IHS Inc. (IHS)

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IHS, Inc. (IHS)

Q4 2011 Earnings Call

January 06, 2012 8:00 a.m. ET

Executives

Andy Schulz - Vice President of Investor Relations

Jerre Stead - Chairman and Chief Executive Officer

Scott Key - President and Chief Operating Officer

Richard Walker - Executive Vice President and Chief Financial Officer

Analysts

Suzanne Stein - Morgan Stanley

Manav Patnaik - Barclays Capital

Eric Boyer - Wells Fargo

Peter Appert - Piper Jaffray

Michael Meltz – JPMorgan

Bill Sutherland - Northland Capital Markets

William Warmington - Raymond James

Brian Karimzad - Goldman Sachs

Robert Riggs - William W Blair

Kelly Flynn - Credit Suisse

Presentation

Operator

Good day ladies and gentlemen and welcome to the Fourth Quarter 2011 IHS, Inc. Earnings conference call. My name is Lacy and I will be your coordinator for today. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Andy Schulz, Vice President of Investor Relations. Please proceed.

Andrew Schulz

Thank you, Lacy. Good morning and thank you for joining us for the IHS Fourth Quarter and Fiscal 2011 Earnings conference call. We issued our earnings release and a supplemental presentation earlier this morning. If you do not have the release and the presentation we issued today, 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 are 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 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 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 HIS’ 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. Good morning, welcome and a very happy New Year to all of our investors and to my IHS colleagues. It is a great pleasure this morning to share with you our outstanding results from the fourth quarter and for the full year of 2011. Before I do, I must begin with a real heartfelt thank you to my IHS colleagues around the world. The performance I am about to share with you is the direct result of the outstanding team work in collaboration displayed by each of my colleagues. I am very proud to be part of this team.

I will start with the quarterly financial highlights. Revenue was up 27% in the fourth quarter. Adjusted EBITDA increased by 33% and our adjusted EBITDA margin was 32.1%, the highest in our company’s history. The absolute dollar levels for Q4 revenue and profit were both company records. Q4 proved to be exactly what we thought it would be, accelerating organic growth on the top line, accompanied by meaningful margin expansion.

Our fourth quarter performance is a fitting capstone on a year characterized by focus and performance. In early November of 2010, we shared our vision for what we would accomplish in 2011. Since then, the world has seen many economic events that certainly have presented challenges for businesses around the world. Despite these global economic challenges we actively managed IHS to ensure that we continue to make the right investment decisions to drive strong profitable growth and to deliver ever better insight, information, and analytics to our customers around the globe every day. Therefore I am proud to share with you these annual results.

Revenue was up 25%. Adjusted EBITDA increased by 26% and our adjusted EBITDA margin was 30.2%, up from last year, despite the significant levels of investment in infrastructure that we have made during 2011. This performance is the direct outcome of the following.

A clear vision of what we are building and an intense focus on the four 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 and COO and Rich Walker, our EVP and CFO would provide more details shortly.

As you know, we have four company objectives, colleagues’ success, customer delight, profitable top and bottom line growth, and shareowner success relative to our peer group. Execution of these objectives drove solid results. The foundation of this performance is the engagement of our colleagues in the level of customer delight. During 2011, 97% of our colleagues participated in our annual engagement survey, providing us with a clear view of actions and experiences that most affect our commitment and performance at IHS.

Our colleague engagement score for 2011 was 59% and represents a recalibration of our baseline with a new third party survey firm that offers an excellent set of analytics and benchmarks as we move to a new level of excellence. We have achieved world class performance in a number of important areas including the value colleagues derive from their work and the freedom of flexibility they have in delivering value to our customers. Importantly, we saw best in class levels in impact that our colleagues are having with customers as a result of increased colleague collaboration at IHS in creating value.

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