REUTERS / Vasily Fedosenko REUTERS / Mike Blake THOMSON REUTERS FALL 2017
Safe Harbor / Forward-Looking Statements Special Note 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 company s 2017 outlook, are forward-looking. Forward-looking statements are those which are not historical facts and also include the company s current expectations regarding revenue growth, adjusted earnings per share (EPS) growth, the impact of transformation initiatives, the effective tax rate, full-year interest expense, return on invested capital, anticipated investments to improve customer experience and in higher growth businesses (and the impacts of such investments), and Legal s U.S. online legal information growth and revenue performance. Our actual results in future periods may differ materially from those currently expected because of a number of risks, uncertainties and assumptions. The risks, uncertainties and assumptions that we believe are material are outlined in our disclosure filings and materials, which you can find on www.thomsonreuters.com. Please consult these documents for a more complete understanding of these risks, uncertainties and assumptions. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Our outlook is provided for the purpose of providing information about current expectations for 2017. This information may not be appropriate for other purposes. Non-IFRS Financial Measures This presentation contains disclosures of certain non-ifrs financial measures. These measures include adjusted EBITDA and the related margin, free cash flow, adjusted EPS, return on invested capital and selected measures before the impact of currency. Please see our earnings release dated November 1, 2017, which is available on www.thomsonreuters.com, for a reconciliation of each of these measures to the most directly comparable IFRS financial measure. You can also find IFRS reconciliations in the Investor Relations section of our website. 2
Progress Against Operating & Capital Strategy Announced Q3 2013 Pivoting from Portfolio to Enterprise Approach OBJECTIVE Innovation-led organic revenue growth Planning less reliance on acquisitions Product & Platform simplification Prioritize investments towards product/platform simplification vs. new products or features PROGRESS + 300 bps improvement in organic revenue growth (2) from 2013 to 2016 110 legacy applications retired and F&R number of products reduced by 70% Workforce reduced by ~20% between 2012 and 2016 Accelerating Transformation of Financial & Risk Continued improvement in Net Sales performance Resetting the cost base Significant improvement in profitability Net Sales positive in 13 out of the last 14 quarters Adjusted EBITDA Margin (3) up ~500 bps since 2012 to ~30% Driving Attractive Returns while maintaining a Strong Capital Structure Gradually improve Revenue Growth performance Expect strong annual Cash OI (1) and FCF per share growth Attractive returns to shareholders through share buybacks and modest dividend increases Maintain a strong balance sheet and credit profile ROIC expected to exceed WACC by 2017 Record FCF per share of $2.70 in 2016 ~$10 Billion in Cash returned to shareholders between 2012 and 2016 3 (1) Cash OI = EBITDA Capex (2) Excluding the impact of recoveries revenues transitioning to direct-billing (3) Excluding charges
Returning Value to Shareholders FCF per share - $2.70 FCF Yield 6.0% Dividend Yield 3.1% 5 th buyback program announced February 2017 additional $1 billion 2.7 (U.S.$ billions) 2.4 2.1 1.5 1.7 1.4 1.0 1.2 0.4 0.2 1.0 1.1 1.1 1.0 1.0 Cash Returned ~$10 Billion (2012 to 2016) ~$ 5.2 Billion Dividends ~$ 4.8 Billion Share Repurchases 2012 2013 2014 2015 2016 Dividends (net of dividend reinvestment) Share Repurchases 4
