Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Q2 2019 Earnings Presentation
35 slides from Thomson Reuters's earnings presentation, Aug 1, 2019
Slide 1: Thomson Reuters 2019 Second-Quarter Results
REUTERS / Vasily Fedosenko REUTERS REUTERS / Mike / Marcos Blake Brindicci Leonhard Foeger THOMSON REUTERS 2019 SECOND-QUARTER RESULTS August 1, 2019
Slide 2: Agenda
Agenda Welcome / Introduction Frank Golden Second-Quarter 2019 Results Jim Smith Financial Review Stephane Bello LSE Group Acquisition of Refinitiv Jim Smith 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 Second-Quarter 2019 Highlights
THOMSON REUTERS SECOND-QUARTER 2019 HIGHLIGHTS JIM SMITH PRESIDENT & CEO 4
Slide 5: Second-Quarter 2019 Consolidated Results
Second-Quarter 2019 Consolidated Results Change at Reported Organic Constant Results Growth Currency Revenues vs prior-year period Up 9% Up 10% Up 4% Adjusted EBITDA Up 2% 0% Q2 2019 Margin: 25.0% Down 160 bp Down 240 bp Adjusted EPS Up 71% Up 65% Q2 2019: $0.29 Up $0.12 Up $0.11 Raising Full Year 2
Slide 6: Second-Quarter 2019 Revenue Growth by Segment
Second-Quarter 2019 Revenue Growth by Segment Reported Revenues up 9% to $1.4 billion Organic revenues up 4% Recurring revenues up 5% Tax Corporates Reuters News Global Print Professionals Legal Tax & Accounting Corporates Reuters News Global Print Professionals Professionals $0.6B $0.3B $0.2B $0.2B
Slide 7: Building a Growing Sustainable Recurring Revenue Model
Building a Growing Sustainable Recurring Revenue Model 1. Focusing on the fundamentals to achieve 2019 & 2020 targets • Revenue growth tracking ahead of plan with strong recurring revenue growth (H1 +5% organic growth) • Improving underlying margin trajectory from revenue flow-through and efficiency
Slide 8: Building Organically On Our Strengths
Building Organically On Our Strengths State-Of-The-Art Artificial Intelligence Combines unique proprietary content, talented technologists and experienced domain experts Westlaw Westlaw Edge Checkpoint Edge Quick Check Edge • Legal Professionals & Corporates • Legal Professionals & Corporates • Tax
Slide 9: Supplementing Organic Growth with Fast Growing Strategically Aligned Acquisitions
Supplementing Organic Growth with Fast Growing Strategically Aligned Acquisitions Targeting closely aligned businesses that are additive to our solutions in high-growth market segments Will drive higher revenue growth and higher Adj. EBITDA and Free Cash Flow COnfIrmatiOn October 2018 July 2019 July
Slide 10: Raising 2019 & 2020 Outlook
Raising 2019 & 2020 Outlook Before currency and excluding the impact of future acquisitions and dispositions Original 2019 Updated 2019 Original 2020 Updated 2020 Outlook Outlook Outlook Outlook 7% - 8.5% 7% - 8.5% 3.5% - 4.5% 4.0% - 4.5% Revenue Growth 3.0% - 3.5% Organic 3.5% - 4.0% Organic Organi
Slide 11: Financial Review
FINANCIAL REVIEW STEPHANE BELLO CHIEF FINANCIAL OFFICER 11
Slide 12: Consolidated Results
Consolidated Results (Excludes Refinitiv) ($ millions) Second-Quarter Six-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 1,423 1,311 +9% +10% 2,910 2,690 +8% +10% Recurring 1,115 984 +13% +15% 2,250 1,989 +13% +15% Transactions 144 153 -6% -5% 332 351
Slide 13: Organic Revenue Growth Details
