IHS Inc. (NYSE: IHS), the leading global source of information
and analytics, today reported results for the second quarter ended
May 31, 2016.
- Revenue of $588 million, up 6 percent
from the prior-year period
- Total organic revenue growth of 2
percent when normalized for CERAWeek timing; reported organic
revenue growth of negative 1 percent, with 1 percent subscription
organic revenue growth
- Net income of $50 million and diluted
earnings per share (EPS) of $0.74
- Adjusted EBITDA of $201 million and
Adjusted earnings per diluted share (Adjusted EPS) of $1.60
- Cash flow from operations of $177
million; free cash flow of $148 million
Adjusted EBITDA, Adjusted EPS, and free cash flow are non-GAAP
financial measures used by management to measure operating
performance. These terms are defined elsewhere in this release.
Please see schedules appearing later in this release for
reconciliations of non-GAAP financial measures to the most directly
comparable GAAP measures.
Second Quarter and Year-to-Date 2016
Financial Performance
Three months ended May 31, Change Six
months ended May 31, Change
(in thousands, exceptpercentages
and pershare data)
2016 2015 $ % 2016
2015 $ % Revenue $ 587,969 $
556,940 $ 31,029 6 % $ 1,136,415 $ 1,070,816 $ 65,599 6 %
Net income $ 50,102 $ 50,952 $ (850 ) (2 )% $ 95,146 $ 90,472 $
4,674 5 % Adjusted EBITDA $ 200,798 $ 170,962 $ 29,836 17 % $
380,406 $ 330,260 $ 50,146 15 % GAAP EPS $ 0.74 $ 0.74 $ — —
% $ 1.40 $ 1.31 $ 0.09 7 % Adjusted EPS $ 1.60 $ 1.38 $ 0.22 16 % $
2.99 $ 2.65 $ 0.34 13 % Cash flow from operations $ 176,666
$ 146,246 $ 30,420 21 % $ 328,568 $ 334,284 $ (5,716 ) (2 )% Free
cash flow $ 148,496 $ 116,020 $ 32,476 28 % $ 275,908 $ 265,246 $
10,662 4 %
“I am very pleased with how well we are managing the business
given the headwinds in Energy,” said Jerre Stead, IHS chairman and
chief executive officer. “We are protecting our shareholders’
returns during this tough operating environment through strong
non-energy revenue growth and a focus on margin expansion.”
“Our non-energy revenue growth continued to perform
exceptionally well in Q2, and we are particularly excited about our
Transportation segment due to the numerous growth drivers within
our Automotive business,” said Todd Hyatt, IHS chief financial
officer.
Second Quarter and Year-to-Date 2016 Revenue
Performance
Second quarter 2016 revenue increased 6 percent compared to the
second quarter of 2015, and year-to-date 2016 revenue also
increased 6 percent compared to the same period of 2015. The
following table provides additional revenue information by
transaction type.
Three months ended May
31, Percent change Six months ended May 31,
Percent change
(in thousands,
exceptpercentages)
2016 2015 Total Organic
2016 2015 Total Organic
Subscription revenue $ 462,042 $ 441,718 5 % 1 % $ 905,201 $
870,982 4 % 1 % Non-subscription revenue 125,927 115,222
9 % (6 )% 231,214 199,834 16 % 2 % Total
revenue $ 587,969 $ 556,940 6 % (1 )% $ 1,136,415
$ 1,070,816 6 % 1 %
The components of revenue growth are described below by segment
and in total.
