Press Release

IHS Markit Reports Fourth Quarter 2020 Results

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LONDON--(BUSINESS WIRE)--Jan. 13, 2021-- IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions, today reported results for the fourth quarter ended November 30, 2020.

Revenue of $1.107 billion, with flat total organic revenue growth

Net income of $151 million and diluted earnings per share (EPS) of $0.38

Adjusted EBITDA of $465 million and Adjusted earnings per diluted share (Adjusted EPS) of $0.72

Cash flow from operations of $338 million and free cash flow of $275 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.

Fourth Quarter and Fiscal Year 2020 Financial Performance

	Three months ended November 30,				Change				Year ended November 30,				Change
(in millions, except percentages and per share data)	2020		2019		$		%		2020		2019		$		%
Revenue	$	1,107.2	$	1,120.4	$	(13.2)	(1)	%	$	4,287.8	$	4,414.6	$	(126.8)	(3)	%

Net income attributable to IHS Markit*	$	151.1	$	203.1	$	(52.0)	(26)	%	$	870.7	$	502.7	$	368.0	73	%
Adjusted EBITDA	$	464.9	$	452.9	$	12.0	3	%	$	1,836.7	$	1,778.9	$	57.8	3	%

GAAP EPS	$	0.38	$	0.50	$	(0.12)	(24)	%	$	2.17	$	1.23	$	0.94	76	%
Adjusted EPS	$	0.72	$	0.65	$	0.07	11	%	$	2.84	$	2.63	$	0.21	8	%

Cash flow from operations	$	338.3	$	225.7	$	112.6	50	%	$	1,138.8	$	1,251.3	$	(112.5)	(9)	%
Free cash flow	$	275.3	$	147.5	$	127.8	87	%	$	939.9	$	973.2	$	(33.3)	(3)	%

* Net income attributable to IHS Markit for the year ended November 30, 2020 includes an approximate $377 million gain on sale related to the A&D business line divestiture in December 2019. Net income attributable to IHS Markit for the year ended November 30, 2019 includes a one-time net tax expense of approximately $150 million associated with U.S. Treasury regulations related to U.S. Tax Reform retroactive to 2018.

“We were pleased to see continued stability in Q4, and 2020 demonstrated the resiliency of our business model given the economic challenges due to the pandemic,” said Lance Uggla, chairman and chief executive officer at IHS Markit.

“We were pleased with the finish to our year, and some of our challenged end markets continue to show signs of recovering, which supports our plan as we head into FY21,” said Jonathan Gear, chief financial officer at IHS Markit.

Fourth Quarter 2020 Revenue Performance

Fourth quarter 2020 revenue remained flat organically compared to the fourth quarter of 2019. The following table provides additional revenue information by transaction type.

	Three months ended November 30,				Percentage change
(in millions, except percentages)	2020		2019		Total		Organic
Recurring fixed	$	809.7	$	810.1	—	%	1	%
Recurring variable	158.5		147.5		7	%	7	%
Non-recurring	139.0		162.8		(15)	%	(11)	%
Total revenue	$	1,107.2	$	1,120.4	(1)	%	—	%

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

	Change in revenue
	Fourth quarter 2020 vs. Fourth quarter 2019
(All amounts represent percentage points)	Organic		Acquisitive		Foreign Currency		Total
Financial Services	6	%	—	%	1	%	7	%
Transportation	2	%	(6)	%	—	%	(4)	%
Resources	(11)	%	—	%	—	%	(11)	%
Consolidated Markets & Solutions	—	%	(1)	%	—	%	(2)	%
Total	—	%	(2)	%	—	%	(1)	%

Fourth Quarter 2020 Operating Performance

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

Financial Services. Fourth quarter revenue for Financial Services increased $28 million, or 7 percent, to $459 million, and included 6 percent total organic growth. Fourth quarter Adjusted EBITDA for Financial Services increased $25 million, or 13 percent, to $224 million.

Transportation. Fourth quarter revenue for Transportation decreased $12 million, or 4 percent, to $312 million, and included 2 percent total organic growth. Fourth quarter Adjusted EBITDA for Transportation increased $6 million, or 4 percent, to $142 million.