%ofTtal92807 First-Half 2019 vs. First-Half 2018 Organic Revenue Growth Details Recurring Revenue Total Company up 130 bps organically Organic Revenue %ofTtal8201 up 170 bps Transactions Revenue up 190 bps organically 18 ÿ H1' 19 Recurring 9% 8% 7% 7% 5% Total 4% 4% 6% 3% 6% 5% 4% 4% 4% Legal Corpor
Slide 14: Legal Professionals
Legal Professionals ($ millions) Second-Quarter Six-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 603 593 +2% +3% 1,197 1,178 +2% +3% Recurring 555 539 +3% +4% 1,105 1,072 +3% +4% Transactions 48 54 -10% -9% 92 106 -12% -11% Adjusted EBITDA 232 198 +
Slide 15: Legal Professionals Revenues
Legal Professionals Revenues Global +3% Law Firms +2% (17% of Revenue) (68% of Revenue) Government +6% (15% of Revenue) Second-Quarter Revenues $0.6 billion / +3% Above chart reflected at constant currency rates 15 Sensitivity: Confidential
Slide 16: Corporates
Corporates ($ millions) Second-Quarter Six-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 318 296 +8% +9% 670 625 +7% +9% Recurring 269 243 +11% +12% 538 486 +11% +12% Transactions 49 53 -8% -6% 132 139 -5% -3% Adjusted EBITDA 102 95 +8% +7% 220 206 +
Slide 17: Corporates Revenues
Corporates Revenues Medium Corporates +7% Large Corporates +10% (18% of Revenue) (74% of Revenue) Global +4% (8% of Revenue) Second-Quarter Revenues $0.3 billion / +9% Above chart reflected at constant currency rates 17 Sensitivity: Confidential
Slide 18: Tax & Accounting Professionals
Tax & Accounting Professionals ($ millions) Second-Quarter Six-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 182 176 +3% +6% 404 393 +3% +6% Recurring 147 139 +6% +9% 320 306 +5% +8% Transactions 35 37 -6% -4% 84 87 -4% -2% Adjusted EBITDA 60 41 +47%
Slide 19: Tax & Accounting Professionals Revenues
Tax & Accounting Professionals Revenues Global* +27% Small-Mid-Large Accounting Firms +4% (15% of Revenue) (79% of Revenue) Government -11% (6% of Revenue) Second-Quarter Revenues $0.2 billion / +6% Above chart reflected at constant currency rates 19 *Global includes Latin America & Asia regions Sen
Slide 20: Reuters News
Reuters News ($ millions) Second-Quarter Six-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 156 72 +116% +118% 311 144 +116% +120% Adjusted EBITDA 10 8 +36% +0% 26 16 +67% +42% Adjusted EBITDA Margin 6.6% 10.5% -390 bp -580 bp 8.4% 10.9% -250 bp -400
Slide 21: Global Print
Global Print ($ millions) Second-Quarter Six-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 164 174 -6% -3% 329 351 -6% -4% Adjusted EBITDA 73 76 -5% -4% 147 157 -7% -6% Adjusted EBITDA Margin 44.2% 43.8% +40 bp -30 bp 44.5% 44.7% -20 bp -100 bp 21 Se
Slide 22: Merger & Acquisitions - 2019
Merger & Acquisitions - 2019 Recent Acquisitions Recent Divestitures IntegrationPoint GlobalTradeSoftware COnfIrmatiOn P A ANGI E A 3 CARSWELL GALSOLUTIO LEC DueDiligence Cyberbahnand Marquedor Servicesby October 2018 July 2019 July 2019 May 2019 Mar 2019 ‘19 Revenues ~$40M ~$55M ~$40M ~$45M ~$25M (
Slide 23: Refinitiv
Refinitiv ($ millions) Second-Quarter Six-Months Change Change 2019 2018 Change Before 2019 2018 Change Before (Reported (Reported (Reported (Reported by Refinitiv) by Thomson Currency by Refinitiv) by Thomson Currency Reuters) (Excludes Reuters) (Excludes Disposals) Disposals) Revenues 1,550 1,553
