IHS Markit (Nasdaq: INFO), a world leader in critical
information, analytics and solutions, today reported results for
the fourth quarter ended November 30, 2017.
- Revenue of $945 million, including
total organic revenue growth of 6 percent
- Net income of $105 million and diluted
earnings per share (EPS) of $0.26
- Adjusted EBITDA of $366 million and
Adjusted earnings per diluted share (Adjusted EPS) of $0.52
- Cash flow from operations of $243
million and free cash flow of $175 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 Full Year 2017 Financial
Performance
Three months ended Year
ended November 30, Change November 30,
Change (in millions, except percentages and per share
data) 2017 2016 $ %
2017 2016 $ % Revenue $
944.7 $ 873.8 $ 70.9 8 % $ 3,599.7 $ 2,734.8 $ 864.9 32 %
Net income attributable to IHS Markit $ 105.7 $ 89.3 $ 16.4 18 % $
416.9 $ 152.8 $ 264.1 173 % Adjusted EBITDA $ 366.0 $ 338.1 $ 27.9
8 % $ 1,389.9 $ 987.7 $ 402.2 41 % GAAP EPS $ 0.26 $ 0.21 $
0.05 24 % $ 1.00 $ 0.48 $ 0.52 108 % Adjusted EPS $ 0.52 $ 0.48 $
0.04 8 % $ 2.07 $ 1.80 $ 0.27 15 % Cash flow from operations
$ 242.9 $ 163.2 $ 79.7 49 % $ 961.5 $ 638.3 $ 323.2 51 % Free cash
flow $ 174.5 $ 114.9 $ 59.6 52 % $ 701.3 $ 490.7 $ 210.6 43 %
“We were very pleased with our fourth quarter and finish to the
year, and are encouraged by the progress we have made against our
longer-term strategy,” said Lance Uggla, chairman and chief
executive officer at IHS Markit.
“Our organic growth performance continues to improve with the
underlying fundamentals in our end markets,” said Todd Hyatt, chief
financial officer at IHS Markit. “Transportation and Financial
Services continued to perform very well, CMS continued to improve,
and Resources returned to growth.”
Fourth Quarter 2017 Revenue Performance
Fourth quarter 2017 revenue increased 8 percent compared to the
fourth quarter of 2016. The following table provides additional
revenue information by transaction type.
Three months ended November 30, Percent
change (in millions, except percentages) 2017
2016 Total Organic Recurring
fixed $ 664.4 $ 621.3 7 % 5 % Recurring variable 117.0 107.3 9 % 8
% Non-recurring 163.3 145.2 12 % 10 % Total revenue $
944.7 $ 873.8 8 % 6 %
The components of revenue growth are described below by segment
and in total.
Change in revenue Fourth quarter 2017 vs. fourth
quarter 2016 (All amounts represent percentage points)
Organic Acquisitive
ForeignCurrency
Total Resources 1 % — % 1 % 1 % Transportation 9 % 4
% 1 % 14 % Consolidated Markets & Solutions 3 % 1 % 1 % 5 %
Financial Services 8 % — % 2 % 10 %
Total 6 %
1 % 1 % 8 %
Fourth Quarter and Full Year 2017 Operating
Performance
Segment results were as follows (additional segment information
is included later in this release):
- Resources. Fourth quarter revenue for
Resources increased $3 million, or 1 percent, to $216 million, with
recurring revenue declining 1 percent organically. Fourth quarter
Adjusted EBITDA for Resources was flat at $92 million.Full year
revenue for Resources decreased $22 million, or 2 percent, to $839
million. Full year Adjusted EBITDA for Resources decreased $8
million, or 2 percent, to $360 million.
- Transportation. Fourth quarter revenue
for Transportation increased $32 million, or 14 percent, to $267
million, and included 11 percent organic growth for the
recurring-based business. Fourth quarter Adjusted EBITDA for
Transportation increased $10 million, or 10 percent, to $111
million.Full year revenue for Transportation increased $99 million,
or 11 percent, to $992 million. Full year Adjusted EBITDA for
Transportation increased $55 million, or 16 percent, to $409
million.
