S&P Global Inc. (SPGI) Q1 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Analyst Call to Discuss IHS Q1 Earnings and Proposed Merger with Markit. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Eric Boyer, Vice President of Investor Relations. Sir, you may begin.

Good morning and thank you for joining us for the discussion of the IHS first quarter earnings and the proposed merger between IHS and Markit. We issued two press releases earlier this morning. First, we issued our Q1 earnings release and second, we issued a release announcing our intent and legal transaction with market. In addition, we posted to our website a presentation with supplemental information on proposed merger. If you do not have a copy of the releases and the supplemental materials, they are available on our website at ihs.com. The supplemental materials are also posted on the Markit website. Some of our comments and discussions on the quarter are based on non-GAAP measures. Our non-GAAP or adjusted numbers exclude stock-based compensation, amortization of acquired intangibles and other items. Our earnings release includes both our GAAP-based income statement and statement of cash flows and reconciliations to the non-GAAP measures discussed during this call. These reconciliation schedules are included in our release and can also be found on the website. The non-GAAP results are a supplement to the GAAP financial statements. IHS believes this non-GAAP presentation and the exclusion of these items is useful in order to focus on what we deem to be a more reliable indicator of ongoing operating performance. As a reminder, this conference call is being recorded and webcast and is the copyrighted property of IHS and Markit. Any rebroadcast of this information in whole or in part without the prior written consent of IHS is prohibited. Please keep in mind that the conference call, especially the discussion of our outlook, may contain statements about expected future events that are forward-looking and subject to risks and uncertainties. Factors that could cause actual results to differ and vary materially from expectations can be found in IHS filings with the SEC and on the IHS website. After our prepared remarks, Jerre Stead, IHS Chairman and CEO; Lance Uggla, Markit Chairman and CEO; Todd Hyatt, IHS EVP and Chief Financial Officer; and Jeff Gooch, Markit Chief Financial Officer will be available to take your questions. With that, it is my pleasure to turn the call over to Jerre Stead. Jerre?

Thank you, Eric. Good morning and thank you for joining us as we share our first quarter results and the announcement of our intent to merge with Markit, a leading global provider of financial information services. This combination is transformational for both of our companies and will create an unparalleled global provider of information and analytics, which will provide significant value for our shareholders, our customers and our colleagues. Today, we will go over IHS’ Q1 2016 financial results, then Lance and I will go into the details of the proposed merger. After our prepared remarks, we will take questions. Now for Q1, results were in line with our expectations. The high level financial results in the period include revenue of $548 million, up 7% from Q1 of 2015; adjusted EBITDA margins of 32.7%, representing expansion of 170 basis points year-over-year and benefiting from operating model efficiencies and continued realization of synergies. Adjusted EPS was $1.40, up 10% over the prior year. In terms of our core industry verticals, transportation, which includes our automotive, maritime and trade and aerospace and defense teams, continue to produce very strong organic growth of 10% for the quarter. Resources which includes our energy and chemical teams, continues to experience declining subscription growth due to headwinds within the energy markets. However, as chemicals team continue to perform very well, our overall reported resources organic revenue benefited from strong non-subscription based growth due to the timing of CERAWeek in Q1 versus Q2 in the prior year. CMS total organic revenue growth of 4% continued to experience steady performance. Turning to M&A, in the beginning of February, we closed the acquisition of OPIS, Oil Price Information Services, which we detailed on our Q4 call. With that, I will turn it over the details to Todd.

