IHS Inc. (IHS)

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IHS Inc. (IHS)

F3Q09 Earnings Call

September 17, 2009 5:00 pm ET


Andy Schulz – Senior Director, Investor Relations

Jerre L. Stead - Chief Executive Officer

Michael J. Sullivan - Chief Financial Officer

Jeffrey R. Tarr – President and Chief Operating Officer


Vincent Lin - Goldman Sachs

Brian Shipman - Jefferies & Co.

John Neff -William Blair & Company

Peter Appert - Piper Jaffray

William Sutherland - Boenning & Scattergood



Welcome to the Q3 2009 IHS Inc. earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Mr. Andy Schulz, Senior Director of Investor Relations.

Andy Schulz

Thank you for joining us for the IHS third quarter 2009 earnings conference call. We issues two news releases about one hour ago. If you do not have the two news releases we issued today, you will find a copy on our Web site at www.IHS.com.

In addition to announcing our third quarter and year-to-date results, we also announced our acquisition of Environmental Support Solutions, or ESS, for approximately $59.0 million net of cash acquired. ESS is yet another important step in the development of our environment domain offerings and we will full discuss the details on this call.

Some of our comments and discussions on the quarter are based on non-GAAP measures. Our non-GAAP or adjusted numbers, exclude stock-based compensation and other non-cash charges, net pension income, gains and losses on sales of assets and other items. Our earnings release includes both our GAAP-based income statement and statement of cash flows and reconciliations to the non-GAAP measures discussed during this call. These reconciliation schedules can also be found on our Web site. The non-GAAP results are a supplement to the GAAP financial statements. IHS believes this non-GAAP presentation and the elimination of these items is useful in order to focus on what we deem to be a more reliable indicator of ongoing operating performance.

As a reminder, this conference call is being recorded and Web cast and is the copyright and property of IHS. Any rebroadcast of this information in whole or in part without the prior written consent of IHS is prohibited.

The agenda for today’s call is as follows: Jerre Stead, our Chairman & CEO, will provide highlights of the quarter, review our most recent acquisitions, including today's ESS announcement, and update some of our strategic initiatives. Mike Sullivan, our Executive Vice President and CFO, will review our third quarter and year-to-date results, update our outlook for fiscal 2009, and provide an initial sense for fiscal 2010 expectations. After formal comments, we’ll then open the call for Q&A, at which time we will be joined by Jeff Tarr, President and Chief Operating Officer of IHS.

Please keep in mind that this conference call, especially the discussion of our outlook, may contain statements about expected future events that are forward-looking and subject to risks and uncertainties. Factors that could cause actual results to differ and vary materially from expectations can be found in IHS’s filings with the SEC and on the IHS Web site.

With that, it is my pleasure to turn the call over to Jerre Stead, IHS chairman and CEO.

Jerre L. Stead

Good afternoon and welcome to all of our investors and IHS colleagues, including our new colleagues at both Log Tech and ESS who are joining us on this call or Web cast. Today, after briefly reviewing our performance for the quarter just ended, I will discuss our recent acquisitions, focusing primarily on today's ESS announcement. I will also update you on two other important endeavors: the ongoing global insight integration and our Vanguard initiative.

Our financial results for Q3 were as follows: revenue for the third quarter was $239.0 million, up 15% over last year. Adjusted EBITDA increased 24% to $71.0 million and our adjusted EBITDA margin was up 200 basis points. Adjusted earnings per diluted share were $0.66, an increase of 18% over last year, and we generated $48.0 million of free cash flow during the recently completed quarter. Mike will provide more details soon.

Again, I wish to salute all of my colleagues for their terrific execution in delivering strong performance this year, under very challenging conditions. Our team has done a great job.

We are focused on improving our leadership position in critical information and insight across four targeted information domains: energy, product life cycle; security; and environment, all supported by macroeconomics that cover 170 global vertical markets 200+ geographic regions. We are executing this strategy both organically and through acquisitions.

Our acquisitions add capability to IHS that are highly desired by our customers. Hopefully, you saw our news release earlier this month regarding the purchase of Log Tech, a classic energy tuck-in acquisition. Log Tech is a leader in the development of digital log information and cost-effective software solution. The acquisition of Log Tech allows IHS to increase our Canadian well log coverage and expand our well log management product offerings across all of our markets.

Now, let's turn to today's acquisition announcement. The acquisition of ESS is another step in our commitment to be the leader in global environment health and safety management solutions. This acquisition puts IHS at the forefront of innovation and sustainability and climate change management. We will integrate the capabilities of ESS into our existing solid position in environmental, health, and safety and combine it with our capabilities and chemical life cycle management reach, materials compliance, and hazardous materials management systems.

Read the rest of this transcript for free on seekingalpha.com