Resources. Fourth quarter revenue for Resources decreased $27 million, or 11 percent, to $210 million, and included an 11 percent decline in total organic growth. Fourth quarter Adjusted EBITDA for Resources decreased $16 million, or 16 percent, to $85 million.

Consolidated Markets & Solutions (CMS). Fourth quarter revenue for CMS decreased $2 million, or 2 percent, to $126 million, with flat total organic growth. Fourth quarter Adjusted EBITDA for CMS remained flat at $31 million.

Outlook

IHS Markit will provide a fiscal year 2021 guidance update and supplemental information deck as part of its previously announced fourth quarter 2020 results conference call on January 13, 2021, at 8:00 a.m. ET. 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 should not be considered in isolation from, or as a substitute for, financial measures calculated in accordance with GAAP. Definitions and reconciliations of the non-GAAP measures, such as EBITDA, Adjusted EBITDA, Adjusted net income, Adjusted EPS, and free cash flow, to the most directly comparable GAAP measures are provided within the schedules attached to IHS Markit’s quarterly earnings releases on the Investor Relations section of the company’s website. 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.

We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us 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. We also believe that investors may find these non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP financial measures or disclosures. None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to any other GAAP measure.

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. 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. 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” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and use words like “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “see,” “seek,” “should,” “strategy,” “strive,” “target,” “will,” and “would” and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, the anticipated benefits therefrom, and our success in integrating acquired businesses; anticipated levels of capital expenditures in future periods; anticipated levels of indebtedness, capital allocation, dividends, and share repurchases in future periods; our belief that we have sufficient liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities, and governmental and regulatory investigations and proceedings; our strategy for customer retention, growth, product development, market position, financial results, and reserves; the completion of the merger with S&P Global Inc. (“S&P Global”) on anticipated terms and timing, including 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; the ability of S&P Global and IHS Markit to integrate the business successfully and to achieve anticipated synergies; potential litigation relating to the proposed transaction that could be instituted against S&P Global, IHS Markit or their respective directors; the risk that disruptions from the proposed transaction will harm S&P Global’s and IHS Markit’s business, including current plans and operations; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger; rating agency actions; potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect IHS Markit’s financial performance; and certain restrictions during the pendency of the merger that may impact IHS Markit’s ability to pursue certain business opportunities or strategic transactions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations, 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. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are more fully discussed under the caption “Risk Factors” in our Annual Report on Form 10-K, along with our other filings with the U.S. Securities and Exchange Commission (“SEC”). However, those factors should not 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. You are cautioned not to place undue reliance on these forward-looking statements, which are based only on information currently available to our management 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 with the SEC or on our website at investor.ihsmarkit.com.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (NYSE: 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 © 2021 IHS Markit Ltd. All rights reserved.

IHS MARKIT LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions)

	As of November 30, 2020		As of November 30, 2019
	(Unaudited)		(Audited)
Assets
Current assets:
Cash and cash equivalents	$	125.6	$	111.5
Accounts receivable, net	891.7		890.7
Deferred subscription costs	84.3		72.1
Assets held for sale	—		115.3
Other current assets	131.7		118.2
Total current assets	1,233.3		1,307.8
Non-current assets:
Property and equipment, net	724.8		658.2
Operating lease right-of-use assets, net	296.8		—
Intangible assets, net	3,846.1		4,169.0
Goodwill	9,908.7		9,836.3
Deferred income taxes	27.1		17.8
Other	98.4		98.1
Total non-current assets	14,901.9		14,779.4
Total assets	$	16,135.2	$	16,087.2
Liabilities and equity
Current liabilities:
Short-term debt	$	268.1	$	251.1
Accounts payable	48.2		59.7
Accrued compensation	206.1		215.2
Other accrued expenses	477.6		479.1
Income tax payable	29.1		58.5
Deferred revenue	886.2		879.7
Operating lease liabilities	63.5		—
Liabilities held for sale	—		25.9
Total current liabilities	1,978.8		1,969.2
Long-term debt, net	4,641.7		4,874.4
Deferred income taxes	543.4		667.2
Operating lease liabilities	297.7		—
Other liabilities	130.4		145.5
Commitments and contingencies
Redeemable noncontrolling interests	13.8		15.1
Shareholders' equity	8,529.4		8,415.8
Total liabilities and equity	$	16,135.2	$	16,087.2

