Post Earnings Coverage as IHS Markit Q3 Earnings Outperform Estimates and Revenue Surges 30 Percent

LONDON, UK / ACCESSWIRE / September 29, 2016 / Active Wall St. announces its post-earnings coverage on IHS Markit Ltd (NASDAQ: INFO). The company reported its financial results for the third quarter fiscal 2016 (Q3 FY16) on September 27, 2016. The London-based company recorded a 30% y-o-y growth in its revenue with adjusted EPS growth of 10% y-o-y in the reported period. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

During the three months ended on August 31, 2016, IHS Markit reported revenue of $724.6 million compared to $557.9 million recorded at the end of Q3 FY15. The market had expected the company to report total revenue of $727.5 million. In Q3 FY16, the company’s total organic revenue declined 1% y-o-y as normalized for Boiler Pressure Vessel Code or BPVC timing. Acquisition provided for a 35% y-o-y growth in revenues, partially offset by a 2% headwind in foreign exchange conversion.

The market information provider reported net income attributable to IHS Markit of $31.7 million, or $0.09 loss per diluted share, in Q3 FY16 compared to net income attributable to IHS Markit of $59.1 million, or $0.24 per diluted share, in Q3 FY15. The reported quarter loss was primarily attributable to acquisition related costs amounting to $105 million, consisting of deal-related fees together with stock-based compensation.

Adjusted net income surged to $158.6 million, or $0.45 per diluted share, in Q3 FY16 from $101.3 million, or $0.41 per diluted share. Adjusted net income numbers for FY16 beat market expectation of $0.44 per diluted share.

In the reported quarter, IHS Markit’s adjusted EBITDA came in at $269.0 million, a surge of 50% from the previous year’s adjusted EBITDA of $179.6 million. The company’s adjusted EBITDA margins also improved from 32.2% in Q3 FY15 to 37.1% in Q3 FY16. The core IHS expansion provided for 380 basis points growth; while 110 basis points growth was due to inclusion of Markit’s stub period results.

Segment-Wise

The company’s Resources segment revenues fell 3% y-o-y in Q3 FY16 to $210.4 million. However, the segment reported that adjusted EBITDA increased by 4% y-o-y to $94.4 million. The company attributed the growth in adjusted EBITDA to the segment’s cost reductions program over the last one year and alignment of resources to the current business opportunities.

The Transportation segment revenues grew by 17% to $227.1 million in Q3 FY16. Further, the segment’s Q3 FY16 adjusted EBITDA surged 22% y-o-y, to $88.6 million, primarily on improved margin flow-through due to high revenue growth.

IHS Markit’s Consolidated Markets & Solutions segment reported an 11% y-o-y decline in revenue, to $130.2 million in Q3 FY17. Meanwhile, segment adjusted EBITDA during Q3 FY16 grew 14% y-o-y, to $33.3 million, primarily due to the ongoing cost reduction efforts.

The Financial Services segment’s revenues came in at $156.9 million in Q3 FY16 with adjusted EBITDA for Financial Services at $65.0 million on adjusted EBITDA margin of 41.4%.

Cash Flow & Balance Sheet

During Q3 FY16, IHS Markit’s cash flow from operation declined 10% y-o-y to $146.6 million from $162.4 million in the previous year comparable quarter. At the close of books on August 31, 2016, IHS Markit had $200.7 million in cash and cash equivalents compared to $291.6 million at the close of books on November 30, 2015.

The company’s long-term debt increased to $3.14 billion as on August 31, 2016 from $2.07 billion as on November 30, 2015. Furthermore, the company reported gross leverage ratio of 2.5 times and net leverage ratio of 2.3 times for the quarter ended August 31, 2016.

Stock Repurchase

In Q3 FY16, the company bought back 4.5 million shares worth $157 million at an average per cost of $35.06. The Board of Directors has recently authorized an additional $1.5 billion share repurchase program, which will be used to return capital to the investors through fiscal 2017.

Earnings Guidance

In its guidance for full year FY16, IHS Markit expects revenue to be in the range of $2.74 billion to $2.77 billion. For the year ending November 30, 2016, the company’s management forecasts adjusted EBITDA to be in the range of $975 million to $995 million. Furthermore, adjusted EPS for FY16 is anticipated to lie between $1.72 per diluted share and $1.78 per diluted share.

Stock Performance

On Wednesday, the stock closed the trading session at $36.78, jumping 3.20% from its previous closing price of $35.64. A total volume of 3.66 million shares have exchanged hands, which was higher than the 3-month average volume of 1.94 million shares. Cintas’ stock price advanced 13.94% in the last three months, 4.05% in the past six months, and 29.32% in the previous twelve months. Furthermore, since the start of the year, shares of the company has gained 21.91%. Shares of the company have a PE ratio of 56.24.

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