Slide 24: Adjusted Earnings Per Share, Free Cash Flow, Corporate Costs
ADJUSTED EARNINGS PER SHARE FREE CASH FLOW CORPORATE COSTS 24
Slide 25: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts & share count) Second-Quarter Six-Months % % 2019 Change 2019 Change Change Change Adjusted EBITDA $355 $7 $752 ($26) Depreciation & Amortization ($142) ($13) ($281) ($24) Interest Expense ($37) $44 ($72) $87 Income Tax ($29) ($1
Slide 26: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) Second-Quarter Six-Months 2019 2018 Change 2019 2018 Change Comparable Free Cash Flow (Continuing Operations) $159 $267 ($108) $318 $297 $21 Other Items (Q1-19 pension contribution and F&R separation costs) $93 $1 ($92) $372 $2 ($370) Free Cash Flow (Continui
Slide 27: Corporate Costs
Corporate Costs ~$570M $499M 2019 Full Year Estimate(2): ~$570 Million ~$330M $272M $282M ~$100M $163M* $87M ~$140M - $150M $50M ~$160M $140M ~$140M ~$130M $69M 2018 (1) 2019 (2) 2020 H1-2019 Q3 Q4 One-Time Costs Stranded Costs Core Corporate Costs (1) Includes $33 million of Capital Expenditures *I
Slide 28: Raising 2019 & 2020 Outlook
Raising 2019 & 2020 Outlook Before currency and excluding the impact of future acquisitions and dispositions Original 2019 Updated 2019 Original 2020 Updated 2020 Outlook Outlook Outlook Outlook 7% - 8.5% 7% - 8.5% 3.5% - 4.5% 4.0% - 4.5% Revenue Growth 3.0% - 3.5% Organic 3.5% - 4.0% Organic Organi
Slide 29: Refinitiv acquisition by LSEG
Refinitiv acquisition by LSEG 29
Slide 30: London Stock Exchange Group to Acquire Refinitiv for $27 Billion
London Stock Exchange Group to Acquire Refinitiv for $27 Billion Transaction is a sign of market trends & has strategic merit for both companies 1. Transforms LSEG’s position as a leading global financial markets infrastructure group 2. LSEG has a strong track record of integrating acquisitions, rea
Slide 31: Creates a New Global Financial Markets Infrastructure Leader
Creates a New Global Financial Markets Infrastructure Leader London StockExchange Group REFINITIV ‒ A leading global financial markets ‒ A leading global provider of data, analytics infrastructure business and financial markets solutions 1 ‒ Open platform promoting partner community, ‒ Successful op
Slide 32: Delivers Attractive Financial Returns for LSEG Shareholders
Delivers Attractive Financial Returns for LSEG Shareholders Enhanced revenue(1) ‒ c.70% recurring subscription-based revenue up from c.40% 1 mix with attractive ‒ 5-7% revenue CAGR targeted over the first three years post completion growth ‒ Annual run rate cost synergies in excess of £350m 2 Signif
Slide 33: LSEG Historical Financial Performance
LSEG Historical Financial Performance (£ in millions) Strong and Consistent Operating Performance Revenue(1) EBITDA(2) £2,500 £1,200 £1,066 £2,135 £1,955 £1,000 £2,000 £915 £1,657 £771 £800 £1,419 £1,500 £1,381 £644 £1,213 £574 £575 £600 £482 £471 £1,000 £815 £853 £391 £400 £343 £628 £675 £500 £200
Slide 34: Transaction Highlights
Transaction Highlights 1. Significant increase in Refinitiv’s value from TRI’s sale of a 55% interest in the business to Blackstone • Enterprise Value increased from ~$20 billion to $27 billion 2. TRI expected to receive approximately 82.5 million LSE Group shares – valued at $6.7 billion (or ~$13 p
Slide 35: Q&A
Q&A 35