OREANDA-NEWS. IHS Inc. (NYSE: IHS), the leading global source of information and analytics, today reported results for the fourth quarter and fiscal year ended November 30, 2015.

  • Revenue including discontinued operations (disc-ops) of $589 million, up 1 percent from the prior-year period; revenue excluding disc-ops of $556 million, up 3 percent from the prior-year period
  • Flat total organic revenue growth and 3 percent subscription organic revenue growth, excluding disc-ops
  • Adjusted EBITDA including disc-ops of $200 million, up 7 percent from the prior-year period
  • Adjusted earnings per diluted share (Adjusted EPS) including disc-ops of $1.68, unchanged from the prior year period

Revenue including disc-ops, 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 2015 Financial Performance

    
                   
      Three months ended November 30,   Change   Year ended November 30,   Change
(in thousands, except percentages and per share data)     2015   2014   $   %   2015   2014   $   %
Revenue (excluding disc-ops)     $ 555,706     $ 541,132     $ 14,574     3 %   $ 2,184,335     $ 2,079,787     $ 104,548     5 %
Revenue from disc-ops     32,972     41,185     (8,213 )   (20 )%   129,956     151,007     (21,051 )   (14 )%
Revenue including disc-ops     $ 588,678     $ 582,317     $ 6,361     1 %   $ 2,314,291     $ 2,230,794     $ 83,497     4 %
                                   
Net income     $ 90,477     $ 60,118     $ 30,359     50 %   $ 240,193     $ 194,549     $ 45,644     23 %
Adjusted EBITDA including disc-ops     $ 199,690     $ 186,455     $ 13,235     7 %   $ 744,077     $ 689,804     $ 54,273     8 %
                                   
GAAP EPS     $ 1.32     $ 0.87     $ 0.45     52 %   $ 3.47     $ 2.81     $ 0.66     23 %
Adjusted EPS including disc-ops     $ 1.68     $ 1.68     $ —     — %   $ 6.07     $ 5.90     $ 0.17     3 %
                                   
Cash flow from operations     $ 115,978     $ 85,649     $ 30,329     35 %   $ 612,639     $ 628,099     $ (15,460 )   (2 )%
Free cash flow     $ 90,745     $ 54,510     $ 36,235     66 %   $ 489,718     $ 513,646     $ (23,928 )   (5 )%
                                                               

“We made strong progress in the second half of the year in increasing operational efficiency and effectiveness,” said Jerre Stead, IHS chairman and chief executive officer. “In addition, we made some very important changes to capital allocation, and the two acquisitions announced in the past several weeks are examples of execution against our new acquisition strategy.”

“We continue to deliver solid profit and margin expansion, with Adjusted EBITDA including disc-ops of $200 million for the quarter, up 7 percent versus a year ago, and full year margin expansion of 130 basis points,” said Todd Hyatt, IHS chief financial officer.

Fourth Quarter and Full Year 2015 Revenue Performance

The subscription-based business grew 3 percent organically in the fourth quarter of 2015 compared to the same period of 2014, as described in the following table.

                   
      Three months ended November 30,   Percent change   Year ended November 30,   Percent change
(in thousands, except percentages)     2015   2014   Total   Organic   2015   2014   Total   Organic
Subscription revenue     $ 448,216     $ 424,768     6 %   3 %   $ 1,768,541     $ 1,643,844     8 %   5 %
Non-subscription revenue     107,490     116,364     (8 )%   (10 )%   415,794     435,943     (5 )%   (9 )%
Revenue     555,706     541,132     3 %   — %   2,184,335     2,079,787     5 %   2 %
Revenue from disc-ops     32,972     41,185     (20 )%   (18 )%   129,956     151,007     (14 )%   (12 )%
Revenue including disc-ops     $ 588,678     $ 582,317     1 %   (1 )%   $ 2,314,291     $ 2,230,794     4 %   1 %
                                                           

Fourth quarter 2015 revenue increased 3 percent compared to the fourth quarter of 2014, and full year 2015 revenue increased 5 percent compared to the same period in 2014. The components of revenue growth are described below by segment and in total.