IHS MARKIT LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except for per-share amounts) (Unaudited)

	Three months ended November 30,				Year ended November 30,
	2020		2019		2020		2019
Revenue	$	1,107.2	$	1,120.4	$	4,287.8	$	4,414.6
Operating expenses:
Cost of revenue	400.3		409.5		1,590.0		1,657.0
Selling, general and administrative	295.0		308.9		1,128.0		1,197.9
Depreciation and amortization	149.3		142.1		591.6		573.1
Restructuring and impairment charges	63.2		6.3		161.1		17.3
Acquisition-related costs	29.1		2.7		45.3		70.3
Other (income) expense, net	(4.0)		3.9		(378.7)		(104.5)
Total operating expenses	932.9		873.4		3,137.3		3,411.1
Operating income	174.3		247.0		1,150.5		1,003.5
Interest income	0.2		0.3		1.0		1.9
Interest expense	(57.7)		(63.8)		(236.6)		(259.7)
Net periodic pension and postretirement expense	(1.2)		(2.1)		(31.6)		(2.8)
Non-operating expense, net	(58.7)		(65.6)		(267.2)		(260.6)
Income from continuing operations before income taxes and equity in loss of equity method investees	115.6		181.4		883.3		742.9
(Provision) benefit for income taxes	35.6		21.3		(13.3)		(242.6)
Equity in loss of equity method investees	(0.3)		(0.4)		(0.6)		(0.9)
Net income	150.9		202.3		869.4		499.4
Net loss attributable to noncontrolling interest	0.2		0.8		1.3		3.3
Net income attributable to IHS Markit Ltd.	$	151.1	$	203.1	$	870.7	$	502.7

Basic earnings per share attributable to IHS Markit Ltd.	$	0.38	$	0.51	$	2.19	$	1.26
Weighted average shares used in computing basic earnings per share	396.6		398.2		396.8		399.5

Diluted earnings per share attributable to IHS Markit Ltd.	$	0.38	$	0.50	$	2.17	$	1.23
Weighted average shares used in computing diluted earnings per share	400.5		408.4		401.5		409.2

IHS MARKIT LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)

	Year ended November 30,
	2020		2019
Operating activities:
Net income	$	869.4	$	499.4
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	591.6		573.1
Stock-based compensation expense	265.7		223.8
Gain on sale of assets, net	(377.3)		(115.3)
Impairment of assets	33.8		—
Payments for acquisition-related performance compensation	(75.9)		—
Net periodic pension and postretirement expense	31.6		2.8
Undistributed earnings of affiliates, net	0.9		0.4
Pension and postretirement contributions	(34.4)		(2.0)
Deferred income taxes	(134.7)		(49.6)
Change in assets and liabilities:
Accounts receivable, net	1.6		(67.9)
Other current assets	(21.9)		(27.0)
Accounts payable	(17.3)		15.5
Accrued expenses	11.4		11.9
Income tax	(41.2)		76.9
Deferred revenue	5.7		38.8
Other assets and liabilities	29.8		70.5
Net cash provided by operating activities	1,138.8		1,251.3
Investing activities:
Capital expenditures on property and equipment	(274.8)		(278.1)
Acquisitions of businesses, net of cash acquired	(4.7)		(136.5)
Proceeds from sale of assets	476.6		163.5
Change in other assets	(10.9)		(18.3)
Settlements of forward contracts	18.8		(2.1)
Net cash provided by (used in) investing activities	205.0		(271.5)
Financing activities:
Proceeds from borrowings	861.7		2,631.7
Repayment of borrowings	(1,086.7)		(3,188.9)
Payment of debt issuance costs	—		(13.2)
Proceeds from noncontrolling interests	—		12.5
Contingent consideration payments	—		(2.2)
Dividends paid	(270.4)		—
Repurchases of common shares	(950.0)		(500.0)
Proceeds from the exercise of employee stock options	229.0		177.7
Payments related to tax withholding for stock-based compensation	(128.2)		(75.6)
Net cash used in financing activities	(1,344.6)		(958.0)
Foreign exchange impact on cash balance	14.9		(30.3)
Net increase in cash and cash equivalents	14.1		(8.5)
Cash and cash equivalents at the beginning of the period	111.5		120.0
Cash and cash equivalents at the end of the period	$	125.6	$	111.5