Thank you, Jerre. Let’s start by reviewing the financial results for the first quarter. Revenue was $548 million, an increase of 7%. Adjusted EBITDA was $180 million, an increase of 13%, and margin expansion of 170 basis points. And adjusted EPS was $1.40, an increase of 10%. Relative to revenue, we continue to see trends similar to those discussed on the Q4 call. Total revenue growth was 7% and included 3% organic revenue growth, acquisitions of 5% and an FX drag of 2%. Subscription organic growth was 1% and non-subscription organic revenue growth was 14%. Revenue growth benefited by approximately $14 million of revenue from CERAWeek in Q1 this year versus Q2 in the prior year. Normalizing for timing impact of CERAWeek, our non-subs organic revenue growth was negative 3% and our total organic revenue growth was 1%. Looking at segment performance, transportation growth was 14%, which included 10% organic; 5% acquisitive; and negative 1% FX impact. Organic revenue growth was comprised of 10% subscription growth and 9% non-subscription growth. We continue to see very strong growth in our automotive businesses and stable growth in the other transportation businesses. Resources growth was negative 1%, which included negative 2% organic; 3%, acquisitive; and negative 2%, FX. Organic revenue growth was comprised of negative 7% subscription; and non-subscription growth of 28%. Normalizing for the timing impact of CERAWeek, resources non-subs organic revenue growth was negative 23% and total resources organic revenue growth was negative 9%. Resources organic subscription revenue growth was negatively impacted from the earn-out of negative year-over-year subscription bookings we experienced throughout 2015 as well as the Q1 negative sub-based activity. In Q1, on a constant currency basis, our resources organic subscription base, which represents the annualized value of subscription contracts, declined approximately $20 million or about 3% in line with our commentary on our Q4 earnings call. In the first quarter, approximately a third of the resources subscription base was available for renewal. As we have previously stated, Q4 and Q1 renewals combined represent approximately 60% of our total annual renewals. The Q1 subscription-based decline was primarily from major independents reducing geographic or product coverage, the long tail of America’s smaller independents experiencing a higher than normal cancellation rate and customers deferring to renew software maintenance. Consistent with the guidance we provided on our Q4 call, we expect continued pressure on our resources organic subspace through Q2 as we continue to complete the cycle of full year renewals in the challenged energy environment. We expect the energy sub base to begin to stabilize in the second half of the year. CMS growth was 10%, which included 4% organic; 8% acquisitive; and negative 2%, FX. Turning now to profits and margins, Q1 adjusted EBITDA totaled $180 million, up 13% versus the year ago. Our adjusted EBITDA margin was 32.7% and represented margin expansion of 170 basis points. We have strong margin improvement in Q1 as we entered the year at a lower cost base due to the transition to our business line operating model and simplification and reduction of our centralized marketing, sales support and shared services cost structure. Regarding segment profitability, transportation’s adjusted EBITDA was $73 million with a margin of 36.7%, up 130 basis points versus last year due primarily to margin benefit from high revenue growth. Resources adjusted EBITDA was $87 million with a margin of 40.4%, up 120 basis points versus last year. And CMS adjusted EBITDA was $28 million with a margin of 20.7% up 450 basis points versus last year due to the acquisition of RootMetrics and improved operational performance. Turning to adjusted EPS, Q1 increased to $1.40 per diluted share, a $0.13 or 10% improvement over the prior year. Our effective GAAP tax rate was 20% and our adjusted tax rate was 28%. Q1 free cash flow was $127 million and represented a conversion rate of 71%. Our trailing 12-month free cash flow was $468 million and represented a conversion rate of 65%. As previously discussed, we are expecting free cash flow conversion in the mid-60s for the full year. Turning to the balance sheet, our quarter end debt balance was $3 billion, which represented a gross leverage ratio of approximately 3.7x and we closed of the quarter with $60 million of cash. In Q1, we have repurchased a total of $104 million of shares, which brings total repurchases of $250 million against our $500 million share repurchase authorization. We have suspended our open market share repurchase as we de-levered from our two recent acquisitions. Tuning to discontinued operations, we remain on track post the sale of OE&RM and GlobalSpec businesses during Q2 of this year. We are reiterating our guidance, which is on an all-in basis and assumes no further acquisitions, currency movements, pension mark-to-market adjustments or unanticipated events. For 2016, we expect revenue in the range of $2.3 billion to $2.38 billion, including 2% to 3% subscription organic growth, neutral non-subscription organic growth and total organic growth of 0% to 3%, adjusted EBITDA in a range of $770 million to $800 million and adjusted EPS in the range of $6 to $6.30. Now, let me pass the call back over to Jerre.

