • 2019 off to a good start on the back of stronger sales in 2018 • Investing organically & inorganically to accelerate growth • Confident in the trajectory of the business 32 Sensitivity: Confidential
Slide 33: Q&A
Q&A 33