IHS MARKIT LTD. SUPPLEMENTAL REVENUE DISCLOSURE (In millions) (Unaudited)

	Three months ended November 30,				Percent change				Year ended November 30,				Percent change
	2020		2019		Total		Organic		2020		2019		Total		Organic
Recurring revenue:
Financial Services	$	273.8	$	259.0	6	%	5	%	$	1,073.3	$	1,013.6	6	%	6	%
Transportation	237.5		237.6		—	%	6	%	878.8		907.3		(3)	%	3	%
Resources	188.0		204.1		(8)	%	(8)	%	776.3		782.9		(1)	%	(3)	%
CMS	110.4		109.4		1	%	2	%	436.8		458.6		(5)	%	2	%
Total recurring fixed revenue	$	809.7	$	810.1	—	%	1	%	$	3,165.2	$	3,162.4	—	%	2	%
Financial Services - variable	158.5		147.5		7	%	7	%	616.3		572.9		8	%	7	%
Total recurring revenue	$	968.2	$	957.6	1	%	2	%	$	3,781.5	$	3,735.3	1	%	3	%

Non-recurring revenue:
Financial Services	$	26.6	$	24.1	10	%	9	%	$	94.4	$	115.0	(18)	%	(18)	%
Transportation	74.8		86.9		(14)	%	(9)	%	272.8		338.8		(19)	%	(16)	%
Resources	22.3		33.5		(33)	%	(32)	%	86.8		150.9		(42)	%	(40)	%
CMS	15.3		18.3		(16)	%	(13)	%	52.3		74.6		(30)	%	(14)	%
Total non-recurring revenue	$	139.0	$	162.8	(15)	%	(11)	%	$	506.3	$	679.3	(25)	%	(21)	%

Total revenue:
Financial Services	$	458.9	$	430.6	7	%	6	%	$	1,784.0	$	1,701.5	5	%	5	%
Transportation	312.3		324.5		(4)	%	2	%	1,151.6		1,246.1		(8)	%	(2)	%
Resources	210.3		237.6		(11)	%	(11)	%	863.1		933.8		(8)	%	(9)	%
CMS	125.7		127.7		(2)	%	—	%	489.1		533.2		(8)	%	—	%
Total revenue	$	1,107.2	$	1,120.4	(1)	%	—	%	$	4,287.8	$	4,414.6	(3)	%	(1)	%

IHS MARKIT LTD. RECONCILIATION OF CONSOLIDATED NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES (In millions, except for per-share amounts) (Unaudited)

	Three months ended November 30,				Year ended November 30,
	2020		2019		2020		2019
Net income attributable to IHS Markit Ltd.	$	151.1	$	203.1	$	870.7	$	502.7
Interest income	(0.2)		(0.3)		(1.0)		(1.9)
Interest expense	57.7		63.8		236.6		259.7
Provision for income taxes	(35.6)		(21.3)		13.3		242.6
Depreciation	55.5		48.6		217.5		196.1
Amortization related to acquired intangible assets	93.8		93.5		374.1		377.0
EBITDA ⁽¹⁾⁽⁶⁾	$	322.3	$	387.4	$	1,711.2	$	1,576.2
Stock-based compensation expense	55.9		56.5		265.7		223.8
Restructuring and impairment charges	63.2		6.3		161.1		17.3
Acquisition-related costs	31.8		8.2		38.4		28.8
Acquisition-related performance compensation	(2.7)		(5.5)		6.9		41.5
Loss on debt extinguishment	—		1.0		—		7.0
Loss (gain) on sale of assets	(6.8)		(2.3)		(377.3)		(115.3)
Pension mark-to-market and settlement expense	1.2		1.8		31.2		1.8
Share of joint venture results not attributable to Adjusted EBITDA	0.3		0.4		0.6		0.9
Adjusted EBITDA attributable to noncontrolling interest	(0.3)		(0.9)		(1.1)		(3.1)
Adjusted EBITDA ⁽²⁾⁽⁶⁾	$	464.9	$	452.9	$	1,836.7	$	1,778.9

