Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Q3 2019 Earnings Presentation
29 slides from Thomson Reuters's earnings presentation, Oct 31, 2019
Slide 1: Thomson Reuters 2019 Third-Quarter Results
REUTERS / Vasily Fedosenko REUTERS REUTERS / Mike / Marcos Blake Brindicci Leonhard Foeger THOMSON REUTERS 2019 THIRD-QUARTER RESULTS October 31, 2019
Slide 2: Agenda
Agenda Welcome / Introduction Frank Golden Third-Quarter 2019 Results Jim Smith Thomson Reuters Evolution Financial Review 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: Third-Quarter 2019 Highlights
THOMSON REUTERS THIRD-QUARTER 2019 HIGHLIGHTS JIM SMITH PRESIDENT & CEO 4
Slide 5: Third-Quarter 2019 Consolidated Results
Third-Quarter 2019 Consolidated Results Change at Reported Organic Constant Results Growth Currency Revenues vs prior-year period Up 10% Up 10% Up 4% Adjusted EBITDA Up 10% Up 9% Q3 2019 Margin: 24.4% unchanged Down 30 bps Adjusted EPS Up 125% Up 108% Q3 2019: $0.27 Up $0.15 Up $0.13 5 Sensitivity:
Slide 6: Third-Quarter 2019 Revenue Growth by Segment
Third-Quarter 2019 Revenue Growth by Segment Reported Revenues up 10% to $1.4 billion Organic revenues up 4% Organic 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.
Slide 7: The New Thomson Reuters: A Return to our Value Creation Model
The New Thomson Reuters A Return to our Value Creation Model Revenue Growth FCF Growth Prioritize capital to highest growth FCF = Lifeblood of future success/growth opportunities Strong Capital Structure Balance re-investment / returns Conservative in light of recurring/stable 50-60% dividend payout
Slide 8: The New Thomson Reuters: A Return to our Value Creation Model
The New Thomson Reuters A Return to our Value Creation Model Revenue Growth FCF Growth Prioritize capital to highest growth FCF = Lifeblood of future success/growth opportunities Organic: 3%-5% 4%-7% 6%-10% Acquisitions: 1%-2% revenue growth FCF growth Strong Capital Structure Balance re-investment
Slide 9: The New Thomson Reuters: A Return to our Value Creation Model
The New Thomson Reuters A Return to our Value Creation Model Revenue Growth FCF Growth Prioritize capital to highest growth FCF = Lifeblood of future success/growth opportunities Organic: 3%-5% 4%-7% 6%-10% Acquisitions: 1%-2% revenue growth FCF growth ~2.5x ~ 50% - 60% Net Debt to Dividend Payout A
Slide 10: Reaffirming 2019 & 2020 Outlook
Reaffirming 2019 & 2020 Outlook Before currency and excluding the impact of future acquisitions and dispositions 2019 Outlook 2020 Outlook Before Currency Before Currency 7% - 8.5% 4.0% - 4.5% Revenue Growth 3.5% - 4.0% Organic Organic Adjusted EBITDA $1.45 - $1.5 billion(1) ~31.0%(1) Corporate Cost
Slide 11: Financial Review
FINANCIAL REVIEW STEPHANE BELLO CHIEF FINANCIAL OFFICER 11
Slide 12: Consolidated Results
Consolidated Results (Excludes Refinitiv) ($ millions) Third-Quarter Nine-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 1,413 1,284 +10% +10% 4,323 3,974 +9% +10% Recurring 1,118 976 +15% +15% 3,368 2,965 +14% +15% Transactions 128 137 -7% -8% 460 48
Slide 13: Legal Professionals
Legal Professionals ($ millions) Third-Quarter Nine-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 605 595 +2% +2% 1,802 1,773 +2% +3% Recurring 560 541 +4% +4% 1,665 1,613 +3% +4% Transactions 45 54 -18% -18% 137 160 -14% -13% Adjusted EBITDA 227 206
Slide 14: Legal Professionals Revenues
Legal Professionals Revenues Global +0% Law Firms +2% (16% of Revenue) (69% of Revenue) Government +5% (15% of Revenue) Third-Quarter Revenues $0.6 billion +2% constant currency +3% organic Above chart reflected at constant currency rates 14 Sensitivity: Confidential
Slide 15: Corporates
Corporates ($ millions) Third-Quarter Nine-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 320 298 7% +8% 990 923 +7% +8% Recurring 275 247 +11% +12% 813 734 +11% +12% Transactions 45 51 -11% -11% 177 189 -6% -5% Adjusted EBITDA 110 105 +4% +6% 330 311