Change in revenue Second quarter 2016 vs.
second quarter 2015 Year-to-date 2016 vs.
year-to-date 2015 (All amounts represent percentage
points) Organic Acquisitive
Foreign
Currency
Organic Acquisitive Foreign
Currency
Resources (13 )% 9 % (1 )% (8 )% 6 % (1 )% Transportation 12 % 9 %
— % 11 % 7 % (1 )% Consolidated Markets & Solutions 2 % 2 % (1
)% 3 % 5 % (2 )%
Total (1 )% 7 %
(1 )% 1 % 6 % (1
)%
Second Quarter and Year-to-Date 2016 Segment
Performance
Segment results were as follows:
- Resources. Second quarter revenue for
Resources decreased $14 million, or 6 percent, to $221 million, and
included negative 8 percent organic growth for the
subscription-based business. Excluding the effect of the timing
shift in our IHS Energy CERAWeek event, which generated
approximately $14 million in revenue for the first quarter of 2016
but was held in our second quarter last year, total Resources
revenue was unchanged for the second quarter of 2016 compared to
the second quarter of 2015. Second quarter Adjusted EBITDA for
Resources increased $4 million, or 4 percent, to $94 million.
Second quarter operating income for Resources decreased $2 million,
or 4 percent, to $62 million.
Year-to-date revenue for Resources decreased
$15 million, or 3 percent, to $437 million. Year-to-date Adjusted
EBITDA for Resources increased $6 million, or 3 percent, to $181
million. Year-to-date operating income for Resources increased $1
million, or 1 percent, to $121 million.
- Transportation. Second quarter revenue
for Transportation increased $41 million, or 21 percent, to $231
million, and included 10 percent organic growth for the
subscription-based business. Second quarter Adjusted EBITDA for
Transportation increased $21 million, or 31 percent, to $91
million. Second quarter operating income for Transportation
increased $13 million, or 27 percent, to $61 million.
Year-to-date revenue for Transportation
increased $65 million, or 18 percent, to $431 million. Year-to-date
Adjusted EBITDA for Transportation increased $32 million, or 25
percent, to $164 million. Year-to-date operating income for
Transportation increased $15 million, or 17 percent, to $104
million.
- Consolidated Markets & Solutions
(CMS). Second quarter revenue for CMS increased $4 million, or 3
percent, to $136 million, and included 3 percent organic growth for
the subscription-based business. Second quarter Adjusted EBITDA for
CMS increased $7 million, or 27 percent, to $31 million. Second
quarter operating income for CMS increased $9 million, or 92
percent, to $19 million.
Year-to-date revenue for CMS increased $16
million, or 6 percent, to $269 million. Year-to-date Adjusted
EBITDA for CMS increased $15 million, or 33 percent, to $58
million. Year-to-date operating income for CMS increased $19
million, or 120 percent, to $34 million.
Outlook (forward-looking statement)
For the year ending November 30, 2016, IHS expects:
- Revenue at the lower end of the
previously provided range of $2.30 billion to $2.38 billion,
including flat total organic growth;
- Adjusted EBITDA at the mid to upper end
of the previously provided range of $770 million to $800 million;
and
- Adjusted EPS at the mid to upper end of
the previously provided range of $6.00 to $6.30 per diluted
share.
The above outlook assumes no further currency movements,
acquisitions, divestitures, pension mark-to-market adjustments or
unanticipated events. See discussion of non-GAAP financial measures
at the end of this release.
As previously announced, IHS will hold a conference call to
discuss second quarter 2016 results on June 28, 2016, at 8:00
a.m. EDT. The conference call will be simultaneously webcast on the
company’s website: www.ihs.com.
Use of Non-GAAP Financial Measures
Non-GAAP results are presented only as a supplement to our
financial statements based on U.S. generally accepted accounting
principles (GAAP). Non-GAAP financial information is provided to
enhance the reader’s understanding of our financial performance,
but none of these non-GAAP financial measures are recognized terms
under GAAP and non-GAAP measures should not be considered in
isolation or as a substitute for financial measures calculated in
accordance with GAAP. Reconciliations of the most directly
comparable GAAP measures to non-GAAP measures, such as EBITDA,
Adjusted EBITDA, Adjusted net income, Adjusted EPS, and free cash
flow are provided within the schedules attached to this
release.
