IHS Markit Ltd. (Nasdaq: INFO), a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide, today reported results for the fourth quarter ended November 30, 2016.
- Revenue of $874 million, including organic revenue growth of 1 percent
- Net income of $89 million and diluted earnings per share (EPS) of $0.21
- Adjusted EBITDA of $338 million and Adjusted earnings per diluted share (Adjusted EPS) of $0.48
- Cash flow from operations of $163 million and free cash flow of $115 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.
Full-year results include IHS results for the full fiscal year and Markit results from the date of merger (July 12, 2016).
“2016 was a momentous year for IHS Markit as we merged two world class organizations in record time,” said Jerre Stead, IHS Markit chairman and chief executive officer. “Thanks to the tireless work by our colleagues we hit the ground running in December, the start of our first fiscal year as a new company.”
“We are in a very solid financial position entering our first fiscal year as a merged company, with a business model that has favorable financial characteristics. The financial levers afforded to us from the merger allow us to invest in our future while delivering strong returns for our shareholders,” said Todd Hyatt, IHS Markit chief financial officer.
Fourth Quarter and Full Year 2016 Revenue Performance
Fourth quarter 2016 revenue increased 57 percent compared to the fourth quarter of 2015, and full year 2016 revenue increased 25 percent compared to the same period of 2015. The following table provides additional revenue information by transaction type.
Fourth Quarter and Full Year 2016 Operating Performance
Segment results were as follows (additional segment information is included on pages 9 and 11):
- Resources. Fourth quarter revenue for Resources decreased $1 million, or 1 percent, to $214 million, and declined 10 percent organically for the recurring-based business. Fourth quarter Adjusted EBITDA for Resources increased $2 million, or 2 percent, to $92 million.
Year-to-date revenue for Resources decreased $24 million, or 3 percent, to $861 million. Year-to-date Adjusted EBITDA for Resources increased $11 million, or 3 percent, to $368 million.
- Transportation. Fourth quarter revenue for Transportation increased $36 million, or 18 percent, to $235 million, and included 9 percent organic growth for the recurring-based business. Fourth quarter Adjusted EBITDA for Transportation increased $22 million, or 28 percent, to $101 million.
Year-to-date revenue for Transportation increased $134 million, or 18 percent, to $893 million. Year-to-date Adjusted EBITDA for Transportation increased $71 million, or 25 percent, to $353 million.
- Consolidated Markets & Solutions (CMS). Fourth quarter revenue for CMS decreased $9 million, or 6 percent, to $133 million, and had 1 percent organic growth for the recurring-based business. Fourth quarter Adjusted EBITDA for CMS increased $2 million, or 6 percent, to $36 million.
Year-to-date revenue for CMS decreased $9 million, or 2 percent, to $532 million. Year-to-date Adjusted EBITDA for CMS increased $21 million, or 19 percent, to $128 million.
- Financial Services. Fourth quarter revenue for Financial Services was $292 million, and included 4 percent total organic growth. Fourth quarter Adjusted EBITDA for Financial Services was $125 million.
Fourth quarter results were adversely affected by the recognition of $41 million of merger-related costs as well as higher levels of stock-based compensation expense. Adjusted EPS in the quarter excludes these impacts.
Outlook (forward-looking statement)
For the year ending November 30, 2017, IHS Markit expects:
- Revenue in a range of $3.490 billion to $3.560 billion, including total organic growth of 2 percent to 4 percent;
- Adjusted EBITDA in a range of $1.375 billion to $1.400 billion; and
- Adjusted EPS in a range of $2.02 to $2.08 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 Markit will hold a conference call to discuss fourth quarter 2016 results on January 17, 2017, at 8:00 a.m. EST. The conference call will be simultaneously webcast on the Investor Relations section of the company’s website: investor.ihsmarkit.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.
Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to IHS Markit, many of which present non-GAAP measures when reporting their results. These measures can 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. However, non-GAAP measures have limitations as an analytical tool. Non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies. They are not presentations made in accordance with GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such performance measures in isolation from, or as a substitute analysis for, results of operations as determined in accordance with GAAP.