Highly Free Cash Flow Generative Growing free cash flow has enabled investment through cycles & steady dividend increases (U.S.$ billions) 1.1 1.8 1.6 1.6 1.6 1.7 1.7* 1.4 1.8 2.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Reported Free Cash Flow Thomson Learning FCF (business sold in 2007) $306MM of Cash Charges 5 *Excludes fourth quarter pension contribution and severance charges
Return on Invested Capital Trend is Positive 7.4% 0.7% 7.5% - 8.0% 5.3% 5.8% 6.7% 6.7% 7.4% 2013 2014 2015 2016 2017 Estimate WACC Reported ROIC Excluding Charges 6
CAPITAL ALLOCATION 7
Capital Strategy Principles Thomson Reuters approaches capital management and balance sheet strength in a consistent and disciplined manner Capital Strategy is as critical as the business strategy Key element in supporting and growing our businesses Disciplined approach is consistent with how we drive and operate the business Maintain a Strong / Stable Capital Structure with Ample Liquidity Target Solid Investment Grade Credit Rating Balance Investing in Business and Returning Capital to Shareholders Maintain Financial Flexibility Relentless Focus on FCF per Share 8
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 9
24 Consecutive Years of Dividend Increases 2017 annualized dividend increase of $0.02 per share to $1.38 U.S. $ per share 1.24 1.28 1.30 1.32 1.34 1.36 1.38 1.08 1.12 1.16 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 10
BUSINESS OVERVIEW 11
Key Investment Highlights Industry Leader Balanced & Diversified Attractive Business Model #1 or #2 in most of the markets we serve Deep and broad industry knowledge Products and services tailored for professionals Balanced revenue stream - $11.2 billion total 54% F&R, 30% Legal, 13% TRTA and 3% Reuters News 62% Americas, 27% EMEA, 11% Asia No single customer greater than ~2% of revenues 86% of total revenues are recurring 93% of total revenues are delivered electronically or as software and services Strong & consistent cash generation capabilities Strong Competitive Positioning Disciplined Financial Policies Proprietary databases and deeply embedded workflow tools and analytics Technology and operating platforms are built to address the global marketplace Strong brand: ranked #66 Best Global Brands (1) Focus on Free Cash Flow growth Maintain strong and stable capital structure Balance investing in business and returning capital to shareholders Committed to maintaining solid investment grade credit rating 12 (1) Interbrand 2016 Best Global Brands ranking
2016 Results by Segment $11.2 billion revenues +1% 28.4% Adjusted EBITDA margin +100 bp 19.2% underlying operating profit margin +90 bp Financial & Risk Legal Tax & Accounting $6.1 billion 2016 revenues 29.7% EBITDA margin 20.0% Op. profit margin 0% +1% +4% $3.4 billion 2016 revenues 37.4% EBITDA margin 30.0% Op. profit margin $1.5 billion 2016 revenues 29.8% EBITDA margin 20.7% Op. profit margin Financial Risk U.S. Online Legal Information Solutions Businesses U.S. Print Professional Corporate Knowledge Solutions Government Revenue growth rates are before the impact of currency Adjusted EBITDA and Underlying Operating Profit exclude the impact of $212m charges taken in the fourth quarter of 2016 Prior year comparatives exclude IP & Science which was sold in October 2016 Segments do not add to total due to Corporate & Other (including Media) and eliminations 13
2016 Results by Segment Revenues: $11.2B Underlying Operating Profit: $2.1B 54% 30% 48% 40% 3% 13% 12% Financial & Risk Legal Tax & Accounting Corporate & Other (includes Media) 86% Recurring Revenues / 93% Electronic, Software & Services 14 Underlying Operating Profit excludes the impact of $212m charges taken in the fourth quarter of 2016
2016 Revenues by Region Consolidated $11.2B Financial & Risk $6.1B Legal $3.4B 62% 31% 12% 27% 43% 42% 41% 41% 16% 17% 10% 86% 3% 87% 11% 3% Americas EMEA Asia Americas EMEA Asia 11% Tax & Accounting $1.5B Americas Europe, Middle East & Africa Asia 3% 95% 2% 2% 3% 95% Americas EMEA Asia 15 Segments do not add to total due to Corporate & Other (including Media) and eliminations.
