Mr. Steve Hasker reports

THOMSON REUTERS REPORTS FOURTH-QUARTER AND FULL-YEAR 2023 RESULTS

Thomson Reuters Corp. has released results for the fourth quarter and full year ended Dec. 31, 2023.

Highlights:

• Good revenue momentum continued in the fourth quarter and full year;
• Full-year total company revenue up 3 per cent/organic revenue up 6 per cent;
• Fourth-quarter total company revenue up 3 per cent/organic revenue up 7 per cent;
• Organic revenue up 8 per cent for the Big 3 segments (legal professionals, corporate, and tax and accounting professionals);
• Met or exceeded full-year 2023 outlook for organic revenue, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin and free cash flow;
• Full-year 2024 outlook anticipates organic revenue growth of approximately 6 per cent and an adjusted EBITDA margin of approximately 38 per cent;
• Financial framework for 2025 to 2026 anticipates 6.5-per-cent to 8-per-cent organic revenue growth and rising adjusted EBITDA margins;
• Increased annualized dividend per share by 10 per cent (31st consecutive annual increase);
• Anticipate current $1-billion share buyback program to conclude by end of the second quarter;
• Acquired a majority ownership stake in e-invoicing leader Pagero Group AB in January, 2024.

"Last year was one of innovation and accomplishment across our business," said Steve Hasker, president and chief executive officer of Thomson Reuters. "We made significant progress delivering generative AI-powered [artificial intelligence] solutions, including the launch of AI-assisted research on Westlaw Precision, as well as expanded features and design enhancements across our product portfolio. We plan to maintain this momentum in 2024 through a robust product road map positioning us to meet our customers' evolving needs at pace."

Mr. Hasker added: "We remain focused on allocating capital to drive long-term shareholder value creation. In 2023, we returned significant capital to shareholders and executed a number of strategic acquisitions, resulting in a stronger and more strategically aligned portfolio with improved growth prospects."

Revenues increased 3 per cent, driven by growth in recurring and transactions revenues. Net divestitures had a 4-per-cent negative impact on revenues and foreign currency had no impact.

Organic revenues increased 7 per cent, driven by 7-per-cent growth in recurring revenues (82 per cent of total revenues) as well as 16-per-cent growth in transactions revenues. Global print revenues decreased 4 per cent organically.

The company's Big 3 segments reported organic revenue growth of 8 per cent and collectively comprised 80 per cent of total revenues.

Operating profit decreased 11 per cent because the prior-year period included gains on the sale of several non-core businesses.

Adjusted EBITDA, which excludes gains on sales of businesses as well as other adjustments, increased 12 per cent due to higher revenues and lower costs. The related margin increased to 38.9 per cent from 35.9 per cent in the prior-year period. Lower costs reflected Change Program investments made in the prior-year period, which benefited the year-over-year change in adjusted EBITDA margin by 340 basis points. Foreign currency contributed 90 basis points to the increase in adjusted EBITDA margin.

Diluted EPS was $1.49, compared with 45 cents in the prior-year period, primarily due to an increase in value of the company's investment in London Stock Exchange Group (LSEG), net of changes in the value of related foreign exchange contracts, and lower income tax expense, which included a non-cash tax benefit. Diluted EPS also benefited from a reduction in weighted average common shares outstanding due to share repurchases and the company's June, 2023, return-of-capital transaction.

Adjusted EPS, which excludes the changes in value of the company's LSEG investment and the related foreign exchange contracts, the non-cash tax benefit as well as other adjustments, increased to 98 cents per share from 75 cents per share in the prior-year period, primarily due to higher adjusted EBITDA. Adjusted EPS also benefited from a reduction in weighted average common shares.

Net cash provided by operating activities increased $29-million as the cash benefits from higher revenues and lower costs more than offset higher tax payments.

Free cash flow increased $87-million due to higher net cash provided by operating activities and other investing activities, which included proceeds from the sale of real estate. The prior-year period also included investments in the Change Program.

2024 outlook

The company's outlook for 2024 in an attached table assumes constant currency rates and incorporates the recent Pagero and World Business Media Ltd. acquisitions but excludes the impact of any future acquisitions or dispositions that may occur during the remainder of the year. Thomson Reuters believes that this type of guidance provides useful insight into the anticipated performance of its businesses.

