Thomson Reuters Corporation · TSX:TRI
Thomson Reuters — Q1 2018 Earnings Presentation
29 slides from Thomson Reuters's earnings presentation, May 11, 2018
Slide 1: Thomson Reuters 2018 First-Quarter Results
REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS 2018 FIRST-QUARTER RESULTS May 11, 2018
Slide 2: Agenda
Agenda Welcome / Introduction Frank Golden First Quarter 2018 Highlights Jim Smith F&R Strategic Partnership with Blackstone 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 are forward-looking, including, but
Slide 4: First-Quarter 2018 Highlights
THOMSON REUTERS FIRST-QUARTER 2018 HIGHLIGHTS JIM SMITH PRESIDENT & CEO 4
Slide 5: Q1 2018 – Consolidated Results
Q1 2018 – Consolidated Results (Excludes Financial & Risk which is now classified as a discontinued operation) Change at Constant Reported Currency Revenues vs prior-year period Up 4% Up 3% Adjusted EBITDA Up 4% Up 3% Q1 2018 Margin: 31.2% Unchanged Unchanged Adjusted EPS Up 12% Up 12% Q1 2018: $0.2
Slide 6: F&R Strategic Partnership Update
F&R STRATEGIC PARTNERSHIP UPDATE JIM SMITH PRESIDENT & CEO 6
Slide 7: A Transformational Partnership
A Transformational Partnership • Blackstone will be a strategic partner that is well positioned to accelerate Financial & Risk’s progress • Repositions our financial services business for growth in a consolidating industry - A platform to build upon • Blackstone is uniquely positioned to: - Identify
Slide 8: Update on Financial & Risk’s Strategic Partnership
Update on Financial & Risk’s Strategic Partnership Regulatory Approval Progress • Antitrust/Competition process is moving forward around the world - received HSR early termination • Financial regulatory process is also moving forward in the UK, US and in other countries Operational Progress • Employ
Slide 9: 2018 F&R Transaction Timeline
2018 F&R Transaction Timeline Employees I0myMI • Transaction Closes Transaction Notified of • Tender Offer / Substantial Issuer Bid Announced Major Allocation • Debt Redemptions Second Half • Investor Day Milestones Jan Feb Mar Apr May Jun Second Half • Regulatory filings required to close the trans
Slide 10: Expected Use of Proceeds from Sale of 55% of F&R
Expected Use of Proceeds from Sale of 55% of F&R $17 billion of cash proceeds allocated to future growth investments, maintaining a strong capital structure and returning capital to shareholders Debt Pay Down ~$3-4B Investment Return of Capital Fund: ~$1-3B to Shareholders ~$9-10B Taxes, Fees & Expe
Slide 11: Thomson Reuters - Transitioning to Position for Growth
Thomson Reuters - Transitioning to Position for Growth Separate Reposition Grow Separate F&R & TR Build a Customer-Centric Digital-First Company to for Day 1 Operating Model Drive Growth • 47,000 employees/86 countries • Integrated operating model • Cohesive go-to-market approach - • 27,000 TR /20,0
Slide 12: Financial Review
FINANCIAL REVIEW STEPHANE BELLO CHIEF FINANCIAL OFFICER 12
Slide 13: Consolidated Results
Consolidated Results (Excludes Financial & Risk which is now classified as a discontinued operation) ($ millions) First-Quarter Change Before 2018 2017 Change Currency Revenues 1,379 1,331 +4% +3% Adjusted EBITDA 430 415 +4% +3% Adjusted EBITDA Margin 31.2% 31.2% 0 bp 0 bp 13 Sensitivity: Confidenti
Slide 14: Q1 2018 Results
Q1 2018 Results DISCONTINUED OPERATION Thomson Reuters F&R (excluding F&R) Reported Revenue Growth: +4% +7% Revenue Growth at Constant Currency: +3% +3% Recoveries Print -5% / $0.1B -2% / $0.2B Recurring Recurring (Ex. Recoveries) +4% / $1.0B +1% / $1.2B Transactions Transactions -1% / $0.2B +14% /
Slide 15: Legal
