Q2 2020 Thomson Reuters Corp Earnings Call
As mentioned we implemented in late March in response to carpet 19 and to not having incurred stranded or onetime costs as was the case in the prior year period.
Mike will discuss the strong EBITDA margin expansion in more detail.
Adjusted EPS was 44 cents per share versus 29 cents per share a year ago.
Our legal cooperates and tax and accounting segments, which make up 80% of our revenues recorded organic revenue growth of 2%.
Legals revenues grew 3% before currency with organic revenues up 1% Legals recurring revenues, 94% of total total legal revenues.
Were up 3% organically the growth was hampered by a 19% decline inorganic transaction revenues.
Waste or edge continues to drive sales and ended the quarter at a 43% ACB penetration level, we expect to us to achieve an ACB penetration of about 55% by year end.
Our government business, which is managed in our legal segment.
And has annual revenues of nearly 400 million.
Continues to exceed expectations growing 11% in the second quarter, and we forecast a similar performance for the second half of the year.
Our corporate business had a very good quarter.
Organic revenues increased 5%.
Recurring revenues, which are more than 85% of this segment's total revenues were up organically by healthy 7%.
Tax and accounting is organic revenues were flat in the quarter as expected.
This was primarily due to the delay in paper return filings.
Which shifted about $6 million in revenue to the third quarter due to the us federal tax filing deadline being extended to July 15.
It's a $6 million of price per returned revenue has been recorded in the second quarter versus the third quarter.
Organic revenue would have been up 3%.
We expect third quarter and fourth quarter organic revenue growth for the segment to rebound to 5% plus.
Reuters news organic revenues were down 11%.
And global pre organic revenues declined 17% as expected.
Given our first half performance and outlook for the second half we are reaffirming our full year 2020 guidance updated in may and increasing free cash flow guidance to between 1 billion and $1.1 billion from 1 billion previously.
We forecast revenue performance to improve in the second half for each of our businesses.
Which should enable us to achieve total company revenue growth between 1% 30%.
And revenue growth for the big 3% to 23% and 4%.
We're also confident that we'll end the year at the upper end of the EBITDA margin range of between 31% in 33%.
We will continue to aggressively managed through this challenging environment and we believe we can achieved revenue growth strong margins and substantial free cash flow for the full year and can build on this performance in 2021.
Estimates of the resilience of our businesses.
Before I turn 11, Michael the wrap up by Tonight I begin my new role since mid March having joined on the cost of the outbreak.
From covered 19 pandemic in North America, Needless to say, it's been a bit of a trial by fire.
Nevertheless, this period as opposed to be the opportunity to get to know and collaborate with our business leaders to utilize our products and to conduct deep dives in each of our businesses.
Working in a virtual environment has allowed me to speak with many of our customers on the Neil daily basis, and look at the company from outside in wins, which has been very instructive.
These insights gained through these conversations have been very helpful. In assessing our position is designing our strategy going forward and setting out our priorities as we focused on accelerating the transition from a holding company to an operating company.
This transition will involve intense focus on technology and product across the company.
And the creation of products of both make our customers' lives simple and are additive to the to our customer experience.
To achieve this we must make important choices on where we increased our focus and investment.
Furthermore, this transition requires that we accelerate our efforts to reimagine the end to end customer experience through simplification innovations and enhanced product integration.
Given our work thus far I'm very confident that there are opportunities to fuel further growth.
And to realize substantial efficiencies.
To help in this transition, we recently announced the appointment of currency Ross as our Chief operations in Technology Officer, and David Wong as our Chief product Officer.
Way determined to enhanced by the innovation integration across the company and to do Siamese we must attract world class talent to drive that business is forward.
And carefully and David I'm confident we had two seasons performance will enable us to achieve our objectives.
Our opportunities to serve customers with solutions that are more digital virtual real time in automated.
I'm looking forward to having more to share with you as our strategic and operating plans become more concrete over the next several months.
Let me now had optimized to discuss our financials in further detail.
Thank you, Steve and installed yields the joining us today.