	Three months ended November 30,				Year ended November 30,
	2020		2019		2020		2019
Net income attributable to IHS Markit Ltd.	$	151.1	$	203.1	$	870.7	$	502.7
Stock-based compensation expense	55.9		56.5		265.7		223.8
Amortization related to acquired intangible assets	93.8		93.5		374.1		377.0
Restructuring and impairment charges	63.2		6.3		161.1		17.3
Acquisition-related costs	31.8		8.2		38.4		28.8
Acquisition-related performance compensation	(2.7)		(5.5)		6.9		41.5
Loss on debt extinguishment	—		1.0		—		7.0
Loss (gain) on sale of assets	(6.8)		(2.3)		(377.3)		(115.3)
Pension mark-to-market and settlement expense	1.2		1.8		31.2		1.8
Income tax effect of above adjustments	(99.1)		(94.6)		(231.2)		(6.2)
Adjusted earnings attributable to noncontrolling interest	—		(0.7)		(0.2)		(2.6)
Adjusted net income ⁽³⁾	$	288.4	$	267.3	$	1,139.4	$	1,075.8
Adjusted EPS ⁽⁴⁾⁽⁶⁾	$	0.72	$	0.65	$	2.84	$	2.63
Weighted average shares used in computing Adjusted EPS	400.5		408.4		401.5		409.2

	Three months ended November 30,				Year ended November 30,
	2020		2019		2020		2019
Net cash provided by operating activities	$	338.3	$	225.7	$	1,138.8	$	1,251.3
Payments for acquisition-related performance compensation	—		—		75.9		—
Capital expenditures on property and equipment	(63.0)		(78.2)		(274.8)		(278.1)
Free cash flow ⁽⁵⁾⁽⁶⁾	$	275.3	$	147.5	$	939.9	$	973.2

IHS MARKIT LTD. SUPPLEMENTAL SEGMENT OPERATING PROFIT MEASURE DISCLOSURE (In millions) (Unaudited)

	Three months ended November 30,						Year ended November 30,
	2020			2019			2020			2019
Adjusted EBITDA by segment:
Financial Services	$	223.5		$	198.3		$	886.1		$	786.2
Transportation	141.5			135.8			514.7			520.9
Resources	84.5			100.3			357.3			403.5
CMS	31.1			31.3			126.5			121.1
Shared services	(15.7)			(12.8)			(47.9)			(52.8)
Total Adjusted EBITDA	$	464.9		$	452.9		$	1,836.7		$	1,778.9

Adjusted EBITDA margin by segment:
Financial Services	48.7		%	46.1		%	49.7		%	46.2		%
Transportation	45.3		%	41.8		%	44.7		%	41.8		%
Resources	40.2		%	42.2		%	41.4		%	43.2		%
CMS	24.7		%	24.5		%	25.9		%	22.7		%
Total Adjusted EBITDA margin	42.0		%	40.4		%	42.8		%	40.3		%

(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 and performance compensation, exceptional litigation, net other gains and losses, pension mark-to-market, settlement, and other expense, the impact of joint ventures and noncontrolling interests, and 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 and performance compensation, acquisition financing fees, net other gains and losses, pension mark-to-market, settlement, and other expense, the impact of noncontrolling interests, and 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 plus payments for acquisition-related performance compensation minus capital expenditures.
(6)		EBITDA, Adjusted EBITDA, Adjusted EPS, and free cash flow are used by securities analysts, investors, and other interested parties to assess our operating performance. For example, a measure similar to Adjusted EBITDA is required by the lenders under our revolving credit agreement.

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Investor Relations:
Eric Boyer
+1 303 397 2969
eric.boyer@ihsmarkit.com

Source: IHS Markit