We use non-GAAP measures in our operational and financial
decision-making, believing that it is useful to exclude certain
items in order to focus on what we deem to be a more reliable
indicator of ongoing operating performance and our ability to
generate cash flow from operations. As a result, internal
management reports used during monthly operating reviews feature
the Adjusted EBITDA, Adjusted net income, Adjusted EPS, and free
cash flow metrics. We also believe that investors may find non-GAAP
financial measures useful for the same reasons, although investors
are cautioned that non-GAAP financial measures are not a substitute
for GAAP disclosures.
Because not all companies use identical calculations, our
presentation of non-GAAP financial measures may not be comparable
to other similarly-titled measures of other companies. However,
these measures can still be useful in evaluating our performance
against our peer companies because we believe the measures provide
users with valuable insight into key components of GAAP financial
disclosures.
About IHS Inc. (www.ihs.com)
IHS Inc. (NYSE: IHS) is the leading source of information,
insight and analytics in critical areas that shape today’s business
landscape. Businesses and governments in more than 140 countries
around the globe rely on the comprehensive content, expert
independent analysis and flexible delivery methods of IHS to make
high-impact decisions and develop strategies with speed and
confidence. IHS has been in business since 1959 and became a
publicly traded company on the New York Stock Exchange in 2005.
Headquartered in Englewood, Colorado, USA, IHS is committed to
sustainable, profitable growth and employs nearly 9,000 people in
33 countries around the world.
IHS is a registered trademark of IHS Inc. All other company and
product names may be trademarks of their respective owners.© 2016
IHS Inc. All rights reserved.
Where To Find Additional Information
In connection with the proposed transaction, on June 6, 2016
Markit filed with the Securities and Exchange Commission (the
“SEC”) a registration statement on Form F-4 that includes a joint
proxy statement of IHS and Markit. IHS and Markit may also file
other documents with the SEC regarding the proposed transaction.
This document is not a substitute for the joint proxy
statement/prospectus or registration statement or any other
document which IHS or Markit may file with the SEC. INVESTORS AND
SECURITY HOLDERS OF IHS and MARKIT ARE URGED TO READ THE
REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS AND ANY
OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE
SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS,
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND
RELATED MATTERS. Investors and security holders may obtain free
copies of these materials and other documents filed with the SEC by
IHS and Markit through the web site maintained by the SEC at
www.sec.gov or by contacting the investor relations department of
IHS and Markit at the following:
IHS MARKIT 15
Inverness Way East 4th Floor, Ropemaker Place, Englewood, CO 80112
25 Ropemaker Street, London England EC2Y 9LY Attention: Investor
Relations Attention: Investor Relations +1 303-397-2969 +44 20 7260
2000
Participants in the Solicitation
IHS, Markit, and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information
regarding IHS’s directors and executive officers, and their direct
or indirect interests in the transaction, by security holdings or
otherwise, is contained in IHS’s Form 10-K for the year ended
November 30, 2015 and its proxy statement filed on February 24,
2016, which are filed with the SEC. Information regarding the
directors and executive officers of Markit, and their direct or
indirect interests in the transaction, by security holdings or
