IHS Inc. (NYSE: IHS), the leading global source of information
and analytics, today reported results for the third quarter ended
August 31, 2014.
- Revenue of $556 million, up 16 percent
from the prior-year period
- Total organic revenue growth of 5
percent, as normalized, anchored by 6 percent subscription organic
revenue growth
- Adjusted EBITDA of $174 million, up 21
percent from the prior-year period
- Adjusted earnings per diluted share
(Adjusted EPS) of $1.49, up 17 percent from the prior-year
period
- Free cash flow of $135 million, up 124
percent from the prior-year period
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 2014 Financial
Performance
Three months ended August 31, Change
Nine months ended August 31, Change
(in thousands, exceptpercentages
and per sharedata)
2014 2013 $
% 2014 2013 $
% Revenue $ 556,011 $ 480,288 $ 75,723 16% $
1,648,477 $ 1,280,956 $ 367,521 29% Net income $
46,517 $ 23,362 $ 23,155 99% $ 134,431 $ 90,923 $ 43,508 48%
Adjusted EBITDA $ 174,441 $ 143,853 $ 30,588 21% $ 503,349 $
392,203 $ 111,146 28% GAAP EPS $ 0.68 $ 0.35 $ 0.33 94% $
1.95 $ 1.36 $ 0.59 43% Adjusted EPS $ 1.49 $ 1.27 $ 0.22 17% $ 4.23
$ 3.61 $ 0.62 17% Cash flow from operations $ 167,476 $
83,203 $ 84,273 101% $ 542,450 $ 344,369 $ 198,081 58% Free cash
flow $ 135,198 $ 60,228 $ 74,970 124% $ 459,136 $ 278,958 $ 180,178
65%
“We are pleased with the solid progress on our commercial
expansion initiatives this quarter as we continue to build our
organic performance,” said Scott Key, IHS president and chief
executive officer. “The disciplined execution of our strategy is
resulting in a consistent delivery of organic revenue growth,
profit growth and margin expansion as we are also building new
growth in our sales and product pipelines.”
“We continue to drive strong cash flows, delivering $586 million
of free cash flow over the last 12 months, and we also drove solid
margin expansion in the quarter,” said Todd Hyatt, IHS chief
financial officer. “These attributes of our business model provide
us with great operational and capital structure flexibility.”
Third Quarter and Year-to-Date 2014 Revenue
Performance
Third quarter 2014 revenue increased 16 percent compared to the
third quarter of 2013, and year-to-date 2014 revenue increased 29
percent compared to the same period in 2013. The components of
revenue growth are described below by segment and in total.
Increase in revenue Third quarter 2014 vs. third
quarter 2013 Year-to-date 2014 vs. year-to-date
2013
(All amounts represent
percentagepoints)
Organic Acquisitive Foreign
Currency
Organic Acquisitive Foreign
Currency
Americas 2 % 17 % —
%
4 % 34 %
(1)
%
EMEA 7 % 2 % 4 % 7 % 6 % 3 % APAC 5 % 2 % — % 3 % 5 %
— %
Total 3 % 11 % 1
% 4 % 24 % 1 %
* Excluding the effect of the BPVC
engineering standard release in the third quarter of 2013, Americas
organic revenue growth was 3 percent for the three months ended
August 31, 2014 (4 percent for the nine months ended August 31,
2014), EMEA organic revenue growth was 8 percent for both the three
and nine months ended August 31, 2014, APAC organic revenue growth
was 6 percent for the three months ended August 31, 2014 (3 percent
for the nine months ended August 31, 2014), and total organic
revenue growth was 5 percent for both the three and nine months
ended August 31, 2014.
The subscription-based business grew 6 percent organically in
the third quarter of 2014 compared to the third quarter of 2013, as
described in the following table.
Three months ended August 31, Percent
change Nine months ended August 31,
Percent change
(in thousands,
exceptpercentages)
2014 2013 Total
Organic 2014 2013 Total
Organic Subscription revenue $ 432,128 $
365,025 18 % 6 % $ 1,275,848 $ 986,675 29 % 6 %
Non-subscription revenue 123,883 115,263 7 %
(5)
%
372,629 294,281 27 % — % Total revenue $ 556,011 $
480,288 16 % 3 % $ 1,648,477 $ 1,280,956 29 % 4 %
* Excluding the effect of the BPVC
engineering standard release in the third quarter of 2013,
non-subscription organic revenue growth was 1 percent for the three
months ended August 31, 2014 (2 percent for the nine months ended
August 31, 2014), and total organic revenue growth was 5 percent
for both the three and nine months ended August 31, 2014.