As a reminder, I will talk to revenue growth before currency and on an organic basis.
Let me start providing some color on the revenue performance of our phase three segments.
Revenue for us little being three was up 3% to quarter and increased 2% organically.
Both within the ranges we provided in the first quarter.
For the quarter legal professionals revenues increased 3% and organic revenues were up 1%.
Recurring organic revenue growth of 3% was partially offset by 19% decline and transaction revenues, which I will discuss in more detail in a moment.
Our government business had another strong quarter was revenue growth of 11%.
And our global legal businesses grew 3%.
And despite carbon 19 was small edge a warm contributed over 100 basis points to organic growth and maintained a healthy premium.
Our corporate segment revenues were up 6% unfolding transformation, which was acquired in July 2019.
And organic revenues were up 5% driven by our legal and tax solutions.
And finally platform Accountings revenues were down 4% in part due to divesting our government business and November 2019.
On an organic basis tax and accounting professionals revenues were flat for the quarter.
This was due to a 300 basis points negative impact due to the delay in paper returned filings, resulting from the extension of the us federal tax filing deadline to July 15.
This was timing related and we solve those revenues recorded in the first two weeks of July.
We expect tax and accounting revenues to rebound in the third and fourth quarters to 5% plus.
Moving to orders in years.
Revenues were flat in the second quarter with organic revenues down 11%, mainly due to the cancellation of enforcing conferences at motors events due to co that 19.
This performance was slightly better than they had anticipated revisiting the conversion of sex and person conferences to virtual events.
I will discuss this in more detail in a moment.
And global print revenues declined 17% in the quarter was organic revenues also down 17%.
As expected.
Due to the temporary delay in shipments of content.
We continue to believe we will be able to recruit most of this revenue in the second half of the year as law firms and government agencies continue to reopen and Lee can again CEB.
So on a consolidated basis second quarter revenues were flat with organic revenues down 2%.
Before turning to profitability, let's look closer at reoccurring and transaction revenue results for the first half.
Starting on the left side total company organic revenue for the first half of 2020, plus flat as compared to 4% bug in the first half of 2019.
However, organic revenues for the big three increased 3% for the first half of this year.
Good performance.
And as soon as you can say on the top right at the slide for recurring revenue growth continues to be very encouraging.
As organic revenue for both total company and that they three grew about 4%.
Currently less than last year's half year period.
The recurring revenue decline was especially evident in tax and accounting, which was partially impacted by the shift of the Ultratech stayed software disease.
Q4 2019.
Q1, 2020, which we mentioned last quarter.
Adjusting for the permanent Ultratech software release change tax and accounting recurring revenues would have been up 6% for the first half.
And the big three recurring revenues would have grown 5%.
Turning to the graph in the bottom price as a slide transaction revenues were down over 1000 basis points year over year.
This was driven by the delay in four items.
Installations in our legal segment.
Tax and accounting pay per returned filings shift into Q3.
A slowing the transaction type sales and the cancellation of some events.
We believe much of this as timing related and will be realized as companies and firms returned to office.
So despite the close of 19 related disruptions. We are encouraged by our first half results, especially for recurring revenues given us confidence and the trajectory of the business.
Okay.
Similar to last quarter's call. We thought it was important to provide more granularity around our expectations for the third quarter.
Starting with a total TR chart on the top lab, we estimate third quarter total revenues and organic revenues will grow between 1% and 2% and we'll continue to be negatively affected our new orders news and global Brent.
The day, three total and organic revenues are forecasted growth, 3% to 4% and the third quarter.
Growth will benefit from a rebound and tax and accounting revenue, partly due to the projected increase in transaction revenues of between 15% and 20% related to the shares at the paper return revenues from Q2 to Q3.
Moving towards me as we forecast third quarter total revenues to decline between 2% and 4% and.
And all workers events in person conferences have been postponed through Q3.
This will have a nominal impact in the third quarter since June events were held during these months.
The event team has aggressively working to host virtual event for the second half of the year. Although this is expected to recruit only a small portion of the plan lost revenues.