- Consolidated Markets & Solutions
(CMS). Fourth quarter revenue for CMS increased $7 million, or 5
percent, to $140 million, and had 1 percent organic growth for the
recurring-based business. Fourth quarter Adjusted EBITDA for CMS
decreased $3 million, or 9 percent, to $33 million.Full year
revenue for CMS increased $4 million, or 1 percent, to $536
million. Full year Adjusted EBITDA for CMS decreased $2 million, or
2 percent, to $125 million.
- Financial Services. Fourth quarter
revenue for Financial Services increased $29 million, or 10
percent, to $321 million, and included 8 percent total organic
growth. Fourth quarter Adjusted EBITDA for Financial Services
increased $22 million, or 18 percent, to $148 million.Full year
revenue for Financial Services was $1.233 billion. Full year
Adjusted EBITDA for Financial Services was $554 million.
Outlook (forward-looking statement)
For the year ending November 30, 2018, IHS Markit expects:
- Revenue in a range of $3.80 billion to
$3.85 billion, including total organic growth of 4 percent to 5
percent;
- Adjusted EBITDA in a range of $1.500
billion to $1.525 billion; and
- Adjusted EPS in a range of $2.23 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;
- Net interest expense to be
approximately $180 million to $190 million;
- Amortization expense related to
acquired intangible assets to be approximately $340 million to $350
million;
- Stock-based compensation expense to be
approximately $200 million to $220 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 conversion 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 fourth quarter 2017 results on January 16, 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,” “target,” similar
expressions, and variations or negatives of these words.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our 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. 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. 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 report. 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.
IHS MARKIT LTD. CONDENSED CONSOLIDATED BALANCE
SHEETS (In millions) As of November
30, As of November 30, 2017 2016
(Unaudited) (Audited) Assets Current assets:
Cash and cash equivalents $ 133.8 $ 138.9 Accounts receivable, net
693.5 635.6 Income tax receivable 31.9 26.0 Deferred subscription
costs 62.8 55.6 Other current assets 93.0 77.4 Total
current assets 1,015.0 933.5 Non-current assets:
Property and equipment, net 531.3 416.2 Intangible assets, net
4,188.3 4,351.8 Goodwill 8,778.5 8,209.8 Deferred income taxes 7.1
14.8 Other 34.2 10.5 Total non-current assets
13,539.4 13,003.1 Total assets $ 14,554.4 $ 13,936.6
Liabilities and equity Current liabilities: Short-term debt
$ 576.0 $ 104.6 Accounts payable 53.4 58.9 Accrued compensation
157.4 174.0 Accrued royalties 42.2 35.7 Other accrued expenses
280.8 257.1 Income tax payable 5.5 11.9 Deferred revenue
790.8 770.2 Total current liabilities 1,906.1 1,412.4
Long-term debt, net 3,617.3 3,279.3 Accrued pension and
postretirement liability 31.8 33.0 Deferred income taxes 869.8
995.1 Other liabilities 105.9 74.7 Commitments and contingencies
Redeemable noncontrolling interests 19.1 57.7 Shareholders' equity