Third Quarter and Year-to-Date 2014 Segment
Performance
On a consolidated basis, IHS continued to deliver solid organic
revenue growth. Segment results were as follows:
- Americas. Third quarter revenue for
Americas increased $56 million, or 18 percent, to $363 million, and
included 5 percent organic growth for the subscription-based
business. Third quarter Adjusted EBITDA for Americas increased $11
million, or 9 percent, to $134 million. Third quarter operating
income for Americas increased $19 million, or 26 percent, to $90
million.Year-to-date revenue for Americas increased $297 million,
or 37 percent, to $1.091 billion. Year-to-date Adjusted EBITDA for
Americas increased $68 million, or 21 percent, to $392 million.
Year-to-date operating income for Americas increased $48 million,
or 23 percent, to $261 million.Americas results for both the third
quarter and year-to-date 2014 periods benefited from the inclusion
of R. L. Polk.
- EMEA. Third quarter revenue for EMEA
increased $16 million, or 13 percent, to $138 million, and included
8 percent organic growth for the subscription-based business. Third
quarter Adjusted EBITDA for EMEA increased $15 million, or 56
percent, to $41 million. Third quarter operating income for EMEA
increased $15 million, or 78 percent, to $35 million. EMEA profit
benefited from revenue growth and prior investment in scaled
infrastructure.Year-to-date revenue for EMEA increased $59 million,
or 17 percent, to $404 million. Year-to-date Adjusted EBITDA for
EMEA increased $36 million, or 47 percent, to $113 million.
Year-to-date operating income for EMEA increased $38 million, or 67
percent, to $94 million.
- APAC. Third quarter revenue for APAC
increased $4 million, or 7 percent, to $54 million, and included 6
percent organic growth for the subscription-based business. Third
quarter Adjusted EBITDA for APAC increased $3 million, or 30
percent, to $13 million. Third quarter operating income for APAC
increased $2 million, or 18 percent, to $11 million.Year-to-date
revenue for APAC increased $12 million, or 8 percent, to $154
million. Year-to-date Adjusted EBITDA for APAC increased $6
million, or 21 percent, to $37 million. Year-to-date operating
income for APAC increased $5 million, or 16 percent, to $34
million.
Outlook (forward-looking statement)
For the year ending November 30, 2014, IHS expects:
- Revenue in a range of $2.225 billion to
$2.235 billion, including 6 percent organic growth on the
subscription base;
- Adjusted EBITDA in a range of $685
million to $695 million; and
- Adjusted EPS in a range of $5.70 to
$5.80 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 third quarter 2014 results on September 18, 2014, 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.
IHS Forward-Looking Statements:
This release contains “forward-looking statements” within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as: “anticipate,”
“intend,” “plan,” “goal,” “seek,” “aim,” “strive,” “believe,”
“project,” “predict,” "estimate," "expect," “continue,” "strategy,"
"future," "likely," "may," “might,” "should," "will," the negative
of these terms and similar references to future periods. Examples
of forward-looking statements include, among others, statements we
make regarding guidance relating to net income, net income per
share, and expected operating results, such as revenue growth and
earnings.
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. Our actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements. Important factors that could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, the following: economic and financial
conditions, including volatility in interest and exchange rates;
our ability to successfully manage risks associated with changes in
demand for our products and services as well as changes in our
targeted industries; our ability to develop new platforms to
deliver our products and services, pricing, and other competitive
pressures, and changes in laws and regulations governing our
business; the extent to which we are successful in gaining new
long-term relationships with customers or retaining existing ones
and the level of service failures that could lead customers to use
competitors' services; our ability to successfully identify and
integrate acquisitions into our existing businesses and manage
risks associated therewith; and the other factors 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 release is
based only on information currently available to us and speaks only
as of the date on which it is made. We undertake no obligation to
publicly update any forward-looking statement, whether written or
oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
Please consult our public filings at www.sec.gov or www.ihs.com.
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 165 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 approximately 8,000
people in 31 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.© 2014
IHS Inc. All rights reserved.