otherwise, is contained in Markit’s 20-F for the year ended
December 31, 2015, and Markit’s proxy statement filed on Form 6-K
on March 27, 2015, which are filed with the SEC. A more complete
description is available in the registration statement on Form F-4
and the joint proxy statement/prospectus.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote of approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of the federal securities laws, including Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” “will,” “would,” “target,” similar
expressions, and variations or negatives of these words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
consummation of the proposed transaction and the anticipated
benefits thereof. These and other forward-looking statements,
including the failure to consummate the proposed transaction or to
make or take any filing or other action required to consummate such
transaction on a timely matter or at all, are not guarantees of
future results and are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially
from those expressed in any forward-looking statements. Important
risk factors that may cause such a difference include, but are not
limited to, (i) the completion of the proposed transaction on
anticipated terms and timing, including obtaining shareholder or
stockholder (as applicable) and regulatory approvals, anticipated
tax treatment, unforeseen liabilities, future capital expenditures,
revenues, expenses, earnings, synergies, economic performance,
indebtedness, financial condition, losses, future prospects,
business and management strategies for the management, expansion
and growth of the combined company’s operations and other
conditions to the completion of the merger, (ii) the ability of IHS
and Markit to integrate the business successfully and to achieve
anticipated synergies, risks and costs, (iii) potential litigation
relating to the proposed transaction that could be instituted
against IHS, Markit or their respective directors, (iv) the risk
that disruptions from the proposed transaction will harm IHS’s and
Markit’s business, including current plans and operations, (v) the
ability of IHS or Markit to retain and hire key personnel, (vi)
potential adverse reactions or changes to business relationships
resulting from the announcement or completion of the merger, (vii)
continued availability of capital and financing and rating agency
actions, (viii) legislative, regulatory and economic developments,
(ix) potential business uncertainty, including changes to existing
business relationships, during the pendency of the merger that
could affect IHS’s and/or Markit’s financial performance, (x)
certain restrictions during the pendency of the merger that may
impact IHS’s or Markit’s ability to pursue certain business
opportunities or strategic transactions and (xi) unpredictability
and severity of catastrophic events, including, but not limited to,
acts of terrorism or outbreak of war or hostilities, as well as
management’s response to any of the aforementioned factors. These
risks, as well as other risks associated with the proposed merger,
are more fully discussed in the joint proxy statement/prospectus
included in the registration statement on Form F-4 filed with the
SEC in connection with the proposed merger. While the list of
factors presented here is, and the list of factors presented in the
registration statement on Form F-4 are, considered representative,
no such list should be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realization of
forward-looking statements. Consequences of material differences in
results as compared with those anticipated in the forward-looking
statements could include, among other things, business disruption,