We continue to assess when we can resilient end person intense based on the local health export supplies and feedback from our customers.
And lastly, global brands third quarter revenues are expected to decline between 7% and 15%.
This is primarily due to unexpected continuing delay and shipping some of our print materials as customers are unlikely to be at their offices to accept shipments due to the phase and calls reopening of the less and various other countries.
We continue to believe we'll be able to include most of this revenue in the second half of the year as the economy begins to return to normal.
As a reminder, these print materials have historically been considered critical content by law firms and government agencies.
We expect press revenue to decline between 7% and 11% for the full year.
Okay.
Turning to our profitability performance in the second quarter adjusted EBITDA for the Big three segments was 426 million.
Up 10% from the prior year period.
And the margin was up over 300 basis points, reflecting the cost savings programs implemented late in the first quarter related to co that 19.
Legal professionals adjusted EBITDA margin in the second quarter grew 310 basis points to 40.9% compared to the prior year period due to higher revenues and coated 19 related cost mitigation efforts.
Corporate adjusted EBITDA margin was up 500 basis points to 35.9%.
Mainly driven by revenue growth uncovered 19 related cost mitigation efforts.
And finally tax and accounting adjusted EBITDA margin decreased 40 basis points that 31.9%.
Due to the decline in revenue.
Moving to orders in years.
Adjusted EBITDA was 25 million 6 million more than the prior year period, mainly due to some onetime items and currency.
Global presence adjusted EBITDA margin for the quarter declined by about 360 basis points due to the decline in revenues, but remained strong at above 40%.
And other corporate costs were only 59 million year to date, we did have some timing benefits in the first half that are not expected to continue.
Therefore, we continue to expect corporate costs to range between 140 million to 150 million over full year.
So in aggregate reported adjusted EBITDA was 479 million.
Up 35% benefiting from not having purge stranded or onetime costs as had been the case in the prior year period.
And also to our cost savings initiatives.
The next slide provides a bit more color on the various factors impacting our adjusted EBITDA margin in the second quarter.
As you can see our recorded 2022nd quarter adjusted EBITDA margin was 34.1%.
There are several factors in the quarter that contributed to the significant increase.
M&A activity and lower revenues related to co that 19 combined for about 300 basis points negative impact on margin.
However, the savings from the 100 million cost savings initiatives, we announced last quarter led to a 490 basis points benefit.
More than offsetting the dilution from M&A and the co that 19 impact.
We are about two thirds of the way through this program.
And we are confident we will achieve the full 100 million savings by year end.
And lastly, currency added about 70 basis points to the quarter.
So on an underlying basis, excluding stranded and onetime costs in the prior year, we adjusted EBITDA margin expanded about 300 basis points, which was primarily related to the cost saving measures as a response to cultivate 19.
We believe these savings will be permanent.
We encourage you to focus on our adjusted EBITDA margin on an annual basis.
Overall, we continue to believe we have good visibility into the levers at our disposal to achieve the upper end of our margin target of 31% to 32%.
We believe we're on track to complete the savings target, while still preserving the flexibility to make the necessary investments in 2020, some accelerate organic revenue growth and margin improvement and 2021.
Now, let me turn to our earnings per share and free cash flow performance.
I will also provide an update on our capital structure.
So starting with earnings per share adjusted EPS increased by 15 cents to 44 cents per share during the second quarter.
The increase was driven by higher adjusted EBITDA, partially offset by four items.
An increase in depreciation and amortization mainly related to acquisitions.
New product releases higher interest expense largely due to lower interest income and higher income taxes.
Finally currency had a one cents positive impact on adjusted EPS in the quarter.
Let me now turn to our free cash flow performance for the first half.
Our reported free cash flow was 340 million versus a negative 176 million in the prior year period.
And improvement at just over 500 million.
Consistent with previous quarters. This slide removed for distorting factors impacting free cash flow performance.
Working from the bottom of the page upwards, the resented related component of our free cash flow was better by 112 million from the prior year period.
This was primarily due to cost incurred in 2019, including residual employee related costs.
And tax expenditures related to the operations of our former ethanol business.