Thanks, Todd. I was very pleased with our Q1 performance given the energy industry challenges and continue to feel good about our leading assets and market position. CERAWeek strengthened my conviction that the energy industry will be back. The world’s demand for oil by 2019, 2020 and beyond will outstrip current production capacity. IHS will continue to provide the information and insight our customers need to make strategic and operational decisions from the boardroom to the retail front to meet the world’s energy demand. Our non-energy businesses are performing very well due to our operational improvements and new product launches. We are especially pleased with our strong auto business performance, which we believe will continue to produce strong results through market cycles given our focus on both the new and used auto markets. And we continue to drive margin expansion as we have committed through our new business lines, operating structure and through operating efficiencies as well as generating strong free cash flow. Now, I would like to turn to today’s very exciting announcement and welcome to the call my new partner, Markit CEO, Lance Uggla. Markit is a leading provider of information processing and solutions for the financial markets. Over the weekend, both Boards of Directors unanimously approved the merger of equals. This transaction creates an information powerhouse with unrivaled information analytics and talent. We will have leading positions in the energy, financial services and transportation industry, among others. We have deep, senior and non-overlapping customer relationships across corporate, government, consumer and financial services. The rationale for this deal is very clear. By combining companies, we are creating a global highly scaled leader in information, analytics and solutions. This transaction offers immediate financial and strategic benefits, while in turn creating new significant, long-term opportunities for next generation of products. Both companies have a strong cultural fit by being values based, innovative and focused on consumer satisfaction and colleague success. The size and scale of the combined company provides a broad opportunity to create value for shareholders through cost synergies in the near-term and also the potential for revenue synergies over the longer term. Importantly, the combined management team brings proven track record of successful M&A integration. Bringing these companies together will result in a business that delivers almost 85% recurring revenue, significant operating leverage with increasing margins and profitability and substantial free cash flow. The financial profile will allow the new company to support robust capital return and to continue disciplined M&A. We expect to return $1 billion of capital through share repurchases in the years 2017 and 2018 buying back almost 20% of our outstanding shares and we expect the combination to have adjusted earnings growth of at least 20% in 2017. We also expect the transaction to be immediately accretive and have mid-teens accretion in 2018. Let’s discuss the details of this transaction. The merged company will be named IHS Markit, will have a market capitalization of approximately $13 billion. Upon closing, which we expect to occur in the second half of 2016, subject to shareholder and regulatory approvals, IHS shareholders will receive a fixed exchange ratio of 3.5566 in IHS Markit for each IHS share. This will be a fully taxed transaction to IHS U.S. shareholders, which will allow the ability to offset capital gains against – capital losses against capital gains, which will allow the ability to offset capital losses against capital gains. In terms of leadership, upon closing, I will assume the role of Chairman and CEO until December 31, 2017. During this time, Lance will be our President and a member of our board. Upon my retirement at the end of 2017, Lance will succeed me as Chairman and CEO. IHS will contribute 6 of its existing members to the IHS Markit board and Markit will contribute 5 of its existing members for a total board of 11 members. The company will be headquartered in London with certain key operations in Colorado. We will target a high non-investment grade credit rating, which will provide us the appropriate capital structure to pursue disciplined acquisitions and to provide a regular return of capital through share repurchases. I want to touch briefly on why I think this is the right time for IHS to be undertaking this exciting new partnership. IHS has produced strong growth and shareholder returns over its 10-year public company history and this transformed the business from an engineering and energy information business into a leading global provider of information, analytics and insight to capital-intensive industries. IHS has scaled businesses within energy and automotive and leading positions in several other end markets. The new business line structure has allowed us to drive business simplification and efficiency. We are seeing the early benefits as evidenced by our strong margin performance just announced a few minutes ago. We have many valuable information assets and the merger will provide IHS Markit the opportunity to combine this information with technology to create something of tremendous value to customers, which does not currently exist. I feel very confident that the pieces that are now in place for IHS to undertake this type of transformational and exciting merger that we have announced today with Markit. With that, I would like to turn it over to Lance, who will provide more details on our vision for the combined company.

