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IHS Q3 Profit Rises, But Misses Estimates; Trims Forecast


Business information provider IHS Inc. (IHS) reported Thursday a higher profit for its third quarter, benefited by strong revenue growth in all segments and regions. Quarterly earnings per share, excluding one-time costs, however, missed Wall Street estimates. Further, the company trimmed its fiscal 2012 earnings and revenue forecast below analysts' estimates.

IHS Chairman and Chief Executive Officer Jerre Stead said, "Our growth remains well above economic growth rates in each of our end markets, but below our expectations. Although our subscription business remained strong, growing at eight percent organically for the seventh consecutive quarter, our non-subscription business experienced weakness as customers put capital decisions on hold in these uncertain environments."

For the third quarter, net income increased to $44.08 million or $0.66 per share from last year's $40.81 million or $0.62 per share. The latest quarter results included stock based compensation expense of $0.30 per share and other restructuring and acquisition-related charges. Quarterly adjusted earnings per share, which excluded items, were $0.99, while last year's earnings were $0.87 per share.

On average, nine analysts polled by Thomson Reuters expected earnings of $1.01 per share for the quarter. Analysts' estimates typically exclude one-time items.

Revenue for the third quarter grew 14 percent to $385.61 million from $338.72 million in the previous year, while analysts estimated revenues of $406.35 million.

The company attributed the revenue growth to five percent organic increase and 11 percent acquisitive growth, partly offset by a negative two percent foreign currency impact.

The subscription-based business grew 12 percent on a reported basis and 8 percent organically and represented 76 percent of total revenue. Non-subscription revenue climbed 22 percent on a reported basis, but fell 5 percent organically.

The company said it continued to grow its business overall in all three of its operating regions. The Americas segment's revenues rose 13 percent, and EMEA segment's revenue climbed 13 percent. The APAC segment's revenue was up 21 percent.

Further, IHS currently expects fiscal 2012 adjusted earnings per share between $3.77 and $3.89, and all-in revenue between $1.515 billion and $1.535 billion. This is in comparison to previous estimate of adjusted earnings of $3.88 and $4.01 per share and all-in revenue of $1.53 billion to $1.58 billion.

Analysts currently expect the company to earn $3.98 per share on revenue of $1.57 billion for the fiscal year 2012.

The company said the latest forecast includes an organic growth rate of approximately eight percent for the subscription-based business.

Stead added, "We continue to move quickly to deploy new systems and processes across every aspect of our business to capture scale efficiencies and to enhance the effectiveness of our global sales force. These important investments will enable us to provide future organic growth, margin expansion and increasing free cash flow as we realize related benefits over the next four quarters and into 2014."

IHS shares closed Wednesday's trading at $115.25, down $0.73 or 0.63 percent.

by RTTNews Staff Writer

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