IHS Markit Reports First Quarter 2018 Results

March 27, 2018

LONDON–(BUSINESS WIRE)–IHS Markit (Nasdaq: INFO), a world leader in critical information,
analytics and solutions, today reported results for the first quarter
ended February 28, 2018.

Revenue of $932 million, including total revenue growth of 10 percent
and total organic revenue growth of 6 percent
Net income of $241 million and diluted earnings per share (EPS) of
$0.59
Adjusted EBITDA of $359 million and Adjusted earnings per diluted
share (Adjusted EPS) of $0.53
Cash flow from operations of $203 million and free cash flow of $148
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.

First Quarter 2018 Financial Performance

Three months ended February 28,	Change
(in millions, except percentages and per share data)	2018	2017	$	%
Revenue	$	932.1	$	844.2	$	87.9	10	%
Net income attributable to IHS Markit*	$	241.3	$	66.0	$	175.3	266	%
Adjusted EBITDA	$	359.3	$	320.2	$	39.1	12	%
GAAP EPS	$	0.59	$	0.16	$	0.43	269	%
Adjusted EPS	$	0.53	$	0.45	$	0.08	18	%
Cash flow from operations	$	202.9	$	250.7	$	(47.8	)	(19)	%
Free cash flow	$	147.7	$	179.0	$	(31.3	)	(17)	%
* Net income attributable to IHS Markit for the three months ended February 28, 2018 includes a one-time tax benefit associated with U.S. tax reform estimated at approximately $136 million.

“We were very pleased with a strong Q1, which positions us well for the
year, and continue to make progress with our strategic initiatives,”
said Lance Uggla, chairman and chief executive officer at IHS Markit.

“Our organic growth benefited from strong execution and improving
underlying fundamentals in our end markets,” said Todd Hyatt, chief
financial officer at IHS Markit. “Transportation and Financial Services
continued to perform very well, while CMS and Resources continued to
improve.”

First Quarter 2018 Revenue Performance

First quarter 2018 revenue increased 10 percent compared to the first
quarter of 2017. The following table provides additional revenue
information by transaction type.

Three months ended February 28,	Percent change
(in millions, except percentages)	2018	2017	Total	Organic
Recurring fixed	$	683.3	$	617.1	11	%	6	%
Recurring variable	117.1	106.4	10	%	7	%
Non-recurring	131.7	120.7	9	%	8	%
Total revenue	$	932.1	$	844.2	10	%	6	%

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

Change in revenue
First quarter 2018 vs. first quarter 2017
(All amounts represent percentage points)	Organic	Acquisitive	Foreign Currency	Total
Resources	3	%	—	%	1	%	4	%
Transportation	10	%	7	%	2	%	20	%
Consolidated Markets & Solutions	5	%	1	%	2	%	9	%
Financial Services	6	%	—	%	3	%	8	%
Total	6	%	2	%	2	%	10	%

First Quarter 2018 Operating Performance

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

Resources. First quarter revenue for Resources increased $8
million, or 4 percent, to $205 million, with recurring revenue
increasing 3 percent organically. First quarter Adjusted EBITDA for
Resources increased $5 million, or 6 percent, to $85 million.
Transportation. First quarter revenue for Transportation
increased $45 million, or 20 percent, to $270 million, and included 11
percent organic growth for the recurring-based business. First quarter
Adjusted EBITDA for Transportation increased $20 million, or 22
percent, to $110 million.
Consolidated Markets & Solutions (CMS). First quarter
revenue for CMS increased $11 million, or 9 percent, to $138 million,
and had 3 percent organic growth for the recurring-based business.
First quarter Adjusted EBITDA for CMS increased $3 million, or 11
percent, to $32 million.
Financial Services. First quarter revenue for Financial
Services increased $24 million, or 8 percent, to $320 million, and
included 6 percent total organic growth. First quarter Adjusted EBITDA
for Financial Services increased $16 million, or 13 percent, to $145
million.

Outlook (forward-looking statement)

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

Revenue in a range of $3.825 billion to $3.875 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.