Also in the first half, we made 76 million payments for separation costs incurred in 2019 related to our transformation program.
The 76 million compares to 372 million in the prior year period for the transformation programs and a pension contribution.
So if we adjust for these items comparable free cash flow from continuing operations was 381 million.
63 million better than the prior year period.
This increase was primarily due to higher EBITDA and lower income taxes.
Slightly offset by higher Capex and unfavorable working capital movements.
As we did last quarter.
Want to provide an update on our capital structure and liquidity.
And as you can see on this slide our capital structure and liquidity position remains strong.
We expect to generate about 1 billion to 1.1 billion of free cash flow this year.
We had over 900 million of cash on hand at June Thirtyth.
We had an undrawn 1.8 billion revolving credit facilities and we also had a 1.8 billion commercial paper program.
So from a liquidity standpoint, we believe we're in a very strong position.
And we remain in a very strong position from a capital structure standpoint, as we are modestly leveraged with a net debt to adjusted EBITDA ratio of 1.9.
Comfortably below our 2.5 times internal target and our credit facility ratios 1.7 times well below the credit line maximum of 4.5 times.
And we have no debt maturing until 2023.
I am pleased to report that in June Moody's affirmed our credit ratings and raised our outlook to stable from negative.
Fighting the strength of our business and strong liquidity position.
Let me point now that in May we completed a five year Canadian 1.4 billion bond offerings.
We swap it into the equivalent of about 1 billion us dollars.
The bond carries an interest rate of 2.25% and matures in 2025.
Now an update on our investment incentive.
The agreement to sell risk benefit to the London stock Exchange group is still expected to close by the end of 2020.
Or early in 2021.
Regarding our investment say when the proposal closes our expected interest was worth about 9.1 billion pretax as of the market close yesterday.
Our future equity interest in the LSC will represent a store value, which can be monetized over time.
We believe it will provide us with a significant level of financial flexibility in the foreseeable future.
As a reminder, accurate deal closes we expect to receive annual dividends from the LLC.
Estimated at 60 million per year based on the Elyses current annual dividend payout.
Now, let me turn to our outlook for the balance of the year.
As Steve mentioned, we are reaffirming our 2024 year outlook for both total TR and the big three.
We anticipate being the upper end of the adjusted EBITDA margin guidance of 31% to 32% for total GR.
Also we are increasing our guidance for free cash flow for the full year from 1 billion to a range of $1 billion to 1.1 billion.
Let me now handed back to crank relevant.
Thanks, very much Mike that that concludes our formal remarks and recap of the quarter.
And now operator, we'd like to open the call for questions. Please.
Thank you, ladies and gentlemen, if you'd like to ask the question. Please press one and then see route on your telephone keypad.
May withdraw your question at any time by repeating that one zero command.
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Once again for your questions. Please press, one and then see ROE at this time.
One moment please for the first question.
Our first question will come from the lineup drew Mcreynolds of RBC capital markets. Please go ahead.
Yeah, Thanks, very much and good morning.
Just a couple of housekeeping and then a bigger picture for you Steve on housekeeping.
Maybe for you Mike can you quantify in the quarter the the onetime positive impact here.
For Reuters news.
And on the free cash flow guidance, what's driving that 100 million increase and then my bigger question here for Steve.
Obviously, the business is tracking on a good trajectory what known unknowns are still left out there related to covert 19 net.
That that management team in the border are still wary of this as we go into the back half of the year. Thank you.
I think straight I'll start with the first two questions on an asset to stay in regards to our free cash flow Andrew listen monitoring our collections on really on a daily weekly basis, and we got the benefit now three additional months of collection since we last both deal made by.
As we look at the collections from April through July each month.
Increased by roughly 25 million, which was very helpful for us and with the benefit of July collections, such as closed we had the strongest month in the last last four for us. So looking at the collections experience drew in the last four months.
Plus our daily contact with our customers in the forecast for Q3 to four.
Ill confident increasing that to 1 billion to 1.1 billion as certainly we'll continue to monitor that for the rest of this year eyes wide open with that we'll continue to support our customers as we have been in regards to payment terms consistent with our made by message we are not letting up contracts for customers.