The company expects its first quarter 2024 organic revenue growth to be approximately 8 per cent, boosted by the expectation for additional AI licensing revenue at Reuters. The company also anticipates an adjusted EBITDA margin of approximately 40 per cent, benefiting from normal seasonal strength and the Reuters licensing revenue, partially offset by M&A (merger and acquisition) dilution and select growth investments.

The company continues to operate in an uncertain macroeconomic environment, reflecting continuing geopolitical risk, uneven economic growth, and an evolving interest rate and inflationary backdrop. Any worsening of the global economic or business environment could impact the company's ability to achieve its outlook.

2025-to-2026 financial framework

For the 2025-to-2026 period, the company targets an organic revenue growth range of 6.5 per cent to 8 per cent, driven by 8 per cent to 9 per cent for the Big 3 segments. The company targets adjusted EBITDA margin expansion of approximately 75 basis points in 2025, followed by at least 50 basis points in 2026. It anticipates accrued capital expenditures as a percentage of revenues to be approximately 8 per cent and 2026 free cash flow to range from $2-billion to $2.1-billion.

This financial framework assumes constant currency rates and incorporates the recent Pagero and World Business Media acquisitions but excludes the impact of any future acquisitions or dispositions that may occur during this time horizon.

Recent acquisitions

In January, 2024, the company announced a recommended public tender offer to acquire 100 per cent of the shares of Pagero and subsequently acquired a majority interest in Pagero. As of Feb. 2, 2024, the company's ownership of Pagero was approximately 84.53 per cent. Pagero is a global leader in e-invoicing and indirect tax solutions, which it delivers through its Smart Business Network. The company links customers, suppliers and institutions, allowing for the automated, compliant and secure exchange of digital orders, invoices and other business documents. Thomson Reuters's majority ownership of Pagero will enhance the strategic partnership announced in February, 2023, accelerating the companies' joint vision for a connected suite of global indirect tax, reporting and e-invoicing capabilities.

In January, 2024, the company also acquired World Business Media, a cross-platform, subscription-based provider of editorial coverage for the global P&C (property and casualty) and specialty (re)insurance industry. This acquisition is in line with Reuters's strategic priority to provide must-have news and insight for new customer markets and professional verticals.

Dividends

The company's board of directors approved a 10-per-cent (or 20-cent-per-share) annualized increase in the dividend to $2.16 per common share, representing the 31st consecutive year of dividend increases. A quarterly dividend of 54 cents per share is payable on March 8, 2024, to common shareholders of record as of Feb. 21, 2024.

Share repurchases -- update on $1-billion buyback program

In November, 2023, Thomson Reuters announced its plans to repurchase up to $1-billion of its common shares.

From November, 2023, through Jan. 31, 2024, the company repurchased approximately 3.3 million of its common shares under this buyback program for a total spend of $457-million. As of Jan. 31, 2024, Thomson Reuters had approximately 452.4 million common shares outstanding.

Subject to market conditions, the company anticipates completing the $1-billion program by the end of the second quarter of 2024.

LSEG ownership interest

Thomson Reuters indirectly owns LSEG shares through an entity that it jointly owns with Blackstone's consortium and a group of current LSEG and former Refinitiv senior management. During 2023, the company sold 56 million shares that it indirectly owned and received nearly $5.5-billion of gross proceeds.

As of Jan. 31, 2024, Thomson Reuters indirectly owned approximately 15.2 million LSEG shares, which had a market value of approximately $1.7-billion based on LSEG's closing share price on that day.

About Thomson Reuters Corp.

Thomson Reuters informs the way forward by bringing together the trusted content and technology that people and organizations need to make the right decisions. The company serves professionals across legal, tax, accounting, compliance, government and media. Its products combine highly specialized software and insights to empower professionals with the data, intelligence and solutions needed to make informed decisions and to help institutions in their pursuit of justice, truth and transparency. Reuters, part of Thomson Reuters, is a world-leading provider of trusted journalism and news.

Thomson Reuters will webcast a discussion of its fourth quarter and full-year 2023 results and its 2024 business outlook and 2025-to-2026 financial framework today beginning at 9 a.m. Eastern Time ET. You can access the webcast by visiting Thomson Reuters's investor relations website. An archive of the webcast will be available following the presentation.

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