IHS INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except for share and
per-share amounts)
As of As of August 31, 2014 November
30, 2013 (Unaudited) (Audited) Assets
Current assets: Cash and cash equivalents $ 261,813 $ 258,367
Accounts receivable, net 365,591 459,263 Deferred subscription
costs 50,535 49,327 Deferred income taxes 72,843 70,818 Other
60,965 43,065 Total current assets 811,747
880,840 Non-current assets: Property and equipment, net
281,952 245,566 Intangible assets, net 1,100,556 1,144,464 Goodwill
3,141,342 3,065,181 Other 17,195 23,562 Total
non-current assets 4,541,045 4,478,773 Total assets $
5,352,792 $ 5,359,613
Liabilities and
stockholders’ equity Current liabilities: Short-term debt $
218,793 $ 395,527 Accounts payable 47,111 57,001 Accrued
compensation 86,418 89,460 Accrued royalties 27,729 36,289 Other
accrued expenses 108,800 98,187 Income tax payable 35,330 9,961
Deferred revenue 613,134 560,010 Total current
liabilities 1,137,315 1,246,435 Long-term debt 1,681,483 1,779,065
Accrued pension and postretirement liability 30,336 27,191 Deferred
income taxes 338,336 361,267 Other liabilities 54,152 38,692
Commitments and contingencies Stockholders’ equity: Class A common
stock, $0.01 par value per share, 160,000,000 shares authorized,
69,127,957 and 67,901,101 shares issued, and 68,172,435 and
67,382,298 shares outstanding at August 31, 2014 and November 30,
2013, respectively 691 679 Additional paid-in capital 915,562
788,670 Treasury stock, at cost: 955,522 and 518,803 shares at
August 31, 2014 and November 30, 2013, respectively (97,227 )
(45,945 ) Retained earnings 1,354,951 1,220,520 Accumulated other
comprehensive loss (62,807 ) (56,961 ) Total stockholders’ equity
2,111,170 1,906,963 Total liabilities and
stockholders’ equity $ 5,352,792 $ 5,359,613
IHS INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except for per-share
amounts)
(Unaudited)
Three months ended August 31, Nine months
ended August 31, 2014 2013 2014
2013 Revenue $ 556,011 $ 480,288 $ 1,648,477 $
1,280,956
Operating expenses: Cost of revenue (includes
stock-based compensation expense of $2,906; $2,649; $6,277 and
$5,625 for the three and nine months ended August 31, 2014 and
2013, respectively) 219,208 198,279 657,078 530,778 Selling,
general and administrative (includes stock-based compensation
expense of $44,821; $41,584; $121,446 and $109,169 for the three
and nine months ended August 31, 2014 and 2013, respectively)
211,285 179,344 612,645 465,182 Depreciation and amortization
50,568 42,431 149,347 107,787 Restructuring charges 2,368 3,264
6,403 11,283 Acquisition-related costs — 14,499 1,017 18,059 Net
periodic pension and postretirement expense (income) (1,328 ) 2,242
4,342 6,724 Other expense, net 132 803 1,440
3,733 Total operating expenses 482,233 440,862
1,432,272 1,143,546
Operating income 73,778
39,426 216,205 137,410 Interest income 251 232 737 879 Interest
expense (12,295 ) (16,072 ) (42,150 ) (28,356 ) Non-operating
expense, net (12,044 ) (15,840 ) (41,413 ) (27,477 ) Income from
continuing operations before income taxes 61,734 23,586 174,792
109,933 Provision for income taxes (15,217 ) (116 ) (40,361 )
(18,909 ) Income from continuing operations 46,517 23,470 134,431
91,024 Loss from discontinued operations, net — (108 ) —
(101 )
Net income $ 46,517 $ 23,362 $
134,431 $ 90,923 Basic earnings per share:
Income from continuing operations $ 0.68 $ 0.35 $ 1.97 $ 1.38 Loss
from discontinued operations, net $ — $ — $ —
$ — Net income $ 0.68 $ 0.35 $ 1.97 $
1.38 Weighted average shares used in computing basic
earnings per share 68,269 66,650 68,100 66,112
Diluted earnings per share: Income from continuing
operations $ 0.68 $ 0.35 $ 1.95 $ 1.36 Loss from discontinued
operations, net $ — $ — $ — $ — Net
income $ 0.68 $ 0.35 $ 1.95 $ 1.36
Weighted average shares used in computing diluted earnings per
share 68,911 67,326 68,810 66,843
