Slide 1: Thomson Reuters 2016 Full-Year & Fourth-Quarter Results
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS 2016 FULL-YEAR & FOURTH-QUARTER RESULTS February 9, 2017
Slide 2: Agenda
Agenda Welcome / Introduction Frank Golden 2016 Highlights Jim Smith 2017 Priorities, Opportunities & Outlook Financial Review 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, including, but not limited to, the
Slide 4: 2016 Highlights
THOMSON REUTERS 2016 HIGHLIGHTS JIM SMITH PRESIDENT & CEO 4
Slide 5: 2016 – Consistent Progress & Improving Momentum
2016 – Consistent Progress & Improving Momentum Delivered Positive Total Revenue Growth (pre-currency) • Financial & Risk achieved positive revenue growth in Q3 & Q4 2016 • Legal subscription revenues increased / Transaction revenues were disappointing • Tax & Accounting revenues grew 4% / Governmen
Slide 6: Full-Year 2016 Results vs. 2016 Outlook
Full-Year 2016 Results vs. 2016 Outlook Achieved or exceeded guidance for each metric 2016 Outlook 2016 Results (Before impact of currency & Q4 charge) (Before impact of currency & Q4 charge) Revenues Low Single Digit 1% Adjusted EBITDA Margin 27.3% - 28.3% 27.6% Underlying Operating Profit Margin 1
Slide 7: Consolidated Q4 2016 Results
Consolidated Q4 2016 Results Results Excluding Results Before Currency & Reported Results Q4 Charge Excluding Q4 Charge Revenues down 1% vs. prior-year period Down 1% Up 1% Adjusted EBITDA down 21% Up 6% Up 5% Margin 22.2% vs. 27.8% in Q4 2015 Up 180 bps Up 100 bps Underlying operating profit down 3
Slide 8: Q4 2016 Revenue Results by Business
Q4 2016 Revenue Results by Business Financial & Risk Legal Tax & Accounting +1% 0% +2% Financial U.S. Online Legal Information Professional Risk Solutions Businesses Corporate U.S. Print Knowledge Solutions Government Note: Revenue growth rates are before the impact of currency 8
Slide 9: 2017 Priorities, Opportunities & Pressures, Outlook
2017 PRIORITIES OPPORTUNITIES & PRESSURES OUTLOOK 9
Slide 10: 2017 Priorities
2017 Priorities Accelerating Organic Revenue Growth is Top Priority • Forecasting steady top-line growth going forward • Focusing on the “Frontline” – Customer Experience & Sales Effectiveness • Investing behind Risk, Elektron Data Platform, Legal Software & Solutions & Global Tax Continue to Drive
Slide 11: 2017 - Mix of Opportunities & Pressures
2017 - Mix of Opportunities & Pressures Potential Opportunities • Higher interest rates may lead to higher bank/financial services industry profits • New and/or repealed legislation may increase demand for legal services • Changes to U.S. tax code may present additional demand for tax products • Mor
Slide 12: 2017 Outlook
2017 Outlook 2016(1) 2017 Outlook(2) (Excludes Q4 charge) (Before Currency) Revenue Growth $11.2 billion Low single digit Adjusted EBITDA Margin 28.4% 28.8% - 29.8% Free Cash Flow(3) $2.1 billion $0.9 - $1.2 billion Adjusted EPS $2.07 $2.35 (1) 2016 Results exclude the impact of $212 million charge
Slide 13: Financial Review
FINANCIAL REVIEW STEPHANE BELLO CHIEF FINANCIAL OFFICER 13
Slide 14: Consolidated Results