       
      Change in revenue (excluding disc-ops)
      Fourth quarter 2015 vs. fourth quarter 2014   2015 vs. 2014
(All amounts represent percentage points)     Organic   Acquisitive  

Foreign
Currency

   Organic   Acquisitive  

Foreign
Currency
Resources     (8 )%   1 %   (2 )%   (4 )%   1 %   (2 )%
Transportation     9 %   4 %   (1 )%   9 %   7 %   (2 )%
Consolidated Markets & Solutions     3 %   11 %   (2 )%   4 %   9 %   (3 )%
Total     — %   5 %   (2 )%   2 %   5 %   (2 )%
                           

Fourth Quarter and Full Year 2015 Segment Performance

Segment results were as follows:

  • Resources. Fourth quarter revenue for Resources decreased $22 million, or 9 percent, to $215 million, and included negative 3 percent organic growth for the subscription-based business. Fourth quarter Adjusted EBITDA for Resources decreased $6 million, or 6 percent, to $91 million. Fourth quarter operating income for Resources decreased $19 million, or 25 percent, to $57 million.

Full year 2015 revenue for Resources decreased $43 million, or 5 percent, to $885 million. Full year 2015 Adjusted EBITDA for Resources decreased $14 million, or 4 percent, to $357 million. Full year 2015 operating income for Resources decreased $38 million, or 13 percent, to $248 million.

  • Transportation. Fourth quarter revenue for Transportation increased $21 million, or 12 percent, to $199 million, and included 11 percent organic growth for the subscription-based business. Fourth quarter Adjusted EBITDA for Transportation increased $12 million, or 18 percent, to $79 million. Fourth quarter operating income for Transportation increased $7 million, or 15 percent, to $53 million.

Full year 2015 revenue for Transportation increased $96 million, or 14 percent, to $758 million. Full year 2015 Adjusted EBITDA for Transportation increased $48 million, or 21 percent, to $283 million. Full year 2015 operating income for Transportation increased $33 million, or 21 percent, to $194 million.

  • Consolidated Markets & Solutions (CMS) excluding disc-ops. Fourth quarter revenue for CMS increased $16 million, or 13 percent, to $142 million, and included 4 percent organic growth for the subscription-based business. Fourth quarter Adjusted EBITDA for CMS increased $11 million, or 45 percent, to $34 million. Fourth quarter operating income for CMS increased $6 million, or 42 percent, to $20 million.

Full year 2015 revenue for CMS increased $51 million, or 10 percent, to $541 million. Full year 2015 Adjusted EBITDA for CMS increased $19 million, or 21 percent, to $107 million. Full year 2015 operating income for CMS decreased $3 million, or 6 percent, to $49 million.

Outlook (forward-looking statement)

For the year ending November 30, 2016, excluding discontinued operations and including the acquisitions of CarProof and OPIS, IHS expects:

  • Revenue in a range of $2.30 billion to $2.38 billion, including 2-3 percent subscription organic growth, neutral non-subscription organic growth, and total organic growth of 0-3 percent;
  • Adjusted EBITDA in a range of $770 million to $800 million; and
  • Adjusted EPS in a range of $6.00 to $6.30 per diluted share.

Additionally, for the year ending November 30, 2016, IHS expects:

  • Depreciation expense to be approximately $100-105 million;
  • Amortization expense related to acquired intangible assets to be approximately $170-180 million;
  • Net interest expense to be approximately $100-105 million;
  • Stock-based compensation expense to be approximately $120-130 million;
  • An adjusted tax rate of approximately 27-28 percent;
  • An effective tax rate of approximately 21-22 percent;
  • Fully diluted shares to be approximately 68.5 million; and
  • Capital expenditures to be approximately 5 percent of revenue.