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 first quarter 2018 results on March 27, 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 February 28, 2018	As of November 30, 2017
(Unaudited)	(Audited)
Assets
Current assets:
Cash and cash equivalents	$	156.0	$	133.8
Accounts receivable, net	802.7	693.5
Income tax receivable	34.4	31.9
Deferred subscription costs	78.0	62.8
Other current assets	94.7	93.0
Total current assets	1,165.8	1,015.0
Non-current assets:
Property and equipment, net	539.7	531.3
Intangible assets, net	4,128.6	4,188.3
Goodwill	8,810.4	8,778.5
Deferred income taxes	11.1	7.1
Other	41.1	34.2
Total non-current assets	13,530.9	13,539.4
Total assets	$	14,696.7	$	14,554.4
Liabilities and equity
Current liabilities:
Short-term debt	$	90.9	$	576.0
Accounts payable	50.1	53.4
Accrued compensation	59.7	157.4
Other accrued expenses	351.9	323.0
Income tax payable	8.5	5.5
Deferred revenue	919.3	790.8
Total current liabilities	1,480.4	1,906.1
Long-term debt, net	4,186.1	3,617.3
Accrued pension and postretirement liability	31.6	31.8
Deferred income taxes	691.0	869.8
Other liabilities	136.9	105.9
Commitments and contingencies
Redeemable noncontrolling interests	8.4	19.1
Shareholders' equity	8,162.3	8,004.4
Total liabilities and equity	$	14,696.7	$	14,554.4

IHS MARKIT LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except for per-share amounts) (Unaudited)
Three months ended February 28,
2018	2017
Revenue	$	932.1	$	844.2
Operating expenses:
Cost of revenue	342.9	327.0
Selling, general and administrative	290.3	268.0
Depreciation and amortization	130.6	120.8
Restructuring charges	—	(0.2	)
Acquisition-related costs	27.0	31.6
Net periodic pension and postretirement expense	0.2	0.4
Other expense, net	1.4	0.9
Total operating expenses	792.4	748.5
Operating income	139.7	95.7
Interest income	0.7	0.5
Interest expense	(46.3	)	(31.8	)
Non-operating expense, net	(45.6	)	(31.3	)
Income from continuing operations before income taxes and equity in loss of equity method investee	94.1	64.4
Benefit for income taxes	146.6	3.6
Equity in loss of equity method investee	—	(2.0	)
Net income	240.7	66.0
Net loss attributable to noncontrolling interest	0.6	—
Net income attributable to IHS Markit Ltd.	$	241.3	$	66.0
Basic earnings per share attributable to IHS Markit Ltd.	$	0.61	$	0.16
Weighted average shares used in computing basic earnings per share	398.0	406.2
Diluted earnings per share attributable to IHS Markit Ltd.	$	0.59	$	0.16
Weighted average shares used in computing diluted earnings per share	412.1	422.2

IHS MARKIT LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
Three months ended February 28,
2018	2017
Operating activities:
Net income	$	240.7	$	66.0
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	130.6	120.8
Stock-based compensation expense	61.9	75.2
Net periodic pension and postretirement expense	0.2	0.4
Undistributed earnings of affiliates, net	—	1.4
Pension and postretirement contributions	(0.5	)	(0.6	)
Deferred income taxes	(187.9	)	8.8
Change in assets and liabilities:
Accounts receivable, net	(110.6	)	(16.7	)
Other current assets	(20.7	)	(40.9	)
Accounts payable	(1.1	)	(12.6	)
Accrued expenses	(67.2	)	(68.9	)
Income tax	29.3	(21.9	)
Deferred revenue	125.3	137.4
Other liabilities	2.9	2.3
Net cash provided by operating activities	202.9	250.7
Investing activities:
Capital expenditures on property and equipment	(55.2	)	(71.7	)
Intangible assets acquired	(3.1	)	—
Change in other assets	0.1	2.6
Settlements of forward contracts	3.1	2.7
Net cash used in investing activities	(55.1	)	(66.4	)
Financing activities:
Proceeds from borrowings	745.0	1,395.0
Repayment of borrowings	(657.0	)	(1,057.5	)
Payment of debt issuance costs	(7.0	)	(9.5	)
Payments for purchase of noncontrolling interests	(7.7	)	—
Repurchases of common shares	(172.5	)	(524.9	)
Proceeds from the exercise of employee stock options	56.9	97.3
Payments related to tax withholding for stock-based compensation	(76.6	)	(67.0	)
Net cash used in financing activities	(118.9	)	(166.6	)
Foreign exchange impact on cash balance	(6.7	)	(1.8	)
Net increase in cash and cash equivalents	22.2	15.9
Cash and cash equivalents at the beginning of the period	133.8	138.9
Cash and cash equivalents at the end of the period	$	156.0	$	154.8