Consolidated Results (includes charges & currency) ($ millions) Fourth-Quarter Full-Year 2016 2015 Change 2016 2015 Change Revenues 2,860 2,887 -1% 11,166 11,257 -1% Adjusted EBITDA 635 802 -21% 2,954 3,089 -4% Adjusted EBITDA Margin 22.2% 27.8% -560 bp 26.5% 27.4% -90 bp Underlying Operating Profit
Slide 15: Consolidated Results: Fourth-Quarter
Consolidated Results Fourth-Quarter Excluding ($ millions except Adj. EPS) Fourth-Quarter Q4 Charges Change Change 2016 2015 Change Before 2016 Change Before Currency Currency Revenues 2,860 2,887 -1% +1% 2,860 -1% +1% Adjusted EBITDA 635 802 -21% -24% 847 +6% +5% Adjusted EBITDA Margin 22.2% 27.8%
Slide 16: Consolidated Results: Full-Year
Consolidated Results Full-Year Excluding ($ millions except Adj. EPS) Full-Year Q4 Charges Change Change 2016 2015 Change Before 2016 Change Before Currency Currency Revenues 11,166 11,257 -1% +1% 11,166 -1% +1% Adjusted EBITDA 2,954 3,089 -4% -6% 3,166 +2% +2% Adjusted EBITDA Margin 26.5% 27.4% -19
Slide 17: Legal
Legal Fourth-Quarter Excluding ($ millions) Fourth-Quarter Q4 Charges Change Change 2016 2015 Change Before 2016 Change Before Currency Currency Revenues 864 880 -2% 0% 864 -2% 0% EBITDA 296 327 -9% -9% 322 -2% +1% EBITDA Margin 34.3% 37.2% -320 bp 37.3% +20 bp Operating Profit 235 264 -11% -10% 261
Slide 18: Legal Revenue By Segment
Legal Revenue By Segment Solutions Businesses +1% U.S. Print -7% $384 million (44% of Revenue) $130 million (15% of Revenue) Subscription: +5% Transactional: -10% Fourth-Quarter Revenues $0.9 billion / 0% (excluding U.S. Print +2%) U.S. Online Legal Information +2% $350 million (41% of Revenue) 18
Slide 19: Legal Revenue Growth By Type
Legal Revenue Growth By Type Subscription Growth Remains Strong $1,600 Legal Solutions Revenues $1,400 -2% -1% +1% +2% +5% $1,200 +5% +6% +5% $1,000 2013 $800 2014 -6% 2015 $600 -7% -6% -7% 2016 +8% -6% $400 -4% +4% $200 $- U.S. Online Legal Info Solutions Subscription Solutions Transactions U.S. Pr
Slide 20: Tax & Accounting
Tax & Accounting Fourth-Quarter Excluding ($ millions) Fourth-Quarter Q4 Charges Change Change 2016 2015 Change Before 2016 Change Before Currency Currency Revenues 416 410 +1% +2% 416 +1% +2% EBITDA 131 161 -19% -20% 149 -7% -8% EBITDA Margin 31.5% 39.3% -830 bp 35.8% -380 bp Operating Profit 86 13
Slide 21: Tax & Accounting Revenue By Segment
Tax & Accounting Revenue By Segment Professional +13% Corporate +3% $158 million (38% of Revenue) $134 million (32% of Revenue) Fourth-Quarter Revenues $0.4 billion / +2% Knowledge Solutions -4% $119 million (29% of Revenue) Government -63% $5 million (1% of Revenue) 21
Slide 22: Financial & Risk
Financial & Risk Fourth-Quarter Excluding ($ millions) Fourth-Quarter Q4 Charges Change Change 2016 2015 Change Before 2016 Change Before Currency Currency Revenues 1,508 1,527 -1% +1% 1,508 -1% +1% EBITDA 289 450 -36% -40% 456 +1% 0% EBITDA Margin 19.2% 29.5% -1190 bp 30.2% -40 bp Operating Profit
Slide 23: Financial & Risk Revenue By Segment
Financial & Risk Revenue By Segment Desktop -4% (-2% excluding pricing adjustment) Elektron Data Platform & Risk +8% $0.6 billion (38% of Revenue) $0.6 billion (39% of Revenue) Fourth-Quarter Revenues $1.5 billion / +1% (excluding Recoveries +2%) Transactions +5% Recoveries -8% $0.2 billion (15% of
