Overview & Brief History:
TRI is a scaled information services business, dual listed in the US and Canada. TRI has 3 businesses:
1) Core information / business services which is 80% of revenue. This is 90% recurring revenue business
growing 6-7% organically (4% in 2020 due to Covid slowdown). The 3 main segments are Legal,
Tax/Accounting, and Corporates.
2) Reuters news, which is 10% of revenue. This is mostly a pass through no-EBITDA business that is the
Reuters news franchise.
3) Global print, which is 10% of revenue (declining 5% annually). This is the legacy legal print business
that is becoming a smaller part of the business mix.
TRI began part 1 of its multi-year transformation in 2018 with the sale of a majority stake in its Financial
& Risk business to Blackstone. This transaction began the simplification of TRI's structure, allowing the
management team to begin to focus on the remaining businesses (F&R business was 50% of total
revenue and had been a flat revenue grower for a decade). After Blackstone operated the business for 12-months,
Blackstone and TRI reached a deal in August 2019 for LSE to acquire the entire F&R business, which will
close in 1Q 2021.
Accounting for the after-tax value of the LSE stake, TRI currently trades at 16x 2021 street EBITDA (which
we will outline below is significantly too low). Peers FDS, VRSK, MCO trade at 22x, 25x, 20x, respectively,
& peer INFO sold to SPGI in December 2020 for 26x.
Why does the opportunity exist:
Despite a $42bn enterprise value, TRI is historically underfollowed by US investors. 15 sell side analysts
have ratings and 8 are Canadian analysts. The main reason why US investors have ignored is because of
TRI's underperformance for a decade after the company purchased the original F&R business in 2008.
From 2009-2018, TRI's organic growth on a consolidated basis was LSD% (compared to peers M-HSD%)
and the stock was a material underperformer. From end of 2009-beginning of 2018, TRI returned 35%
vs. SPY 137% and peers FDS, VRSK, MCO 189%, 209%, 444%, respectively.
Following the F&R sale, TRI's stock has performed closer in-line with peers (+70% over the last two years
vs. FDS +71%, MCO +89%, VRSK +116%, SPY +40%), but the company is on the cusp of engaging in the
second part of its transformation effort.