operational problems, financial loss, legal liability to third
parties and similar risks, any of which could have a material
adverse effect on IHS’s or Markit’s consolidated financial
condition, results of operations, credit rating or liquidity.
Neither IHS nor Markit assumes any obligation to publicly provide
revisions or updates to any forward-looking statements, whether as
a result of new information, future developments or otherwise,
should circumstances change, except as otherwise required by
securities and other applicable laws.
IHS INC.CONDENSED CONSOLIDATED
BALANCE SHEETS(In thousands, except for share and per-share
amounts)
As of As of May 31, 2016 November
30, 2015 (Unaudited) (Audited) Assets
Current assets: Cash and cash equivalents $ 345,540 $ 291,580
Accounts receivable, net 378,026 355,913 Income tax receivable
7,737 4,585 Deferred subscription costs 62,481 52,752 Assets held
for sale — 193,377 Other 69,575 57,135 Total current
assets 863,359 955,342 Non-current assets: Property
and equipment, net 318,451 314,366 Intangible assets, net 1,320,421
1,014,691 Goodwill 4,081,083 3,287,459 Deferred income taxes 6,630
6,630 Other 26,248 22,593 Total non-current assets
5,752,833 4,645,739 Total assets $ 6,616,192 $
5,601,081
Liabilities and stockholders’ equity
Current liabilities: Short-term debt $ 473,796 $ 36,019 Accounts
payable 45,399 59,180 Accrued compensation 69,512 105,477 Accrued
royalties 34,810 33,306 Other accrued expenses 131,271 118,217
Income tax payable 45,498 23,339 Deferred revenue 649,794 552,498
Liabilities held for sale — 32,097 Total current
liabilities 1,450,080 960,133 Long-term debt 2,487,524 2,095,183
Accrued pension and postretirement liability 25,902 26,745 Deferred
income taxes 329,838 259,524 Other liabilities 66,906 58,619
Commitments and contingencies Stockholders’ equity:
Class A common stock, $0.01 par value per
share, 160,000,000 shares authorized,71,117,896 and 70,287,707
shares issued, and 67,452,437 and 67,523,885 sharesoutstanding at
May 31, 2016 and November 30, 2015, respectively
711 703 Additional paid-in capital 1,104,593 1,053,141
Treasury stock, at cost: 3,665,459 and
2,763,822 shares at May 31, 2016 andNovember 30, 2015,
respectively
(417,199 ) (317,016 ) Retained earnings 1,750,408 1,655,262
Accumulated other comprehensive loss (182,571 ) (191,213 ) Total
stockholders’ equity 2,255,942 2,200,877 Total
liabilities and stockholders’ equity $ 6,616,192 $ 5,601,081
IHS INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except for per-share
amounts)(Unaudited)
Three months ended May 31, Six months ended May
31, 2016 2015 2016
2015 Revenue $ 587,969 $ 556,940 $ 1,136,415 $
1,070,816
Operating expenses:
Cost of revenue (includes stock-based
compensation expense of
$1,426; $1,444; $2,715; and $2,858 for the
three and six months endedMay 31, 2016 and 2015, respectively)
212,287 214,858 423,082 415,203
Selling, general and administrative
(includes stock-based compensationexpense of $30,668; $31,282;
$59,475; and $61,741 for the three andsix months ended May 31, 2016
and 2015, respectively)
206,927 202,660 393,442 389,108 Depreciation and amortization
64,294 53,803 124,809 104,685 Restructuring charges 7,639 6,720
13,342 20,141 Acquisition-related costs 11,561 301 15,343 477 Net
periodic pension and postretirement expense 406 497 813 993 Other
expense (income), net (355 ) 1,932 862 1,094
Total operating expenses
502,759 480,771 971,693 931,701
Operating income 85,210 76,169 164,722 139,115 Interest
income 281 180 545 340 Interest expense (27,237 ) (17,454 ) (55,377
) (34,448 ) Non-operating expense, net (26,956 ) (17,274 ) (54,832
) (34,108 ) Income from continuing operations before income taxes
58,254 58,895 109,890 105,007 Provision for income taxes (13,406 )
(12,222 ) (23,815 ) (20,384 ) Income from continuing operations
