Press Release

Q3 2018 IHS Markit Earnings Conference Call - Supplemental Materials - Click here for PDF

LONDON--(BUSINESS WIRE)--Sep. 25, 2018-- IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions, today reported results for the third quarter ended August 31, 2018.

• Revenue of $1.001 billion, including total revenue growth of 11 percent, total organic revenue growth of 6 percent, and normalized total organic revenue growth of 7 percent
• Net income of $104 million and diluted earnings per share (EPS) of $0.26
• Adjusted EBITDA of $391 million and Adjusted earnings per diluted share (Adjusted EPS) of $0.58
• Cash flow from operations of $346 million and free cash flow of $293 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.

Third Quarter and Year-to-Date 2018 Financial Performance

^{* Net income attributable to IHS Markit for the nine months ended August 31, 2018 includes a one-time tax benefit associated with U.S. tax reform estimated at approximately $136 million.}

"Continued focus on operational execution led to strong financial results in the quarter. I am particularly pleased with the continued sense of urgency and high level of commercial engagement across the firm," said Lance Uggla, chairman and chief executive officer at IHS Markit.

"We continue to deliver broad-based revenue and profit growth and solid free cash flow conversion," said Todd Hyatt, chief financial officer at IHS Markit.

Third Quarter 2018 Revenue Performance

Third quarter 2018 revenue increased 11 percent compared to the third quarter of 2017. The following table provides additional revenue information by transaction type.

The components of revenue growth are described below by segment and in total.

^{* Excluding the effect of the BPVC engineering standard release in the third quarter of 2017, total non-recurring organic revenue increased 13 percent, CMS total organic revenue increased 4 percent, and total organic revenue increased 7 percent for the three months ended August 31, 2018 compared to the three months ended August 31, 2017.}

Third Quarter 2018 Operating Performance

Segment results were as follows (additional segment information is included later in this release):

• Resources. Third quarter revenue for Resources increased $9 million, or 5 percent, to $212 million, with recurring revenue increasing 4 percent organically. Third quarter Adjusted EBITDA for Resources decreased $3 million, or 4 percent, to $85 million.
• Transportation. Third quarter revenue for Transportation increased $40 million, or 16 percent, to $297 million, and included 10 percent organic growth for the recurring-based business. Third quarter Adjusted EBITDA for Transportation increased $18 million, or 16 percent, to $128 million.
• Consolidated Markets & Solutions (CMS). Third quarter revenue for CMS decreased $2 million, or 1 percent, to $137 million, and had 3 percent organic growth for the recurring-based business. Third quarter Adjusted EBITDA for CMS decreased $2 million, or 5 percent, to $30 million.
• Financial Services. Third quarter revenue for Financial Services increased $49 million, or 16 percent, to $355 million, and included 8 percent total organic growth. Third quarter Adjusted EBITDA for Financial Services increased $18 million, or 13 percent, to $156 million.

Outlook (forward-looking statement)

For the year ending November 30, 2018, IHS Markit now expects:

• Revenue in a range of $4.000 billion to $4.020 billion, including total organic growth of 6 percent;
• Adjusted EBITDA in a range of $1.550 billion to $1.560 billion; and
• Adjusted EPS in a range of $2.25 to $2.27 per diluted share.

Additionally, for the year ending November 30, 2018, IHS Markit expects:

• Depreciation expense to be approximately $180 million to $190 million;
• Amortization expense related to acquired intangible assets to be approximately $360 million to $370 million;
• Net interest expense to be approximately $215 million to $220 million;
• Stock-based compensation expense to be approximately $225 million to $235 million;
• An adjusted effective tax rate of approximately 18 percent to 20 percent;
• Weighted average diluted shares of approximately 405 million to 410 million;
• Capital expenditures to be approximately 6 percent to 7 percent of revenue; and
• Free cash flow as a percentage of Adjusted EBITDA in the mid-60's.

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 third quarter 2018 results on September 25, 2018, at 8:00 a.m. EDT. The conference call will be simultaneously webcast on the Investor Relations section of the company's website: investor.ihsmarkit.com. A replay of the earnings webcast will be available approximately two hours after the conclusion of the live event. The webcast recording will be available for one year on the Investor Relations section of the company's website.

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. This communication also includes certain forward-looking non-GAAP financial measures. IHS Markit is unable to present a reconciliation of this forward-looking non-GAAP financial information because management cannot reliably predict all of the necessary components of such measures. Accordingly, investors are cautioned not to place undue reliance on this information.

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.

Forward-Looking Statements

This communication contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "anticipate," "intend," "plan," "goal," "seek," "aim," "strive," "believe," "see," "project," "predict," "estimate," "expect," "continue," "strategy," "future," "likely," "may," "might," "should," "will," "would," "could," "target," similar expressions, and variations or negatives of these words and the use of future tense. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, estimates and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. A detailed discussion of some of the risks and uncertainties that could cause our actual results and financial condition to differ materially from the forward-looking statements is described under the caption "Risk Factors" in our most recent annual report on Form 10-K, along with our other filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. Any forward-looking statement made by us in this communication is based only on information currently available to us and speaks only as of the date of this communication. We do not assume 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. Please consult our public filings at www.sec.gov or www.ihsmarkit.com.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2018 IHS Markit Ltd. All rights reserved.

^{* Excluding the effect of the BPVC engineering standard release in the third quarter of 2017 results in the following organic revenue change percentages:}

• ^{CMS non-recurring organic revenue increased 13 percent and 8 percent for the three and nine months ended August 31, 2018, respectively;}
• ^{Total non-recurring organic revenue increased 6 percent and 8 percent for the three and nine months ended August 31, 2018, respectively;}
• ^{CMS total organic revenue increased 4 percent for both the three and nine months ended August 31, 2018; and}
• ^{Total organic revenue increased 7 percent for both the three and nine months ended August 31, 2018.}

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Source: IHS Markit

IHS Markit
News Media Contact:
Dan Wilinsky, +1 303-397-2468
dan.wilinsky@ihsmarkit.com
or
Investor Relations Contact:
Eric Boyer, +1 303-397-2969
eric.boyer@ihsmarkit.com