IHS Inc. (IHS)

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IHS Inc. (IHS)

Q4 2012 Results Earnings Call

January 8, 2013 8:00 AM ET

Executives

Andy Schulz - Vice President, Investor Relations

Jerre Stead - Chairman and CEO

Scott Key - President and COO

Rich Walker - Executive Vice President and CFO

Todd Hyatt - Chief Financial and IT Officer

Analysts

Eric Boyer - Wells Fargo

Peter Appert - Piper Jaffray

Bill Warmington - Raymond James

Andrew Steinerman - J.P. Morgan

Dan Leben - Robert W. Baird

Bill Sutherland - Northland Capital Markets

Kelly Flynn - Credit Suisse

Keane McCarthy - William Blair

Suzi Stein - Morgan Stanley

Presentation

Operator

Good day, ladies and gentlemen. And welcome to the Fourth Quarter 2012 IHS Incorporated Earnings Conference Call. My name is [Cheynnelle], and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Andy Schulz, Vice President of Investor Relations.

Andy Schulz

Thank you, [Cheynnelle]. Good morning. And thank you for joining us for the IHS fourth quarter and fiscal 2012 earnings conference call. We issued two press releases earlier this morning. If you do not have these releases, you will find copies of them on our website at ihs.com.

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 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 website.

The non-GAAP results are 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 webcast, and is the copyrighted property of IHS. Any rebroadcast of this information, in whole or in part, without the prior written consent of IHS is prohibited.

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’ filings with the SEC and on the IHS website.

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

Jerre Stead

Thank you, Andy, and good morning. Welcome and happy New Year to all of our investors and to my IHS colleagues. It’s a pleasure to be with you this morning to share our results from the fourth quarter and for the full year of 2012.

Before I do that I want to cover one important thought now that we’ve wrapped up 2012. When I think of a business, I consider it in the context of what I call the four Ps. Does the business have the right people, platform, processes and products. For the past several years, I’ve had the distinct pleasure of being able to update you frequently on our progress as we’ve invested heavily in our people, our platforms, our processes and our products.

Simply put, this has been the largest transformation and value creation exercise in our company’s history. It is the foundation for long term profitable growth for IHS. This past year was notable as we marked the highest level of investment and greatest progress achieved in these critical areas. If I can leave you with one thought to take away from this call and webcast, it is this: We have never been better positioned as we enter the year than we are today, because we now have the right people, platforms and processes and products. 2013 will be another year of significant investments in challenging economic conditions. However, we are in a better position to succeed than we have been at any point in our company’s history and it’s only growing to get better. I could not be proud of every IHS colleague.

Now under the quarterly financial highlights, revenue was up 12% in the fourth quarter. Adjusted EBITDA increased by 17% and our adjusted EBITDA margin was 33.8%, the highest in our company’s history. Q4 proved to be exactly what we thought it would be, solid performance in the face of strong macro economic headwinds and we are pleased to deliver the fourth quarter and full year goals that we outlined for you in September. The challenging global economy in which we are living is well documented. We shared our views on the broad environment at length on our 2013 guidance call on December 12.

Despite the headwinds, we actively managed IHS to ensure that we continue to make the right investment decisions to drive strong profitable growth and deliver ever better insight information and analytics to our customers around the globe everyday. Therefore I am proud to share with you these annual results. Revenue was up 15%. Adjusted EBITDA increased by 21% and our adjusted EBITDA margin was 31.7%, up from last year while our expenses included the significant level of investment and infrastructure that we made during 2012. This performance is the direct outcome of the following: a clear vision of what we are building, an intense focus on the five corporate objectives we set for ourselves this year and relentless execution while adapting our priorities to changing market conditions throughout the year. Scott Key, our President, Chief Operating Officer and Rich Walker our Executive VP of Global Finance will provide more details shortly.

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