But we are working with customers within reason.
In regards to other payment terms. So we're confident as we sit today drew on the one to 1.1 billion on free cash flow.
In regards to Reuters news in regards to EBITDA, we had about $7 million worth of onetime nonrecurring items drew that helped us in Q on future.
Andrew This is Steve Thanks for the question with regard to known and unknown.
You get a sense of the resiliency of our business through Q2 results.
And I think Mike in high the team have competence in.
In addition, our forecast for the rest of the year.
They are on a loss of non non BCC Matt.
The b to B, three particular, we'd have great visibility into.
Moving to the sort of likely results and levels of activity I think if there is a node on node is is it sort of how much momentum we can build in 2021.
And we'll have more to say snap on that.
The mix shift together and report Q3, and and have a look into the 2021, but I would say that's them to nine on known unknowns with regard to decrease and then of course.
Pretty.
A question is is what happens to be any codes that are there in terms of shipments.
In Android is the question is or how much can we transitioned to two to two digital and virtual environments in the a bench business.
The weekly conservative on both of those fronts and.
We think we're introducing a reasonable position given the prevailing conditions.
That's great. Thank you.
Thank you we'll go next to line up urban that Gallup habits with Canaccord Genuity. Please go ahead.
Thanks for taking my questions.
Focus a little bit on the progress with Westlaw edge rocks to provided an update on the penetration numbers.
In terms of the competitive impact there have been declining to reenter up therapeutic readdressing, just asking to give a little closer to your phone its little hard to here.
Well there can you hear me a little bit better.
But that's a bit better yes. Thank you.
I just wanted to focus on the West law.
You provided obviously the penetration number is an update on that I wanted to get to that.
The competitive environment. There have you seen any kind of response to that from the other players in terms of upgrades to our product.
And.
Are you seeing any kind of change always the from youre sort of lead competitors.
In terms of sort of.
Market share gain et cetera, why did you get your thoughts on that thanks.
Sure as and I'll start and pass it to Steve. We're certainly aware of the latest competitive update that you were referring to we remain keenly focused on less low edge. We think we had incredibly strong product.
Next to incredibly strong cells and account management organization Thats working with our customers every day.
Further evidence of the strength of less small averages performance in the month of July.
Very pleased to share that our sales volumes and premium continued in July very consistent over first half.
As this year. So we remain quite optimistic that will achieve at 55% penetration by year end still leaving significant runway for other than that and 2021 for westlaw edge and great leadership, there from our Paul Fischer, Andy margins might gain in leading less law enforcement.
Product development.
Standpoint for us and we're continuing to invest in west slow edge.
Really building really confident.
Yes, but the only thing.
At our these areas.
As we sit here today, we have a pretty significantly and we're excited about furthering that really by making the mix set aside investments is around with storage.
Thank you.
Thank you we'll go next to the line as Kevin Mcveigh I'm Credit Suisse. Please go ahead.
Great. Thank you pay.
No so early but any thoughts as to.
Framework for organic growth in 2021 image total overall, obviously sensitivities and jump on Sunday the pack size extended process establish into 2021.
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Yes, Kevin let me start with that in regards I think there was just one question in regards to 2021 organic growth. It was trying to figure there Frank I get that correct.
We heard we heard to meet the beginning portion of the question Kevin under terms of 2021 organic growth, we didnt hear the latter portion.
It just appears a way to maybe think about that within the context to total revenue growth and obviously sounds like there'll be some catch up on the French side, hopefully to 2021, just any thoughts on organic growth be helpful.
You cannot share with you delay that we're thinking about it in its three to four big block. So first of all starting with the net sales activity Asian at 80% of our revenues driven by recurring so the net sales performance that we have in Q3 to four will be a significant indicator for us as we prepare for our guide.
Vincent in February with the Q4 earnings call.
We have about 75% of our renewals completed thus far this year, Kevin we have about 75% of our price slips already completed.