IHS INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited)
Nine months ended August 31, 2014
2013 Operating activities: Net income $ 134,431 $
90,923 Reconciliation of net income to net cash provided by
operating activities: Depreciation and amortization 149,347 107,787
Stock-based compensation expense 127,723 114,794 Impairment of
assets — 1,629 Excess tax benefit from stock-based compensation
(11,609 ) (12,405 ) Net periodic pension and postretirement expense
4,342 6,724 Pension and postretirement contributions (2,080 )
(12,601 ) Deferred income taxes 8,337 (37,756 ) Change in assets
and liabilities: Accounts receivable, net 93,234 43,662 Other
current assets (11,490 ) 3,319 Accounts payable (9,682 ) (14,442 )
Accrued expenses (2,878 ) (371 ) Income tax payable 16,281 32,700
Deferred revenue 43,465 21,567 Other liabilities 3,029
(1,161 )
Net cash provided by operating activities 542,450
344,369
Investing activities: Capital
expenditures on property and equipment (83,314 ) (65,411 )
Acquisitions of businesses, net of cash acquired (133,938 )
(1,481,288 ) Intangible assets acquired (714 ) — Change in other
assets 3,846 (5,590 ) Settlements of forward contracts 1,345
2,853
Net cash used in investing activities (212,775
) (1,549,436 )
Financing activities: Proceeds from
borrowings 165,000 1,375,000 Repayment of borrowings (439,317 )
(128,648 ) Payment of debt issuance costs — (17,360 ) Excess tax
benefit from stock-based compensation 11,609 12,405 Proceeds from
the exercise of employee stock options — 549 Repurchases of common
stock (51,282 ) (87,512 )
Net cash provided by (used in)
financing activities (313,990 ) 1,154,434 Foreign
exchange impact on cash balance (12,239 ) (23,380 ) Net increase
(decrease) in cash and cash equivalents 3,446 (74,013 ) Cash and
cash equivalents at the beginning of the period 258,367
345,008 Cash and cash equivalents at the end of the period $
261,813 $ 270,995
IHS INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited)
Three months ended August 31,
Percent change Nine months ended August 31,
Percent change 2014 2013
Total Organic 2014
2013 Total Organic Revenue by
segment: Americas $ 363,449 $ 307,281 18 % 2 % $
1,090,656 $ 794,072 37 % 4 % EMEA 138,120 122,247 13 % 7 % 403,828
344,662 17 % 7 % APAC 54,442 50,760 7 % 5 % 153,993
142,222 8 % 3 %
Total revenue $ 556,011
$ 480,288 16 % 3 % $ 1,648,477 $ 1,280,956 29
% 4 %
Revenue by transaction type: Subscription $
432,128 $ 365,025 18 % 6 % $ 1,275,848 $ 986,675 29 % 6 %
Non-subscription 123,883 115,263 7 %
(5)
%
372,629 294,281 27 % — %
Total revenue $
556,011 $ 480,288 16 % 3 % $ 1,648,477 $
1,280,956 29 % 4 %
Revenue by product
category: Resources $ 229,107 $ 218,345 5 % 6 % $ 690,477 $
630,541 10 % 6 % Industrials 185,267 119,149 55 % 6 % 538,336
245,997 119 % 3 % Horizontal products 141,637 142,794
(1)
%
(3)
%
419,664 404,418 4 % 3 %
Total revenue $
556,011 $ 480,288 16 % 3 % $ 1,648,477 $
1,280,956 29 % 4 %
Excluding the effect of the BPVC engineering standard release in
the third quarter of 2013 results in the following organic revenue
growth percentages:
- Americas organic revenue growth was 3
percent for the three months ended August 31, 2014 and 4 percent
for the nine months ended August 31, 2014;
- EMEA organic revenue growth was 8
percent for both the three and nine months ended August 31,
2014;
- APAC organic revenue growth was 6
percent for the three months ended August 31, 2014 and 3 percent
for the nine months ended August 31, 2014;
- Non-subscription organic revenue growth
was 1 percent for the three months ended August 31, 2014 and 2
percent for the nine months ended August 31, 2014;
- Horizontal products organic revenue
growth was 2 percent for the three months ended August 31, 2014 and
4 percent for the nine months ended August 31, 2014; and
- Total organic revenue growth was 5
percent for both the three and nine months ended August 31,
2014.
IHS INC.