8,004.4 8,084.4 Total liabilities and equity $
14,554.4 $ 13,936.6
IHS MARKIT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
millions, except for per-share amounts) (Unaudited, except
for year ended November 30, 2016) Three months
ended Year ended November 30, November
30, 2017 2016 2017
2016 Revenue $ 944.7 $ 873.8 $ 3,599.7 $ 2,734.8
Operating expenses: Cost of revenue 342.1 345.5 1,348.4
1,037.7 Selling, general and administrative 285.0 246.0 1,096.0
907.1 Depreciation and amortization 128.1 119.2 492.5 335.7
Restructuring charges 0.8 (1.1 ) — 22.8 Acquisition-related costs
36.1 41.3 113.0 161.2 Net periodic pension and postretirement
expense 3.0 8.8 6.9 10.0 Other expense (income), net 10.4
1.9 18.7 (0.1 ) Total
operating expenses 805.5 761.6
3,075.5 2,474.4
Operating income 139.2
112.2 524.2 260.4 Interest income 0.6 0.4 2.2 1.3 Interest expense
(43.3 ) (27.4 ) (154.3 ) (119.4 )
Non-operating expense, net (42.7 ) (27.0 )
(152.1 ) (118.1 ) Income from continuing operations before
income taxes and equity in loss of equity method investee 96.5 85.2
372.1 142.3 Benefit for income taxes 8.6 5.8 49.9 5.1 Equity in
loss of equity method investee — (3.3 )
(5.0 ) (4.5 ) Income from continuing operations 105.1 87.7
417.0 142.9 Income from discontinued operations, net —
1.2 — 9.2
Net
income 105.1 88.9 417.0 152.1 Net (income) loss attributable to
noncontrolling interest 0.6 0.4
(0.1 ) 0.7
Net income attributable to IHS Markit
Ltd. $ 105.7 $ 89.3 $ 416.9 $ 152.8
Basic earnings per share: Income from continuing operations
attributable to IHS Markit Ltd. $ 0.27 $ 0.21 $ 1.04 $ 0.46 Income
from discontinued operations, net — —
— 0.03 Net income attributable to IHS
Markit Ltd. $ 0.27 $ 0.21 $ 1.04 $ 0.49
Weighted average shares used in computing basic earnings per share
397.6 416.6 400.3
309.2 Diluted earnings per share: Income from
continuing operations attributable to IHS Markit Ltd. $ 0.26 $ 0.20
$ 1.00 $ 0.45 Income from discontinued operations, net —
— — 0.03 Net
income attributable to IHS Markit Ltd. $ 0.26 $ 0.21
$ 1.00 $ 0.48 Weighted average shares used in
computing diluted earnings per share 412.9
432.9 416.2 316.3
IHS
MARKIT LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (In millions) (Unaudited)
Year ended November 30, 2017 2016
Operating activities: Net income attributable to IHS Markit
Ltd. $ 416.9 $ 152.8 Reconciliation of net income to net cash
provided by operating activities: Depreciation and amortization
492.5 335.7 Stock-based compensation expense 261.9 206.2 Gain on
sale of business — (41.5 ) Excess tax benefit from stock-based
compensation — (5.6 ) Net periodic pension and postretirement
expense 6.9 10.0 Undistributed earnings of affiliates, net 5.3 2.2
Pension and postretirement contributions (5.7 ) (5.7 ) Deferred
income taxes (100.1 ) 6.7 Change in assets and liabilities:
Accounts receivable, net (27.5 ) (8.5 ) Other current assets (34.6
) 12.3 Accounts payable (20.0 ) (12.5 ) Accrued expenses (42.8 )
35.6 Income tax (14.7 ) (44.7 ) Deferred revenue 4.7 (14.6 ) Other
liabilities 18.7 9.9
Net cash
provided by operating activities 961.5
638.3
Investing activities: Capital expenditures on
property and equipment (260.2 ) (147.6 ) Acquisitions of