Thanks, Jerre and we are both really excited to be here with you today and Jerre as my new partner, I am personally very excited. So before I discuss the strategic and financial rationale for this transaction, I want to take a moment to explain to you why this deal makes sense for Markit and our customers right now. Since I founded the company 13 years ago, our growth has been driven by delivering transparency and helping our customers manage regulatory change and reduce costs. These trends are not going away and in fact are still strong today. Our customers’ demands for unique information, continues to grow. By joining forces with IHS, we will substantively expand our unique content set and distribute them across our combined increased customer bases. Let’s take a look at the strategic and financial rationale of the transaction. First, IHS Markit will be a global leader in information services, delivering mission-critical, unique solutions to our broad customer base in order to improve decision-making. We will combine our datasets and complementary products and use technology to tailor delivery to the needs of our individual customers, allowing easier and more flexible access to information. This will allow us to develop next-generation products and services to meet our customers’ needs improving our competitive positioning. Second, IHS Markit will have a broad base of over 50,000 customers, including over 75% of the Fortune Global 500. These are long, tenured relationships with the senior leaders of a wide range of companies and government. Both our companies pride themselves on working closely with customers to develop products. And these relationships, together with our combined deep expertise, will help power innovation. Thirdly, we see meaningful and achievable cost and revenue synergies that will accrue from this combination. First, from a cost perspective, by rationalizing some of our overlapping functions and increasing our use of Centers of Excellence in cost competitive locations, we will be able to achieve run-rate savings of $125 million by the end of 2019, $35 million of that by the end of ‘17 and $95 million by the end of 2018, but it’s not just about cost. The revenue synergies that we are announcing, we see $100 million of revenue opportunities as we leverage IHS information datasets and research with Markit’s customers and in turn sell Markit’s information, managed services and software offerings across IHS’ impressive and large customer base. Let’s talk about the importance of combined networks. Both financial institutions and their corporate customers need to work together to solve mutual problems. Let me give you just a couple of great examples. We built two products targeting regulatory requirements: one, Know Your Customer, which we call KYC; and Know Your Third Party, known as KY3P. By including the broad IHS customer base within these networks will increase the value of the network for all our customers. Over the longer term, we will also develop new products together that combine our data and analytics capabilities. The combined company will be able to deliver predictive analytics, benchmark indices and asset valuations across industries, position ourselves uniquely against our competitors. This merger is going to provide many opportunities. And finally, IHS Markit will drive significant shareholder returns. As Jerre covered, IHS Markit will generate substantial free cash flow, which will support a capital allocation framework aimed at driving shareholder value. Our primary initial focus will be a smooth integration and the realization of the synergies I just described. But with over $900 million of expected free cash flow generated by the combined company, we will have tremendous flexibility to return significant capital to investors whilst maintaining leverage of 2x to 3x. As Jerre said and I will repeat, we plan to execute share repurchases of $1 billion in each of 2017 and ‘18, nearly 20% of the outstanding capital base. Now, before handing back to Jerre, I want to say how excited we are about the deep experience of our teams. We both have a strong record of growing businesses organically as well as delivering successful M&A integration. Both companies have similar values based cultures. The two companies have acquired and integrated many times in the past decade and is built into the DNA of both of our business models. We know how to achieve both the cost and revenue synergies that we have discussed. And our combined teams have clear alignment on our immediate goals and on developing the plans for a smooth integration. Together, we will create an environment that will allow our people to grow, providing greater opportunities for learning and for developing their careers. People often ask me, what is unique about Markit and what makes us different? I think it’s combining people with expertise and underlying markets with a technology required to develop and deliver our products. This combination with IHS gives us that same expertise and closeness to markets across multiple industry sectors. Overall, the merger of IHS and Markit is a transformational combination that will create a global information and services leader with scaled businesses in multiple markets and we are excited to bring together our respective strengths. Back to you, Jerre.

Thanks, Lance. A great summary. So before we take your questions and I will remind you that this is a 90-minute call today, so there will be time for questions. I also remind you that you should ask one question. And it would be very pleasing if you didn’t do the ABC today. So, let’s recap on why this merger makes immediate strategic sense and also discuss the long-term financial objectives of our company, IHS Markit. The combination will forge an information powerhouse that delivers mission-critical unique data to a broad customer set. The transaction is financially attractive with immediate and medium-term earnings enhancement through synergies and combines two companies with proven track records of delivering consistent, organic and acquisitive growth. We see increased opportunities as Lance just mentioned for our colleagues to grow and develop their careers. Over the long-term, we expect the combination of these two companies to deliver the following: mid single-digit organic revenue growth with significant opportunities to accelerate; adjusted EBITDA margin in the low to mid-40s range; and double-digit adjusted EPS growth and as I said earlier, 20% plus. Overall, the enhanced growth potential for the combined company will lead to significant long-term shareholder value creation. Today’s announcement marks day one of the race to complete all of the necessary steps for these two great companies to merge together. In all my years of business experience, including leading 7 public companies and serving on 35 public company boards, I have never seen a transaction with as much value creation potential as with this merger. I can’t wait to get started and Lance and I will have a great time creating a better company than ever before. With that, I am ready to take the questions. Operator, we are ready to go.