Slide 24: Financial & Risk Business Mix
Financial & Risk Business Mix Segment Customer Regional 17% 19% Asia 31% Elektron Data Platform +7% 38% & Risk -7% 56% Sell-side 63% 12% 39% 40% Americas 15% Transactions 11% 8% Recoveries 46% -7% +7% 44% Buy-side 44% -3% 39% Desktop 37% 41% EMEA 2012 2016 2012 2016 2012 2016 24 Note: Charts show me
Slide 25: Consolidated Revenue Growth by Type
Consolidated Revenue Growth by Type 3% 3% 2% 2% 1% 2015 2016 -2% -5% -6% -7% -13% Subscriptions Transactions Recoveries U.S. Print Total 78% 14% 4% 4% % of Total Revenues Note: Revenue growth rates are before the impact of currency 25
Slide 26: Adjusted Earnings Per Share, Free Cash Flow, Balance Sheet Update
ADJUSTED EARNINGS PER SHARE FREE CASH FLOW BALANCE SHEET UPDATE 26
Slide 27: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts) Fourth-Quarter Full-Year 2016 Change % Change 2016 Change % Change Underlying Operating Profit $368 ($192) $1,930 ($125) Interest Expense ($99) $3 ($403) $13 Income Tax(1) ($26) $0 ($135) $48 Other (2) ($15) ($6) ($53) $5 Adjust
Slide 28: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) Full-Year 2016 2015 Change % Change Free Cash Flow (excluding IP & Science) $1,976 $1,556 $420 27% Free Cash Flow - IP & Science $46 $245 ($199) -81% Free Cash Flow $2,022 $1,801 $221 12% 28
Slide 29: Returning Capital To Shareholders
Returning Capital To Shareholders $2.7B $2.4B $2.1B $1.5B $1.4B $1.7B $1.0B $0.4B $1.1B $1.1B $1.0B $1.0B 2013 2014 2015 2016 Dividends Share Buyback Shares Repurchased (millions) 10.9 28.3 35.9 41.9 Net Debt To Adj. EBITDA 2.1x 2.2x 2.3x 1.8x 29
Slide 30: Consecutive Years of Dividend Increases
24 Consecutive Years of Dividend Increases 2017 annualized dividend increase of $0.02 per share to $1.38 1.38 1.36 1.34 1.32 1.30 1.28 1.24 U.S. $ per share 1.16 1.12 1.08 0.98 0.88 0.79 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 30
Slide 31: 2016 Debt Profile
2016 Debt Profile • Debt Outstanding = $7.8 billion • Net Debt / EBITDA <2.5x • Average maturity of term debt ~8 years • Average interest rate <5% $1,200 $1,000 $800 $600 $400 $200 $0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2035 2040 2043 31
Slide 32: 2017 Outlook
2017 Outlook 32
Slide 33: Adjusted EBITDA Margin Progression
Adjusted EBITDA Margin Progression 28.8% - 29.8% 28.4% 27.4% 26.9% 1.9% 25.9% 1.2% 2.1% 27.4% 26.5% 25.7% 23.8% 2013 2014 2015 2016 2017 Outlook Reported Adjusted EBITDA Margin Excluding Charges Note: Margins presented exclude IP & Science 33
Slide 34: 2017 Outlook
2017 Outlook 2016 2017 Outlook(1) Excluding Q4 charge Before Currency Revenue Growth $11.2 billion Low single digit Adjusted EBITDA Margin 28.4% 28.8% - 29.8% Free Cash Flow(2) $2.1 billion $0.9 - $1.2 billion Adjusted EPS $2.07 $2.35 Depreciation & Amortization $1.0 billion $950 million - $1,050 mi
Slide 35: 2017 Priorities
2017 Priorities Accelerating Organic Revenue Growth is Top Priority Continue to Drive Productivity Gains Deliver on Our Commitments 35
Slide 36: Q&A
Q&A 36