businesses, net of cash acquired (401.1 ) (1,014.4 ) Proceeds from
sale of business — 190.9 Change in other assets 0.5 (4.5 )
Settlements of forward contracts 14.5 (7.2 )
Net cash used in investing activities (646.3 )
(982.8 )
Financing activities: Proceeds from borrowings
3,194.5 4,018.0 Repayment of borrowings (2,381.2 ) (3,364.8 )
Payment of debt issuance costs (14.4 ) (22.8 ) Payments for
purchase of noncontrolling interests (57.0 ) — Proceeds from
noncontrolling interests 7.5 — Contingent consideration payments
(2.6 ) — Repurchases of common shares (1,317.8 ) (570.0 ) Proceeds
from the exercise of employee stock options 331.6 147.3 Payments
related to tax withholding for stock-based compensation (89.9 )
(35.8 ) Excess tax benefit from stock-based compensation —
5.6
Net cash (used in) provided by
financing activities (329.3 ) 177.5
Foreign exchange impact on cash balance 9.0
12.8 Net decrease in cash and cash equivalents (5.1 ) (154.2
) Cash and cash equivalents at the beginning of the period
138.9 293.1 Cash and cash equivalents at the
end of the period $ 133.8 $ 138.9
IHS
MARKIT LTD. SUPPLEMENTAL REVENUE DISCLOSURE (In
millions) (Unaudited) Three months
ended Year ended November
30, Percent change November 30, Percent
change 2017 2016 Total
Organic 2017 2016 Total
Organic Recurring revenue: Resources $ 180.7 $ 182.1
(1 )% (1 )% $ 711.2 $ 739.5 (4 )% (5 )% Transportation 188.1 160.6
17 % 11 % 689.7 621.4 11 % 10 % CMS 117.5 114.0 3 % 1 % 457.5 458.1
— % 1 % Financial Services - fixed 178.1 164.6 8 % 7
% 691.6 255.5 N/M 4 %
Total recurring fixed
revenue $ 664.4 $ 621.3 7 % 5 % $ 2,550.0 $ 2,074.5 23 % 2 %
Financial Services - variable 117.0 107.3 9 % 8 %
449.0 164.1 N/M 9 %
Total recurring revenue $
781.4 $ 728.6 7 % 5 % $ 2,999.0 $ 2,238.6 34 % 3 %
Non-recurring revenue: Resources $ 35.7 $ 31.4 14 % 10 % $
128.1 $ 121.3 6 % 3 % Transportation 79.2 74.5 6 % 4 % 301.9 271.4
11 % 10 % CMS 22.5 19.2 17 % 13 % 78.4 74.1 6 % 6 % Financial
Services 25.9 20.1 29 % 27 % 92.3 29.4
N/M 24 %
Total non-recurring revenue $ 163.3 $ 145.2 12 % 10
% $ 600.7 $ 496.2 21 % 9 %
Total revenue (segment):
Resources $ 216.4 $ 213.5 1 % 1 % $ 839.3 $ 860.8 (2 )% (4 )%
Transportation 267.3 235.1 14 % 9 % 991.6 892.8 11 % 10 % CMS 140.0
133.2 5 % 3 % 535.9 532.2 1 % 2 % Financial Services 321.0
292.0 10 % 8 % 1,232.9 449.0 N/M 7 %
Total
revenue $ 944.7 $ 873.8 8 % 6 % $ 3,599.7 $ 2,734.8 32 % 4 %
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 Year ended November 30,
November 30, 2017 2016 2017
2016 Net income attributable to IHS Markit
Ltd. $ 105.7 $ 89.3 $ 416.9 $ 152.8 Interest income (0.6 ) (0.4
) (2.2 ) (1.3 ) Interest expense 43.3 27.4 154.3 119.4 (Benefit)
Provision for income taxes (8.6 ) (5.8 ) (49.9 ) (5.1 )
Depreciation 43.6 36.6 157.0 114.8 Amortization related to acquired
intangible assets 84.5 82.6
335.5 220.9
EBITDA (1)(6) $
267.9 $ 229.7 $ 1,011.6 $ 601.5 Stock-based compensation expense
58.7 61.3 261.9 203.9 Restructuring charges 0.8 (1.1 ) — 22.8
Acquisition-related costs 26.2 41.3 103.1 161.2 Acquisition-related
performance compensation 9.9 — 9.9 — Litigation charges related to
class action suit — 0.1 — 0.1 Loss on debt extinguishment — 0.6 —