Consolidated Revenue Growth by Type 2% 3% 3% 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 16
Financial & Risk 2016 Results By Segment Desktop -3% (-1% excluding pricing adjustment) $2.4 billion (39% of Revenue) Elektron Data Platform & Risk +6% $2.3 billion (38% of Revenue) Full-Year Revenues $6.1 billion / 0% (excluding Recoveries +1%) EBITDA Margin* 29.7% Transactions +2% $0.9 billion (15% of Revenue) Recoveries -13% $0.5 billion (8% of Revenue) 17 * Excludes fourth quarter 2016 charges
Financial & Risk Business Mix Segment Customer Regional 31% +7% 38% Elektron Data Platform & Risk 17% 19% Asia 12% 11% 15% Transactions 63% -7% 56% Sell-side 39% 40% Americas 8% Recoveries 46% -7% 39% Desktop 37% +7% 44% Buy-side 44% -3% 41% EMEA 2012 2016 2012 2016 2012 2016 18 Note: Charts show metrics as a percentage of Financial & Risk s revenues in each period
Financial Products, Customers & Competition Segment Major Brands Type of Product/Service Target Customers Desktop Thomson Reuters EIKON Thomson ONE Flagship desktop platform providing pre-trade decision-making tools, news, real-time pricing, research and analysis, charting, analytics, portfolio tools, trading connectivity and collaboration tools Integrated access to information, analytics and tools designed specifically for each customer s workflow Trading & investment professionals, brokers & financial analysts, Investment banks, asset managers Wealth management firms, corporate customers, inc. strategy, research, and finance professionals ELEKTRON Data Platform ELEKTRON Data Platform Global, proprietary, flexible, high speed, cross asset data feeds and trading infrastructure. Scalable and robust technology platforms that enable financial institutions to control real-time information flows Investment Banks, asset managers, custodians, hedge funds, MTFs prop. traders, inter-dealer brokers and Financial Institutions Tradeweb Global electronic multi-dealer-to-customer marketplace for trading fixed income, derivatives and money market products Institutional traders Transactions Thomson Reuters BETA A complete suite of integrated, intelligent solutions to manage retail brokerage operations Wealth management firms FX Trading Solutions Foreign Exchange (FX) Trading (Premium pre-trade, execution and post-trade desktop), Electronic Trading (e-commerce solution for automated FX price distr.) and FXall ( Dealer-to-client multibank trading and workflow solutions) FX and money market traders, sales desks, hedge funds and alternative market makers, asset managers, banks, broker/dealers and prime brokers Financial Business Competition Bloomberg FIS Dow Jones IT Vendors FactSet ICE Data Services NEX Group EBS platform Single/Multi-dealer portals S&P (Capital IQ) Telekurs MarketAxess Other specialist providers 19
Risk Products, Customers & Competition Segment Major Brands Type of Product/Service Target Customers Customer and Third Party Risk Regulatory Intelligence and Regulatory Change Management Information, software products and services: Thomson Reuters Org ID (KYC compliance), World-check data, screening software and due diligence reports Information and software products providing global coverage of over 750 regulatory bodies and over 2500 rulebooks with exclusive news and analysis from our global team of regulatory experts Corporate compliance, risk professionals, money laundering reporting officers and business leaders Corporate compliance, risk professionals, general counsels, business leaders, boards of directors and law firms Risk Compliance Learning Training programs which assist in changing behavior and supporting a culture of integrity and compliance Corporate compliance, risk management professionals, general counsels, law firms Internal Audit and Controls Audit and controls testing, including risk assessment, global issue tracking and administration Audit management professionals, business leaders and boards of directors Enterprise Risk Management Risk management solution that helps identify, document and assess strategic and operational risks Risk management professionals, business leaders, boards of directors and law firms Pricing and Reference Services Data delivery platform for non-streaming cross-asset class content globally Custodians, banks, insurance companies, fund administrators, pension funds, hedge funds, and market makers Risk Business Competition Regulatory Intelligence: Regulatory Change Management: Customer and 3 rd Party Risk: Pricing & Reference: Wolters Kluwer Wolters Kluwer Dow Jones ICE Data Services LexisNexis IBM Watson Analytics LexisNexis Bloomberg Bloomberg Nasdaq Bwise Asset pricing and reference data providers MetricStream 20
Legal 2016 Results By Segment Solutions Businesses +2% $1.5 billion (45% of Revenue) U.S. Print -7% $0.5 billion (14% of Revenue) Subscription: +5% (78% of Revenue) Transactional: -6% (22% of Revenue) Full-Year Revenues $3.4 billion / +1% (excluding U.S. Print +2%) EBITDA Margin* 37.4% U.S. Online Legal Information +2% $1.4 billion (41% of Revenue) 21 * Excludes fourth quarter 2016 charges