44,848 46,673 86,075 84,623 Income from discontinued operations,
net 5,254 4,279 9,071 5,849
Net
income $ 50,102 $ 50,952 $ 95,146 $ 90,472
Basic earnings per share: Income from continuing
operations $ 0.66 $ 0.68 $ 1.28 $ 1.23 Income from discontinued
operations, net 0.08 0.06 0.13 0.09 Net
income $ 0.74 $ 0.74 $ 1.41 $ 1.32
Weighted average shares used in computing basic earnings per share
67,574 68,802 67,501 68,752
Diluted earnings per share: Income from continuing operations $
0.66 $ 0.68 $ 1.27 $ 1.22 Income from discontinued operations, net
0.08 0.06 0.13 0.08 Net income $ 0.74
$ 0.74 $ 1.40 $ 1.31 Weighted average
shares used in computing diluted earnings per share 67,808
69,111 67,974 69,258
IHS INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited)
Six months ended May 31, 2016
2015 Operating activities: Net income $ 95,146 $
90,472 Reconciliation of net income to net cash provided by
operating activities: Depreciation and amortization 124,809 114,829
Stock-based compensation expense 64,439 67,834 Gain on sale of
assets (43,255 ) — Impairment of assets — 1,243 Excess tax benefit
from stock-based compensation (60 ) (5,193 ) Net periodic pension
and postretirement expense 813 993 Pension and postretirement
contributions (1,656 ) (2,285 ) Deferred income taxes 25,609 (3,944
) Change in assets and liabilities: Accounts receivable, net 13,036
67,628 Other current assets (28,829 ) (29,725 ) Accounts payable
(19,873 ) (7,002 ) Accrued expenses (15,598 ) (53,476 ) Income tax
24,839 20,242 Deferred revenue 80,764 70,140 Other liabilities
8,384 2,528
Net cash provided by operating
activities 328,568 334,284
Investing
activities: Capital expenditures on property and equipment
(52,660 ) (69,038 ) Acquisitions of businesses, net of cash
acquired (1,113,440 ) (369,908 ) Proceeds from sale of assets
190,215 — Change in other assets 4,272 (339 ) Settlements of
forward contracts (4,148 ) 2,419
Net cash used in
investing activities (975,761 ) (436,866 )
Financing
activities: Proceeds from borrowings 1,100,000 440,000
Repayment of borrowings (269,882 ) (153,263 ) Payment of debt
issuance costs (15,430 ) — Excess tax benefit from stock-based
compensation 60 5,193 Repurchases of common stock (106,015 )
(105,247 )
Net cash provided by financing activities 708,733
186,683 Foreign exchange impact on cash balance
(9,148 ) (11,378 ) Net increase in cash and cash equivalents 52,392
72,723 Cash and cash equivalents at the beginning of the period
293,148 153,156 Cash and cash equivalents at the end
of the period $ 345,540 $ 225,879
IHS INC.SUPPLEMENTAL REVENUE
DISCLOSURE(In thousands)(Unaudited)
Three months ended May 31, Percent change
Six months ended May 31, Percent change 2016
2015 Total Organic 2016
2015 Total Organic
Subscription revenue by segment: Resources $ 190,729 $
188,824 1 % (8 )% $ 371,407 $ 378,817 (2 )% (7 )% Transportation
155,216 141,031 10 % 10 % 303,638 277,354 9 % 10 % CMS 116,097
111,863 4 % 3 % 230,156 214,811 7 % 4 %
Total subscription revenue $ 462,042 $ 441,718
5 % 1 % $ 905,201 $ 870,982 4 % 1 %
Non-subscription revenue by segment: Resources $ 30,395 $
45,849 (34 )% (36 )% * $ 65,639 $ 73,425 (11 )% (12 )%
Transportation $ 75,706 $ 49,261 54 % 19 % 126,960 88,654 43 % 14 %
CMS $ 19,826 $ 20,112 (1 )% (1 )% 38,615
37,755 2 % 1 %
Total non-subscription revenue $
125,927 $ 115,222 9 % (6 )% * $ 231,214 $
199,834 16 % 2 %
Total revenue by segment:
Resources $ 221,124 $ 234,673 (6 )% (13 )% * $ 437,046 $ 452,242 (3
)% (8 )% Transportation 230,922 190,292 21 % 12 % 430,598 366,008
18 % 11 % CMS 135,923 131,975 3 % 2 % 268,771
252,566 6 % 3 %
Total revenue $ 587,969 $
556,940 6 % (1 )% * $ 1,136,415 $ 1,070,816 6
% 1 %
Revenue by region: Americas $ 410,955 $ 375,880
