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Key Takeaways from IHS Markit's 3rd-Quarter Results

·3 min read

- By Mayank Marwah

On Sept. 29 before the market opened, IHS Markit Ltd. (NYSE:INFO) released its results for its fiscal third quarter of 2020, which ended Aug. 31. The financial information services provider surpassed earnings and revenue projections.

Snapshot of the quarter

The London-based company posted adjusted earnings per share of 77 cents in the third quarter, up from 67 cents in the year-ago quarter. Analysts called for earnings per share of 69 cents.

Revenue of $1.07 billion was down from the $1.11 billion recorded in the prior-year quarter, but was slightly ahead of analysts' projections.

Growth in the financial services segment was negated by poor performance of transportation, resources and consolidated markets and solutions segments.

Reflecting on the quarter, the company's Chairman and CEO Lance Uggla said:

"In Q3, we delivered solid results as the markets we operate in have begun to recover at varying speeds. We are managing the COVID challenges well while continuing to make the right long-term decisions for the company, shareholders, and the communities that we operate in and serve."

Segment performance

In the Financial Services sector, revenue rose 4% in the second quarter to $446 million. That includes 4% organic growth. Quarterly adjusted Ebitda for the segment stood at $226 million, which reflected a 13% growth over the past year.

The Transportation division saw revenue decline of 5% to $299 million, which includes a flat organic growth. Adjusted Ebitda came in at $154 million, which increased $19 million from the prior-year quarter.

Revenue of $208 million plunged 9% on a year-over-year basis for the Resources segment, inclusive of the total organic revenue decline of 9%. Adjusted Ebitda fell $14 million to $86 million.

In the Consolidated Markets & Solutions division, revenue dipped 13% to $121 million, including the total organic revenue decline of 5% in the reported quarter. Quarterly adjusted Ebitda totalled $31 million, which was flat year-over-year.

Financial forecast

IHS Markit has provided financial guidance for fiscal 2020. The company predicts adjusted Ebitda to fall within the range of $1.825 billion to $1.835 billion. Adjusted EPS is expected to be between $2.76 and $2.78. Chief Financial Officer Jonathan Gear said:

"We are positioned to deliver results for the year that include recurring organic revenue growth, strong margin expansion, and double-digit normalized earnings growth and are exiting the year in good position to achieve our 2021 outlook."

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.