0.6 Gain on sale of assets — (0.7 ) — (0.7 ) Pension adjustment
expense 2.7 8.4 5.4 8.4 Share of joint venture results not
attributable to Adjusted EBITDA — 0.6 (1.2 ) 0.3 Adjusted EBITDA
attributable to noncontrolling interest (0.2 ) (0.9 ) (0.8 ) (1.2 )
Income from discontinued operations, net —
(1.2 ) — (9.2 )
Adjusted EBITDA
(2)(6) $ 366.0 $ 338.1 $ 1,389.9 $
987.7
Three months ended Year ended
November 30, November 30, 2017 2016
2017 2016 Net income attributable to IHS Markit
Ltd. $ 105.7 $ 89.3 $ 416.9 $ 152.8 Stock-based compensation
expense 58.7 61.3 261.9 203.9 Amortization related to acquired
intangible assets 84.5 82.6 335.5 220.9 Restructuring charges 0.8
(1.1 ) — 22.8 Acquisition-related costs 26.2 41.3 103.1 161.2
Acquisition-related performance compensation 9.9 — 9.9 — Litigation
charges related to class action suit — 0.1 — 0.1 Acquisition
financing fees — — — 12.1 Loss on debt extinguishment — 0.6 — 0.6
Gain on sale of assets — (0.7 ) — (0.7 ) Pension adjustment expense
2.7 8.4 5.4 8.4 Income tax effect of above adjustments (72.2 )
(72.5 ) (271.3 ) (202.2 ) Adjusted earnings attributable to
noncontrolling interest (0.1 ) (0.5 ) (1.4 ) (0.7 ) Income from
discontinued operations, net — (1.2 ) —
(9.2 )
Adjusted net income (3) $ 216.2
$ 207.6 $ 860.0 $ 570.0
Adjusted
EPS (4)(6) $ 0.52 $ 0.48 $ 2.07 $
1.80 Weighted average shares used in computing Adjusted EPS
412.9 432.9 416.2
316.3
Three months ended Year ended
November 30, November 30, 2017 2016
2017 2016 Net cash provided by operating
activities $ 242.9 $ 163.2 $ 961.5 $ 638.3 Capital expenditures
on property and equipment (68.4 ) (48.3 )
(260.2 ) (147.6 )
Free cash flow (5)(6) $
174.5 $ 114.9 $ 701.3 $ 490.7
IHS MARKIT LTD. SUPPLEMENTAL SEGMENT OPERATING
PROFIT MEASURE DISCLOSURE (In millions)
(Unaudited) Three months ended
Year ended November 30, November 30,
2017 2016 2017 2016
Adjusted EBITDA by segment: Resources $ 92.1 $ 92.4 $ 360.2
$ 367.8 Transportation 110.6 100.7 408.6 353.3 CMS 32.8 35.9 125.2
127.5 Financial Services 147.7 125.4 553.7 190.4 Shared services
(17.2 ) (16.3 ) (57.8 ) (51.3 )
Total Adjusted EBITDA $ 366.0 $ 338.1 $
1,389.9 $ 987.7
Adjusted EBITDA margin by
segment: Resources 42.6 % 43.3 % 42.9 % 42.7 % Transportation*
41.4 % 42.8 % 41.2 % 39.6 % CMS 23.4 % 27.0 % 23.4 % 24.0 %
Financial Services 46.0 % 42.9 % 44.9 % 42.4 %
Total Adjusted
EBITDA margin* 38.7 % 38.7 % 38.6 % 36.1 %
* Excluding the effect of the aM acquisition, Transportation
Adjusted EBITDA margin was 43.4 percent and 41.7 percent for the
three and twelve months ended November 30, 2017, respectively, and
Total Adjusted EBITDA margin was 39.3 percent and 38.7 percent for
the same respective periods.
(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 and settlement
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, acquisition financing fees, net other gains and losses,
pension mark-to-market and settlement 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 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/20180116005696/en/
IHS MarkitNews Media Contact:Dan Wilinsky+1
303-397-2468dan.wilinsky@ihsmarkit.comorInvestor Relations
Contact:Eric Boyer+1 303-397-2969eric.boyer@ihsmarkit.com
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