IHS Inc. Announces Higher First-Quarter 2008 Results

Business Wire, March 19, 2008

EPS of $0.34 and Adjusted EPS of $0.45

ENGLEWOOD, Colo. -- IHS Inc. (NYSE: IHS), a leading global source of critical information and insight, today reported results for the first quarter ended February 29, 2008. Revenue for the first quarter of 2008 totaled $198.8 million, representing a 30-percent increase over first-quarter 2007 revenue of $152.6 million. Net income for the first quarter of 2008 increased 17 percent to $21.4 million, or $0.34 per diluted share, compared to first-quarter 2007 net income of $18.4 million, or $0.32 per diluted share.

Adjusted EBITDA totaled $50.8 million for the first quarter of 2008, up 41 percent from $36.1 million in the first quarter of 2007. Adjusted earnings per diluted share were $0.45 for the first quarter of 2008, an increase of 18 percent over the prior-year amount of $0.38 per diluted share. Adjusted EBITDA and adjusted earnings per share are non-GAAP (generally accepted accounting principles) financial measures used by management to measure operating performance. Please see the end of this release for more information about these non-GAAP measures.

"We are off to a very good start in 2008," said Jerre Stead, chairman and chief executive officer, IHS. "We continued to drive solid organic growth, improve margins and deliver strong cash flow in the quarter, and we have completed five strategic acquisitions that strengthen our ability to be the Source for Critical Information and Insight[TM] for our customers around the globe."

First-Quarter 2008 Detail

Revenue for the first quarter of 2008 totaled $198.8 million, representing a 30-percent increase over first-quarter 2007 revenue of $152.6 million. Organic revenue growth in the first quarter of 2008 represented 9 percent of the increase, acquisitions contributed 19 percent and foreign exchange accounted for the remainder of the overall revenue increase. The Energy segment grew its revenue 27 percent in the first quarter of 2008 to $110.3 million, compared to $86.7 million in the prior year. The Engineering segment grew its first-quarter 2008 revenue by 34 percent, to $88.5 million, versus $65.9 million in 2007.

Adjusted EBITDA for the first quarter of 2008 grew 41 percent, to $50.8 million, from $36.1 million and was driven primarily by top-line growth, margin improvement and contributions from our 2007 acquisitions. Operating income increased $5.0 million year over year, or 20 percent, to $30.9 million, up from $25.9 million in the first quarter of 2007. Energy operating income was $39.2 million, an increase of 45 percent over the prior-year quarter, and Engineering operating income was $15.0 million, up 15 percent over last year.

Cash Flows

IHS generated approximately $32.5 million of cash flow from operations during the first quarter of 2008, compared to last year's $23.1 million.

Balance Sheet

IHS ended the first quarter of 2008 with $139.1 million of cash and cash equivalents, and virtually no debt. "Early in March, we announced four strategic acquisitions with a total transaction value of almost $125 million, which we funded in part from existing cash balances and in part by utilizing $50 million from our $385 million credit facility," stated Michael Sullivan, executive vice president and chief financial officer. "Our strong balance sheet and the cash-generating characteristics of our recurring revenue subscription model continue to support our profitable growth strategies, including a robust acquisition pipeline."

Share Repurchase Program

During the first quarter of 2008, IHS repurchased 66,500 shares of its common stock in the open market for approximately $3.9 million, or $58.41 per share.

Outlook (Forward-Looking Statement)

Based upon year-to-date performance, IHS is revising its annual guidance upward and currently anticipates all-in revenue growth in the range of 21 to 23 percent for the full year ending November 30, 2008 from a base of $688.4 million in fiscal 2007. The company further expects adjusted EBITDA on an all-in basis to grow 26 to 28 percent for fiscal 2008 from a base of $167.6 million in fiscal 2007. See discussion of adjusted EBITDA and non-GAAP financial measures at the end of this release.

As previously announced, IHS will hold a conference call to discuss first quarter results on March 19, 2008, at 3:00 p.m. MDT (5:00 p.m. EDT). The conference call will be simultaneously webcast on the company's website: www.ihs.com.

Use of Non-GAAP Financial Measures

Non-GAAP results are presented only as a supplement to the financial statements based on U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information is provided to enhance the reader's understanding of our financial performance, but no non-GAAP measure should be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures, such as adjusted EBITDA and adjusted earnings per diluted share, are provided within the schedules attached to this release.