As we go into Q3, two for the volume component of net sales will be in a really important factor for us July looks good. So that's the first area is net sales driving the recurring I should mention France is a significant piece for us and as our clients not just in the law firms, but also the journal.
So in government agencies returned to the office that will influence the timing of the print shipments between 2020, and 2021 and end of orders against that Steve referred to earlier leave we'll be prepared on 2021 for in person conferences. Likewise, we'll be prepared for virtual conferences or hybrid or comp.
A nation of those in the last leg is the transactional revenue.
Including their orders events piece, there that we have across the business, which is about 10%. So those are the four key factors, Kevin and I think the one that I'm focused on the most of the net sales activity.
For the Big story.
Super helpful remain just any thoughts my guess to just client behavior overall, I mean, it sounds like pioneering and much better position. This cycle as opposed to last but maybe just help the screen that a little bit.
Hi, crush and use of the weather cobot environment as opposed to the GFC just for them, it's with efficient business environment overall.
Yes.
Services.
Kevin This is Steve I have escaped the opportunity to speak with customers most days and I think.
What we're seeing news is due to combination treatment. Firstly, we are getting on with that work in serving their clients whether that's in the.
In the in the legal profession oil attacks and county professions.
Hello.
The first and second early period is a lot of activity from from government agencies and transition from reducing the costs in various stages visual courses on circle.
The first the thing is just to focus on that work and serving their clients in getting these liberty units in a very difficult in uncertain environment I think the second do.
Everyone's.
Looking at as borrowers case counts and spikes in various various states in various countries reemergence of ours in some parts of the world We have a degree of trepidation.
So our business continues to perform as expected.
And we expect that to continue to happen, but it's not easy for our customers and at least we face that.
Now reaction to that it has been unequivocal and it's pretty into double and triple down on our customer service and support.
Hundreds and hundreds of out rips ratio unsolicited and office support.
To our customers in various loans were in that that thats, helping the.
During the course court case management system, and moving conversion courses as operating expertise insights around there is to inspect produced or whether it's just going the extra mile and that of the whole. This includes David come what may.
We head into the.
During the third quarter is important in 2021, so we're not our confidence Kevin, but so far so good.
Appreciate that thank you very much.
Thank you well go next to the line up Gary Bisbee at Bank of America. Please go ahead.
Hey, good morning, guys.
So I guess the first question for you mentioned last quarter and again a bit more detailed this quarter. This concept of transitioning from more of a holding company structure to an operating company.
What are the.
Great.
Steps to that or advantages in that you see a lot of time, what I've seen other companies pursue this type of thing there is spending that happen first that delivers.
Moving to later I guess as you think about.
Strategic priorities.
Is that something that that could happen here.
Thank you.
Yeah.
Thanks, Thanks, Gary so.
If I just take off the sit back and provide alluded context, I think what Jim as Stephane space was very different.
Is very different portfolio of assets to the one that this is Mike and I have.
To specifically you have the financial and risk segments.
We believe that sort of took a lot of the oxygen in terms of Tom if energy is and in capital its own support.
We don't have that business. So we're much more focused we're much more focused specifically on on LP, three clinical and I will be three.
Segments and as we've had a chance in this residuals work environments to really feel that beyond and understand what we've gotten and supports what we found is that the business was understandably liquidity correctly manages the portfolio target six.
Business is able to sort of.
Good good there on products and fixed ex together conduct their end customer service and support.
Mechanisms in disparate was and I think we have a pretty big opportunity to look across the portfolio. We will consider the activities that are really Coleman is not identical.
And in bid best of breed next generation technology remains fundamentally transformed the customer experience.
That's that's the task ahead of Us and that's why we lost Chris Chris to growth to join US the chief operations and technology helps to shed a lot of experienced Sabrina.
When is the big opportunities quite what the financials look like I don't know, we've obviously started that process and are luxmanor today that we were.
Pretty months ago, and we'll leave it will be will be considerably smaller in three months time.
We had a chance to come back to you were just got a little bit more than that.
Great and then a follow up if I could just you meant you also mentioned.