Slide 16: Corporates Revenues
Corporates Revenues Medium Corporates +5% Large Corporates +8% (17% of Revenue) (75% of Revenue) Global +13% (8% of Revenue) Third-Quarter Revenues $0.3 billion +8% constant currency +6% organic Above chart reflected at constant currency rates 16 Sensitivity: Confidential
Slide 17: Tax & Accounting Professionals
Tax & Accounting Professionals ($ millions) Third-Quarter Nine-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 166 149 +11% +10% 570 542 +5% +7% Recurring 140 129 +9% +8% 460 434 +6% +8% Transactions 26 20 +26% +22% 110 108 +2% +3% Adjusted EBITDA 35 3
Slide 18: Tax & Accounting Professionals Revenues
Tax & Accounting Professionals Revenues Global* +23% Small-Mid-Large Accounting Firms +7% (15% of Revenue) (78% of Revenue) Government +8% (7% of Revenue) Third-Quarter Revenues $0.2 billion +10% constant currency +8% organic Above chart reflected at constant currency rates 18 *Global includes Latin
Slide 19: Reuters News
Reuters News ($ millions) Third-Quarter Nine-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 155 71 +120% +121% 466 215 +117% +120% Adjusted EBITDA 5 5 -14% -97% 31 21 +45% +10% Adjusted EBITDA Margin 3.2% 8.2% -500 bp -670 bp 6.7% 10.0% -330 bp -480 b
Slide 20: Global Print
Global Print ($ millions) Third-Quarter Nine-Months Change Change 2019 2018 Change Before 2019 2018 Change Before Currency Currency Revenues 168 171 -2% -2% 497 522 -5% -3% Adjusted EBITDA 71 76 -5% -4% 218 233 -6% -5% Adjusted EBITDA Margin 42.5% 44.2% -170 bp -110 bp 43.8% 44.6% -80 bp -110 bp 20
Slide 21: Adjusted Earnings Per Share, Free Cash Flow, Corporate Costs
ADJUSTED EARNINGS PER SHARE FREE CASH FLOW CORPORATE COSTS 21
Slide 22: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($ millions except per share amounts & share count) Third-Quarter Nine-Months % % 2019 Change 2019 Change Change Change Adjusted EBITDA $345 $32 $1,097 $6 Depreciation & Amortization ($155) ($35) ($436) ($59) Interest Expense ($40) $42 ($112) $129 Income Tax ($16) $
Slide 23: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) Third-Quarter Nine-Months 2019 2018 Change 2019 2018 Change Comparable Free Cash Flow (Continuing Operations) $332 $191 $141 $650 $488 $162 Other Items (Q1-19 pension contribution & F&R separation costs) $170 $34 ($136) $542 $36 ($506) Free Cash Flow (Continu
Slide 24: Corporate Costs
Corporate Costs ~$570M 2019 Full Year Estimate(2): ~$570 Million $499M $405M ~$330M $272M $238M* $87M ~$100M ~$140M - $150M $75M $140M ~$140M ~$165M $92M 2018 (1) 2019E (2) 2020E Nine-Months Q4E One-Time Costs Stranded Costs Core Corporate Costs (1) Includes $33 million of Capital Expenditures *Incl
Slide 25: 2020 - Returning to Our Value Creation Model
2020 - Returning to Our Value Creation Model 25
Slide 26: Substantial Return of Capital & Strong Capital Structure
Substantial Return of Capital & Strong Capital Structure 2012 - 2019 2020 & After Well positioned to continue providing attractive returns to ~$24 billion of Capital Returned to Shareholders since 2012 shareholders while maintaining strong capital structure 23.8 22.6 ~ 50% - 60% Dividend Payout Rati
Slide 27: Free Cash Flow Growth from Business Growth & Lower Capex
Free Cash Flow Growth Resulting from Growth in the Business & Lower Capex Attributable to Our Platform Strategy & Portfolio Simplification Targeting to Reduce Capex as Percentage of Revenue to 7.5% - 8% in 2020 Capital Expenditures as Percent of Revenue 1• Platform Consolidation Putting multiple pro
Slide 28: Targeting Higher Revenue Growth and Record FCF per Share in 2020
Targeting Higher Revenue Growth and Record FCF per Share in 2020 Returning to a Virtuous Value Creation Model Optimizing Capital Deployment 2020 Est. Organic Revenue Growth Improving Retention 4.0% - 4.5% Accelerating Revenue Growth 2020 Est. Free Cash Flow per Share Generates Operating Leverage & I
Slide 29: Q&A
Q&A 29