IHS MARKIT LTD. SUPPLEMENTAL REVENUE DISCLOSURE (In millions) (Unaudited)
Three months ended February 28,	Percent change
2018	2017	Total	Organic
Recurring revenue:
Resources	$	183.4	$	176.8	4	%	3	%
Transportation	198.7	160.8	24	%	11	%
CMS	118.9	111.6	7	%	3	%
Financial Services – fixed	182.3	167.9	9	%	6	%
Total recurring fixed revenue	$	683.3	$	617.1	11	%	6	%
Financial Services – variable	117.1	106.4	10	%	7	%
Total recurring revenue	$	800.4	$	723.5	11	%	6	%
Non-recurring revenue:
Resources	$	21.9	$	20.1	9	%	8	%
Transportation	70.9	64.1	11	%	10	%
CMS	18.7	14.9	26	%	21	%
Financial Services	20.2	21.6	(6)	%	(9)	%
Total non-recurring revenue	$	131.7	$	120.7	9	%	8	%
Total revenue (segment):
Resources	$	205.3	$	196.9	4	%	3	%
Transportation	269.6	224.9	20	%	10	%
CMS	137.6	126.5	9	%	5	%
Financial Services	319.6	295.9	8	%	6	%
Total revenue	$	932.1	$	844.2	10	%	6	%

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 February 28,
2018	2017
Net income attributable to IHS Markit Ltd.	$	241.3	$	66.0
Interest income	(0.7	)	(0.5	)
Interest expense	46.3	31.8
Benefit for income taxes	(146.6	)	(3.6	)
Depreciation	41.6	36.1
Amortization related to acquired intangible assets	89.0	84.7
EBITDA (1)(6)	$	270.9	$	214.5
Stock-based compensation expense	61.9	75.2
Restructuring charges	—	(0.2	)
Acquisition-related costs	12.1	31.6
Acquisition-related performance compensation	14.9	—
Share of joint venture results not attributable to Adjusted EBITDA	—	(0.4	)
Adjusted EBITDA attributable to noncontrolling interest	(0.5	)	(0.5	)
Adjusted EBITDA (2)(6)	$	359.3	$	320.2
Three months ended February 28,
2018	2017
Net income attributable to IHS Markit Ltd.	$	241.3	$	66.0
Stock-based compensation expense	61.9	75.2
Amortization related to acquired intangible assets	89.0	84.7
Restructuring charges	—	(0.2	)
Acquisition-related costs	12.1	31.6
Acquisition-related performance compensation	14.9	—
Income tax effect of above adjustments*	(200.1	)	(65.4	)
Adjusted earnings attributable to noncontrolling interest	(0.5	)	(0.4	)
Adjusted net income (3)	$	218.6	$	191.5
Adjusted EPS (4)(6)	$	0.53	$	0.45
Weighted average shares used in computing Adjusted EPS	412.1	422.2
* Income tax effect for the three months ended February 28, 2018 includes a one-time tax benefit associated with U.S. tax reform estimated at approximately $136 million.
Three months ended February 28,
2018	2017
Net cash provided by operating activities	$	202.9	$	250.7
Capital expenditures on property and equipment	(55.2	)	(71.7	)
Free cash flow (5)(6)	$	147.7	$	179.0

IHS MARKIT LTD. SUPPLEMENTAL SEGMENT OPERATING PROFIT MEASURE DISCLOSURE (In millions) (Unaudited)
Three months ended February 28,
2018	2017
Adjusted EBITDA by segment:
Resources	$	84.9	$	80.0
Transportation	109.7	89.8
CMS	31.8	28.6
Financial Services	145.4	129.2
Shared services	(12.5	)	(7.4	)
Total Adjusted EBITDA	$	359.3	$	320.2
Adjusted EBITDA margin by segment:
Resources	41.4	%	40.6	%
Transportation*	40.7	%	39.9	%
CMS	23.1	%	22.6	%
Financial Services	45.5	%	43.7	%
Total Adjusted EBITDA margin*	38.6	%	37.9	%
* Excluding the effect of the aM acquisition, Transportation Adjusted EBITDA margin was 43.9 percent for the three months ended February 28, 2018, and Total Adjusted EBITDA margin was 39.4 percent for the same period.

(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 and performance compensation, 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.

Contacts

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

IHS Markit Reports First Quarter 2018 Results

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