Legal ($ millions) First-Quarter Change 2018 2017 Change Before Currency Revenues 872 841 +4% +2% Recurring 637 604 +5% +4% Transactions 76 77 -1% -1% Print 159 160 -1% -2% Adjusted EBITDA 319 314 +2% +1% Adjusted EBITDA Margin 36.6% 37.3% -70 bp -50 bp All figures include Risk products being retain
Slide 16: Legal Revenue By Segment
Legal Revenue By Segment Global Solutions +4% Global Print -2% (-4% Organic) $350 million (40% of Revenue) $159 million (18% of Revenue) Recurring: +6% (82% of revenue) Transactions: -2% (18% of revenue) First-Quarter Revenues $0.9 billion / +2% (excluding Global Print +3%) U.S. Online Legal Informa
Slide 17: Tax & Accounting
Tax & Accounting ($ millions) First-Quarter Change 2018 2017 Change Before Currency Revenues 437 417 +5% +5% Recurring 310 288 +8% +8% Transactions 114 115 -1% -1% Print 13 14 -7% -7% Adjusted EBITDA 147 141 +4% +5% Adjusted EBITDA Margin 33.6% 33.8% -20 bp +10 bp 17 Sensitivity: Confidential
Slide 18: Tax & Accounting Revenue By Segment
Tax & Accounting Revenue By Segment Professional +6% Corporate +6% $160 million (37% of Revenue) $173 million (40% of Revenue) First-Quarter Revenues $0.4 billion / +5% Knowledge Solutions +1% Government -1% $93 million (21% of Revenue) $11 million (2% of Revenue) 18 Sensitivity: Confidential
Slide 19: Reuters News
Reuters News (Does not include Financial & Risk payment of $325m annually) ($ millions) First-Quarter Change 2018 2017 Change Before Currency Revenues 72 74 -3% -7% Adjusted EBITDA 8 13 -38% -38% Adjusted EBITDA Margin 11.1% 17.6% -650 bp -590 bp 19 Sensitivity: Confidential
Slide 20: Financial & Risk (Discontinued Operation)
Financial & Risk (Discontinued Operation) ($ millions) First-Quarter Change Before 2018 2017 Change Currency Revenues 1,583 1,485 +7% +3% Recurring ex. Recoveries 1,212 1,150 +5% +1% Transactions 252 215 +17% +14% Recoveries 119 120 -1% -5% Adjusted EBITDA 526 461 +14% +9% Adjusted EBITDA Margin 33.
Slide 21: Adjusted Earnings Per Share / Free Cash Flow
ADJUSTED EARNINGS PER SHARE FREE CASH FLOW 21
Slide 22: Adjusted Earnings Per Share (EPS)
Adjusted Earnings Per Share (EPS) ($millions except per share amounts and share count) First-Quarter 2018 Change % Change Adjusted EBITDA $430 $15 Depreciation & Computer Software Amortization ($128) ($4) Interest Expense ($78) $14 Income Tax ($26) ($8) Dividend declared on preference shares ($1) $0
Slide 23: Consolidated Free Cash Flow
Consolidated Free Cash Flow ($ millions) First-Quarter 2018 2017 Change Comparable Free Cash Flow (Continuing Operations) $30 $32 ($2) Other Items (Q4-16 Charges paid and 2017 $500m pension contribution) $1 $532 ($531) Free Cash Flow (Continuing Operations) $29 ($500) $529 Free Cash Flow – IP & Scie
Slide 24: 2018 Outlook
2018 OUTLOOK 24
Slide 25: Anticipated Phasing of Corporate Costs
Anticipated Phasing of Corporate Costs ~$500M - $600M ~$500M - $550M ~$190M 2018 2019 2020 25 Sensitivity: Confidential
Slide 26: Anticipated Corporate Costs By Quarter
Anticipated Corporate Costs By Quarter 2018 Full Year: ~$500M-$600M ~$140M - $240M ~$175M ~$140M $44M Q1-18 Q2-18 Q3-18 Q4-18 26 Sensitivity: Confidential
Slide 27: 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 $1.2 - $1.3 billion Corporate Costs $244 million $500 million - $600 million Depreciation & Amortization of computer software $496 m
Slide 28: Conclusion
Conclusion • Encouraging start to the year • Each business off to a good start • Focused on closing the F&R transaction in second-half & quickly re-positioning “New TR” • Working to expand our positions & accelerating growth in Legal, Tax & Accounting & Regulatory • Well capitalized with significant
Slide 29: Q&A
Q&A 29