Legal Revenue Growth By Type $1,600 $1,400-2% -1% +1% +2% Legal Solutions Revenues $1,200 +5% +6% +5% +5% $1,000 2013 $800 2014 $600-6% -7% -6% -7% 2015 2016 $400-4% +4% +8% -6% $200 $- U.S. Online Legal Info Solutions Subscription Solutions Transactions U.S. Print % of 2016 Revenues 41% 35% 10% 14% 22
Legal Products, Customers & Competition Segment Major Brands Type of Product/Service Target Customers Findlaw Online Legal directory, website creation and hosting services; law firm marketing; peer rating Law firm professionals, marketers and consumers Solutions Elite/Legal Tracker CLEAR Suite of integrated software applications that assist with business management, including financial and practice management Public and proprietary records about individuals and companies with tools for immediately usable results Law firms and legal, finance and technology professionals Fraud prevention and investigative professionals Legal Managed Services Outsourced legal services (formerly known as Pangea 3) Corporate legal and law firm professionals U.S. Online Legal Information Westlaw Legal, regulatory and compliance information-based product and services; The primary online legal research delivery platform in the U.S., with authoritative content, powerful search functionality and research organization Law firm, corporate and trademark professionals, law students, law librarians, agencies and governments U.S. Print U.S. Print Legal publications Lawyers, law firm leadership, general counsels Legal Business Competition RELX Group (LexisNexis) Wolters Kluwer Bloomberg BNA Practice and matter management software companies Client development providers Other service providers who support legal professionals 23
Tax & Accounting 2016 Results By Segment Professional +8% $469 million (32% of Revenue) Corporate +7% $534 million (37% of Revenue) Full-Year Revenues $1.5 billion / +4% EBITDA Margin* 29.8% Knowledge Solutions 2% $418 million (29% of Revenue) Government -36% $31 million (2% of Revenue) 24 * Excludes fourth quarter 2016 charges
Tax & Accounting Products, Customers & Competition Segment Major Brands Type of Product/Service Target Customers Corporate ONESOURCE Comprehensive global tax compliance solution with local, country-specific, focus to manage a company s entire tax lifecycle Tax departments of multinational and domestic corporations, accounting firms, financial institutions and tax authorities Professional CS Professional Suite / Onvio A scalable, integrated suite of desktop software applications that cater to the key aspects of a professional accounting firm s operations Accounting firms Knowledge Solutions Checkpoint Integrated information solution delivering research, expert guidance, applications and workflow tools Accounting firms, corporate tax, finance and accounting departments, trade professionals, law firms and governments Government Aumentum Integrated software solution for governments to manage the entire property lifecycle in order to simplify property tax functions and improve services to taxpayers Government offices (treasurers, tax collectors, auditors, clerks, assessors, land managers) Tax & Accounting Business Competition Corporate Software and Services: Professional Software and Services: Knowledge Solutions: Wolters Kluwer (CCH Integrator) Wolters Kluwer (CCH Axccess, ifirm) Bloomberg BNA (tax research) CSC (CORPTAX) Intuit Other providers of software and services ERP vendors 25
2017 PRIORITIES & OUTLOOK 26
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 Productivity Gains Opportunity to achieve additional and substantial savings Financial & Risk reduced number of products by ~70% since 2012 Closed 62 offices in 2016 to ~230 from ~520 in 2012 Workforce reduced ~25% since 2012 (~20% ex. IP&S) Deliver on Our Commitments 27 Deliver Adjusted EPS target of $2.35 5th buyback program announced Additional $1 billion 24 th consecutive annual dividend increase ($0.02 per share to $1.38) Targeting record Adjusted EPS & Adjusted EBITDA margin Targeting Return on Invested Capital above cost of capital first time since 2007
Adjusted EBITDA Margin Progression 29.3% - 30.3% 25.9% 26.9% 1.2% 27.4% 28.4% 1.9% 2.1% 23.8% 25.7% 27.4% 26.5% 2013 2014 2015 2016 2017 Outlook Note: Margins presented exclude IP & Science Reported Adjusted EBITDA Margin Excluding Charges 28
2017 Outlook Raised 2016 (1) Excluding Q4 charge FY 2017 Outlook (2) February 2017 At Constant Currency FY 2017 Revised Outlook (2) August 2017 At Constant Currency Revenue Growth $11.2 billion Low single digit No change to original Adjusted EBITDA Margin 28.4% 28.8% - 29.8% 29.3% - 30.3% Free Cash Flow $2.1 billion $900 million - $1.2 billion No change to original Adjusted EPS $2.07 $2.35 $2.40 - $2.45 (November update top end of range) Depreciation & Amortization $1.0 billion $950 million - $1.05 billion $1.0 billion - $1.05 billion Capital Expenditures % of Revenue 8.1% ~8.5% ~9.0% Interest Expense (P&L) $403 million $400 million - $425 million No change to original Effective Tax Rate on Adjusted Earnings 7.8% 10% - 13% No change to original 29 (1) 2016 Results exclude the impact of $212 million of severance charges from adjusted EBITDA and adjusted EPS. (2) 2017 outlook assumes constant currency rates compared to 2016 and does not factor in the impact of acquisitions or dispositions that may occur during the year.