IHS Inc. Announces Full-Year and Fourth-Quarter 2005 Results

Business Wire, Jan 12, 2006

ENGLEWOOD, Colo. -- IHS Inc. (NYSE:IHS), one of the leading global providers of critical technical information, decision-support tools and related services, today reported results for the full year and fourth quarter ended November 30, 2005. Revenue for fiscal 2005 was $476.1 million, representing an increase of 21 percent compared to $394.0 million for fiscal 2004. Net income for fiscal 2005 was $41.8 million, or $0.75 per diluted share, compared to $61.3 million, or $1.11 per diluted share, for fiscal 2004. Revenue for the fourth quarter of fiscal 2005 totaled $126.0 million, representing an increase of six percent over fourth-quarter 2004 revenue of $118.4 million. Net income for the fourth quarter of 2005 decreased 39 percent to $16.4 million, or $0.29 per diluted share, compared to fourth-quarter 2004 net income of $26.9 million, or $0.49 per diluted share. Full-year and fourth-quarter 2004 net income amounts include an after-tax gain of $23.0 million, or $0.42 per diluted share related to the sale of an investment in an affiliate. IHS generated approximately $48.3 million and $11.5 million of cash flow from operations in the full year and fourth quarter of 2005, respectively. The company also successfully completed an initial public offering during the fourth quarter of 2005.

Adjusted EBITDA totaled $86.7 million for fiscal 2005, up 17 percent compared to $74.4 million in fiscal 2004. Adjusted EBITDA totaled $28.6 million in the fourth quarter of 2005, up 15 percent from $24.8 million in the fourth quarter of 2004.

Adjusted EBITDA, a non-GAAP financial measure, is used by management to measure operating performance. EBITDA is defined as net income plus net interest, taxes, depreciation and amortization. Adjusted EBITDA excludes non-cash items, gains and losses on sales of assets and investments and other items that management does not utilize in assessing operating performance (as further described in the attached financial schedules). Management believes that it is useful to eliminate these items in order to focus on what it deems to be a more reliable indicator of ongoing operating performance. Management believes that investors may find adjusted EBITDA useful for the same reasons, although investors are cautioned that non-GAAP financial measures, such as adjusted EBITDA, are not a substitute for GAAP disclosures.

Non-GAAP results are presented only as a supplement to the financial statements based on U.S. generally accepted accounting principles (GAAP). Reconciliations of comparable GAAP measurements to non-GAAP measurements, such as EBITDA and adjusted EBITDA, are provided within the schedules attached to this release.

"We believe that our strong results in 2005 demonstrate that we are meeting the needs of an expanding market," said Charles Picasso, IHS President and CEO. "We grew the top line organically in both of our Energy and Engineering business segments by expanding our subscription base. We also enhanced our product offerings, including integrating several smaller strategic acquisitions, enhanced content and functionality of some of our existing products, continued to drive efficiencies across the organization, and generated significant cash flows. We are leveraging our global opportunity by providing customers with one-stop access to critical information and insight in our targeted industries."

Full-Year 2005

Our 21-percent overall revenue growth in 2005 was primarily comprised of eight-percent organic growth and 10-percent growth from acquisitions completed within the last year. Drivers of organic growth included expansion in the subscription base and strong demand for services and decision-support tools. Revenue within our Energy segment increased 30 percent in fiscal 2005 to $242.3 million, compared to $185.8 million in 2004. Organic revenue growth contributed 13 percentage points of the increase. The balance of revenue growth was primarily driven by acquisitions. Engineering segment revenue increased 12 percent in fiscal 2005 to $233.8 million, compared to $208.2 million in 2004. Organic revenue growth contributed three percentage points of the increase. The remainder of Engineering's revenue growth was primarily driven by the combination of acquisitions and the unwinding of a joint venture.

Fourth-Quarter 2005

Overall revenue growth for IHS in the fourth quarter of 2005 was primarily attributable to six-percent organic growth. One important item affecting the year-over-year organic revenue growth comparison was a seasonal standards product in our Engineering division, which is released and primarily sold in the fourth quarter once every three years -- including our fiscal 2004, when it accounted for $3.7 million of revenue. Excluding this product release from the comparison, organic growth was nine percent. Drivers of organic growth included expansion of the subscription base and strong growth rates within our services businesses. Energy segment revenue increased 11 percent in the fourth quarter of fiscal 2005 to $63.4 million, compared to $57.2 million in the comparable fiscal 2004 fourth quarter. That segment's organic revenue growth contributed substantially all of the increase. Engineering segment revenue increased two percent in the fourth quarter of fiscal 2005 to $62.6 million, compared to $61.3 million in the comparable 2004 fourth quarter. Engineering segment's organic revenue growth was flat compared to the prior year, but adjusting for the same product mentioned above, Engineering organic growth would have been seven percent.