RECONCILIATION OF CONSOLIDATED NON-GAAP
FINANCIAL MEASUREMENTS TO
MOST DIRECTLY COMPARABLE GAAP FINANCIAL
MEASUREMENTS
(In thousands, except for per-share
amounts)
(Unaudited)
Three months ended August 31, Nine months
ended August 31, 2014 2013 2014
2013 Net income $ 46,517 $ 23,362 $ 134,431 $
90,923 Interest income (251 ) (232 ) (737 ) (879 ) Interest expense
12,295 16,072 42,150 28,356 Provision for income taxes 15,217 116
40,361 18,909 Depreciation 17,361 12,964 49,241 33,695 Amortization
related to acquired intangible assets 33,207 29,467
100,106 74,092
EBITDA (1)(6) $ 124,346
$ 81,749 $ 365,552 $ 245,096 Stock-based compensation expense
47,727 44,233 127,723 114,794 Restructuring charges 2,368 3,264
6,403 11,283 Acquisition-related costs — 14,499 1,017 18,059
Impairment of assets — — — 1,629 Loss on sale of assets — — 2,654
1,241 Loss from discontinued operations, net — 108 —
101
Adjusted EBITDA (2)(6) $ 174,441
$ 143,853 $ 503,349 $ 392,203
Three months ended August 31, Nine months ended
August 31, 2014 2013 2014 2013
Net income $ 46,517 $ 23,362 $ 134,431 $ 90,923 Stock-based
compensation expense 47,727 44,233 127,723 114,794 Amortization
related to acquired intangible assets 33,207 29,467 100,106 74,092
Restructuring charges 2,368 3,264 6,403 11,283 Acquisition-related
costs — 14,499 1,017 18,059 Impairment of assets — — — 1,629 Loss
on sale of assets — — 2,654 1,241 Loss from discontinued
operations, net — 108 — 101 Income tax effect on adjusting items
(27,220 ) (29,428 ) (80,953 ) (71,067 )
Adjusted net income
(3) $ 102,599 $ 85,505 $ 291,381 $
241,055
Adjusted EPS (4)(6) $ 1.49 $
1.27 $ 4.23 $ 3.61 Weighted average shares
used in computing Adjusted EPS 68,911 67,326 68,810
66,843
Three months ended August
31, Nine months ended August 31, 2014 2013
2014 2013 Net cash provided by operating
activities $ 167,476 $ 83,203 $ 542,450 $ 344,369 Capital
expenditures on property and equipment (32,278 ) (22,975 ) (83,314
) (65,411 )
Free cash flow (5)(6) $ 135,198 $
60,228 $ 459,136 $ 278,958
IHS INC.
RECONCILIATION OF SEGMENT NON-GAAP
FINANCIAL MEASUREMENTS TO
MOST DIRECTLY COMPARABLE GAAP FINANCIAL
MEASUREMENTS
(In thousands)
(Unaudited)
Three months ended August 31, 2014 Americas
EMEA APAC
Shared Services
Total Operating income $ 90,178 $ 35,166 $
10,587 $ (62,153 ) $ 73,778 Adjustments: Stock-based compensation
expense — — — 47,727 47,727 Depreciation and amortization 41,846
5,057 2,317 1,348 50,568 Restructuring charges 1,563 734
71 — 2,368
Adjusted EBITDA $ 133,587
$ 40,957 $ 12,975 $ (13,078 ) $ 174,441
Three months ended August 31, 2013 Americas
EMEA APAC Shared Services Total
Operating income $ 71,366 $ 19,788 $ 8,967 $ (60,695 ) $
39,426 Adjustments: Stock-based compensation expense — — — 44,233
44,233 Depreciation and amortization 34,368 5,666 558 1,839 42,431
Restructuring charges 2,255 590 419 — 3,264 Acquisition-related
costs 14,369 130 — — 14,499
Adjusted
EBITDA $ 122,358 $ 26,174 $ 9,944 $
(14,623 ) $ 143,853
Nine months ended August 31, 2014
Americas EMEA APAC Shared Services
Total Operating income $ 261,375 $ 94,226 $ 33,587 $
(172,983 ) $ 216,205 Adjustments: Stock-based compensation expense
— — — 127,723 127,723 Depreciation and amortization 124,414 16,162
3,405 5,366 149,347 Restructuring charges 3,335 2,675 393 — 6,403
Acquisition-related costs 696 321 — — 1,017 Loss on sale of assets
2,654 — — — 2,654
Adjusted
EBITDA $ 392,474 $ 113,384 $ 37,385 $
(39,894 ) $ 503,349
Nine months ended August 31, 2013
Americas EMEA APAC Shared Services
Total Operating income $ 213,014 $ 56,259 $ 28,964 $
(160,827 ) $ 137,410 Adjustments: Stock-based compensation expense
— — — 114,794 114,794 Depreciation and amortization 83,833 17,057
1,495 5,402 107,787 Restructuring charges 8,316 2,527 440 — 11,283
Acquisition-related costs 17,767 292 — — 18,059 Impairment of
assets 1,629 — — — 1,629 Loss on sale of assets — 1,241
— — 1,241
Adjusted EBITDA $ 324,559
$ 77,376 $ 30,899 $ (40,631 ) $ 392,203
(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,
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, asset impairment charges, gain or loss on sale of assets,
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.
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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