9 % (1 )% $ 787,090 $ 716,710 10 % 2 % EMEA 119,189 128,902 (8 )%
(6 )% 238,030 249,545 (5 )% (3 )% APAC 57,825 52,158
11 % 11 % 111,295 104,561 6 % 7 %
Total
revenue $ 587,969 $ 556,940 6 % (1 )% $ 1,136,415
$ 1,070,816 6 % 1 %
* Excluding the effect of the CERAWeek
timing shift from the second quarter of 2015 to the first quarter
of 2016 results in the following organicrevenue growth percentages
in the second quarter of 2016:
Resources non-subscription organic revenue growth (5 )% Total
non-subscription organic revenue growth 6 % Resources total organic
revenue growth (7 )% Total organic revenue growth 2 %
IHS INC.RECONCILIATION OF
CONSOLIDATED NON-GAAP FINANCIAL MEASUREMENTS TOMOST DIRECTLY
COMPARABLE GAAP FINANCIAL MEASUREMENTS(In thousands, except
for per-share amounts)(Unaudited)
Three months ended May 31, Six months ended May
31, 2016 2015 2016
2015 Net income $ 50,102 $ 50,952 $ 95,146 $ 90,472
Interest income (281 ) (180 ) (545 ) (340 ) Interest expense 27,237
17,454 55,377 34,448 Provision for income taxes 13,406 12,222
23,815 20,384 Depreciation 24,452 21,048 47,988 40,845 Amortization
related to acquired intangible assets 39,842 32,755
76,821 63,840
EBITDA (1)(6) $ 154,758 $
134,251 $ 298,602 $ 249,649 Stock-based compensation expense 32,094
32,726 62,190 64,599 Restructuring charges 7,639 6,720 13,342
20,141 Acquisition-related costs 11,561 301 15,343 477 Impairment
of assets — 1,243 — 1,243 Income from discontinued operations, net
(5,254 ) (4,279 ) (9,071 ) (5,849 )
Adjusted EBITDA
(2)(6) $ 200,798 $ 170,962 $ 380,406 $
330,260
Three months ended May 31, Six
months ended May 31, 2016 2015 2016
2015 Net income $ 50,102 $ 50,952 $ 95,146 $ 90,472
Stock-based compensation expense 32,094 32,726 62,190 64,599
Amortization related to acquired intangible assets 39,842 32,755
76,821 63,840 Restructuring charges 7,639 6,720 13,342 20,141
Acquisition-related costs 11,561 301 15,343 477 Acquisition
financing fees — — 4,973 — Impairment of assets — 1,243 — 1,243
Income from discontinued operations, net (5,254 ) (4,279 ) (9,071 )
(5,849 ) Income tax effect on adjusting items (27,681 ) (25,267 )
(55,174 ) (51,538 )
Adjusted net income (3) $ 108,303
$ 95,151 $ 203,570 $ 183,385
Adjusted EPS (4)(6) $ 1.60 $ 1.38 $
2.99 $ 2.65 Weighted average shares used in computing
Adjusted EPS 67,808 69,111 67,974 69,258
Three months ended May 31, Six months ended
May 31, 2016 2015 2016 2015
Net cash provided by operating activities $ 176,666 $
146,246 $ 328,568 $ 334,284 Capital expenditures on property and
equipment (28,170 ) (30,226 ) (52,660 ) (69,038 )
Free cash
flow (5)(6) $ 148,496 $ 116,020 $ 275,908
$ 265,246
IHS INC.RECONCILIATION OF
SEGMENT NON-GAAP FINANCIAL MEASUREMENTS TOMOST DIRECTLY
COMPARABLE GAAP FINANCIAL MEASUREMENTS(In
thousands)(Unaudited)
Three months ended May 31, 2016 Resources
Transportation CMS Shared
Services Total Operating income $ 61,873 $
60,540 $ 18,581 $ (55,784 ) $ 85,210 Adjustments:
Stock-based compensation expense — — — 32,094 32,094 Depreciation
and amortization 26,153 27,885 10,169 87 64,294 Restructuring
charges 4,539 781 2,028 291 7,639 Acquisition-related costs 1,085
1,484 (11 ) 9,003 11,561
Adjusted
EBITDA $ 93,650 $ 90,690 $ 30,767 $
(14,309 ) $ 200,798
Adjusted EBITDA as a percentage of
revenue 42.4 % 39.3 % 22.6 % 34.2 %
Three months
ended May 31, 2015 Resources Transportation
CMS Shared Services Total Operating
income $ 64,186 $ 47,833 $ 9,666 $ (45,516 ) $ 76,169
Adjustments: Stock-based compensation expense — — — 32,726 32,726
Depreciation and amortization 21,844 20,412 11,498 49 53,803
Restructuring charges 3,897 1,055 1,768 — 6,720 Acquisition-related
costs — — — 301 301 Impairment of assets — — 1,243
— 1,243
Adjusted EBITDA $ 89,927
$ 69,300 $ 24,175 $ (12,440 ) $ 170,962
Adjusted EBITDA as a percentage of revenue 38.3 % 36.4 %