Obviously, the comment environment is accelerating digital strategies for a lot of businesses and you're focused on helping clients, whether the challenge and remote work and everything else are there are there new product opportunities in that that are worth calling out or are there products within the portfolio that are seeing growing traction in.
As a real opportunity to upgrade clients and help them be productive in this environment any color would be helpful.
Yeah, I mean, we've seen within new product opportunities in a couple of different places the one that springs to mind.
He is with a pretty straight to monitoring our government sales segment. So.
The the.
The capabilities that we acquired through on Darragh in terms of.
In terms of poor detection around entitlement programs, that's a growth area for us transition to digital cause you to growth area for us and nice quarter governments in for really leading news and supporting that processing in a number of sites.
So thats just a couple of examples we see the saying the in legal, particularly sort of adoption of technologies and workflow tools and the tax and accounting. This is real demand to automate non value added activities and allow tax and accounting customers to focus on value added to their clients and.
So we're looking at this environment various saying this there's more opportunity when there is anything else a cross sell out there will be through these segments and we're excited about accelerating as to pursue those opportunities.
Thank you.
Thank you well go next to the line of George Tong Goldman Sachs. Please go ahead.
Hi, Thanks for taking my question. This is Ryan on for George today.
I I guess I just had a question on how has the a the current environment impacting your ability to lean on pricing I know you had mentioned that westlaw edge is still commanding a premium but.
We paused price increases on contract renewals in any of the segments are offerings.
Brian out our pricing is very consistent in 2020, thus far with 2019 through June Thirtyth, we have completed overall about 75% of our pricing actions that we had anticipated.
At the beginning of this year, so very consistent thus far with last year.
And Joe I wanted to assess reminder, our price increases occur when the contracts come up for renewal so the happen throughout the year.
Okay, Great and then add to that point, so for how have the renewal rates and performing in Twoq you relative to your internal expectations and how do you see them evolving over the quarters ahead.
Yes overall for total TR renewal rates of approximately 90%, thus far and plenty plenty consistent with 2019.
Our internal forecast based on our pipeline reviews indicate we'll see similar experienced during the remainder of the year, we anticipate ending 2020.
With flat renewals in this year versus 2019 composite weighted average of about 90% and Ryan we calculate that based on our revenue dollars not customers.
Great. Thank you.
Yeah.
Our next question will come from the line as Vince Valentini TD Securities. Please go ahead.
Yes, thanks very much.
It's a shift to the cost side in impressive results are in getting a lot of $100 million of cost savings already can you just flush showed a bit.
Where are those savings have come from so far and.
How much of it is this stuff like travel and entertainment that.
Probably comes back at some point and then an update on how you replace those those cost savings in in 2021 to stay at 100 million dollar level.
Sure.
Since we have completed 67 million into 100 million through June Thirtyth, we're very confident and completing the remainder during Q3 to four possibly going over the 100 million.
We have confidence level relates to a discretionary expenses you mentioned travel entertainment that also events consulting and advisory and we also events have been very tightly managing our head count we are making selective buyers.
Equal areas areas, such as go to market resources for Brian talked rallies segments.
And machine learning digital are illustrated areas, where we are doing some selected hiring.
And I am quite optimistic as we go into 2021, we will sustain the 100 million savings as we go into next year.
There could be a mix change could be a little bit more TNT next year than this year, but we'll be able to offset that in other areas. So very confident events of sustaining that in 2021.
Thanks, Mike can you just clarify on your free cash flow slide there's there's a $32 million positive.
Quarter from the other category, which was.
I didn't mention shelf last year, but what would the 32 million be this year.
I believe it is pulling up that slight Vincent that was a nonrecurring item whereby we received some proceeds during Q2.
Thank you.
Thank you then.
Thank you and there are no further questions in queue at this time.
Well thanks Maria.
So late Q1 eight quarters. So we're happy to take that in August let everybody get on with their holiday affair or holidays any longer.
But many of them we'd like to thank you all for joining us today and please feel free to follow up with myself, we're making if you have any additional questions enjoy the rest of this summer.
Thank you.
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