18.3 % 30.7 %
Six months ended May 31, 2016
Resources Transportation CMS Shared
Services Total Operating income $ 121,254
$ 103,595 $ 34,248 $ (94,375 ) $ 164,722 Adjustments: Stock-based
compensation expense — — — 62,190 62,190 Depreciation and
amortization 50,618 53,917 20,231 43 124,809 Restructuring charges
7,384 1,883 3,784 291 13,342 Acquisition-related costs 1,704
4,629 5 9,005 15,343
Adjusted
EBITDA $ 180,960 $ 164,024 $ 58,268 $
(22,846 ) $ 380,406
Six months ended May 31,
2015 Resources Transportation CMS
Shared Services Total Operating income
$ 120,645 $ 88,472 $ 15,541 $ (85,543 ) $ 139,115 Adjustments:
Stock-based compensation expense — — — 64,599 64,599 Depreciation
and amortization 42,993 40,344 21,245 103 104,685 Restructuring
charges 11,746 2,698 5,697 — 20,141 Acquisition-related costs — 50
— 427 477 Impairment of assets — — 1,243 —
1,243
Adjusted EBITDA $ 175,384 $
131,564 $ 43,726 $ (20,414 ) $ 330,260
(1) EBITDA is defined as net income plus or minus net
interest, plus provision for income taxes, depreciation, and
amortization. (2) Adjusted EBITDA further excludes primarily
non-cash items and other items that we do not consider to be useful
in assessing our operating performance (e.g., stock-based
compensation expense, restructuring charges, acquisition-related
costs, asset impairment charges, gain or loss on sale of assets,
gain or loss on debt extinguishment, pension mark-to-market and
settlement expense, and income or loss from discontinued
operations). All of the items included in the reconciliation from
net income to Adjusted EBITDA are either non-cash items or items
that we do not consider to be useful in assessing our operating
performance. In the case of the non-cash items, we believe that
investors can better assess our operating performance if the
measures are presented without such items because, unlike cash
expenses, these adjustments do not affect our ability to generate
free cash flow or invest in our business. For example, by excluding
depreciation and amortization from EBITDA, users can compare
operating performance without regard to different accounting
determinations such as useful life. In the case of the other items,
we believe that investors can better assess operating performance
if the measures are presented without these items because their
financial impact does not reflect ongoing operating performance.
(3) Adjusted net income is defined as net income plus primarily
non-cash items and other items that management does not consider to
be useful in assessing our operating performance (e.g., stock-based
compensation expense, amortization related to acquired intangible
assets, restructuring charges, acquisition-related costs,
acquisition financing fees, asset impairment charges, gain or loss
on sale of assets, gain or loss on debt extinguishment, pension
mark-to-market and settlement expense, and income or loss from
discontinued operations, all net of the related tax effects). (4)
Adjusted EPS is defined as Adjusted net income (as defined above)
divided by diluted weighted average shares. (5) Free cash flow is
defined as net cash provided by operating activities less capital
expenditures. (6) EBITDA, Adjusted EBITDA, Adjusted EPS, and free
cash flow are used by many of our investors, research analysts,
investment bankers, and lenders to assess our operating
performance. For example, a measure similar to Adjusted EBITDA is
required by the lenders under our term loan and revolving credit
agreements.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160628005361/en/
IHS Inc.News Media Contact:Dan Wilinsky,
+1-303-397-2468dan.wilinsky@ihs.comorInvestor Relations
Contact:Eric Boyer, +1-303-397-2969eric.boyer@ihs.com
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