Thank you. [Operator Instructions] And our first question comes from the line of Gary Bisbee with RBC Capital Markets. Your line is now open.

Hey, good morning.

Good morning, Gary.

So the cost synergies, I think we all understand, I think a lot of people are scratching their heads here just trying to understand what would the fundamental synergies be? You referenced some revenue synergies, but can we just get some more color or examples on why one of the businesses helps the other together from a fundamental perspective outside of cost actions that there is – the deal really makes sense? Thanks.

No, that’s fine, Gary. Thank you. I will start and have Lance pick up. By far, bigger potential for us is the ability to sell and Lance will give you a couple examples in just a minute, Gary, of the ability to sell the products that Markit has into our customer base and to do the reverse with our products into Markit’s customer base. Keep in mind what we said, we will now be doing business significant business at the C level for over 75% of the Global Fortune 500. I doubt if you will talk or hear from a company that can do that. That gives us an opportunity to sell products that exist today to get the short-term and medium-term benefits from an organic base of revenue increase, more exciting even though is the technology opportunities we have to add new products going forward, but Lance give him a couple of examples.

Okay. No, I think that’s a great question, Gary. And when I was talking to my team, of course, Jerre and I have kept this under wrap since before Christmas. And so of course, when I was talking to my team, what do you think they would say? They go, how is this going to impact us? So I said, well, if I worked in the market index team and all of a sudden I had all this data coming from energy, transportation, chemicals, defense, automotive, economic and country measures that are unparalleled in the marketplace, I look at that and I go, that’s $10 billion, $20 billion, $30 billion, $40 billion, $50 billion of assets under management that need to be benchmarked against new indices and new overlays. That’s long-term growth and short-term low-hanging fruit. If I sat in my private equity valuations team when energy – money from the energy – from the private equity markets is lining up to flow into the energy sector, I would be sitting thinking, I am in the best seat in the house, getting to work with all this new analytics and research from the energy markets to help invest in private debt and private equity. If I sat in our KYC team and I have 3,500 financials that I was trying to get on our KYC platform and I woke up and had 50,000 at Jerre’s corporate and we could walk into C suite of the 75% of the global 500, I would think I have the best job in the world. And I could give you 20 more examples like that. So, this is about revenue. It’s about growth. It’s about opportunity. And the financial lens is damn good. It’s one that we are excited about. And I am sure Todd and Jeff will go through the numbers. But for Jerre and I it’s all about building a future for our company, our customers and our employees and there is nothing to be shy about on that side.

The biggest thing and then we will go on to the next question that when we met for 2 days offside a couple of weeks ago with our top development people and our top operational executives, the biggest opportunity for us is to pick the top 4 or 5 out of 30 or 40 opportunities to make things happen. So, that’s really the driver here and it’s one that’s going to change the world for all of our customers. Thanks, Gary. Next question.

Thank you. And our next question comes from the line of Bill Warmington with Wells Fargo. Your line is now open.

Good morning, everyone.

Hi, Bill.

Just want to say congratulations on the merger. My question is to ask about the how Markit defines subscription revenue. I saw the recurring fixed and recurring variable. I am trying to understand the distinction between that and the way that IHS had traditionally described subscription revenue?

That’s great, Bill. As Jeff will – who is the CFO for Markit will respond to that. That’s one of the many things we talked about early. Jeff?

Yes. Thanks, Jerre. You are right – the slide deck definition or differences between the two firms which we’ll work out. But in terms of our number is very simple. 95% of my revenues come from long-term relationships with our customers. To aid transparency, we break that down as we say into two groups. Fixed recurring revenues, I think is – some call it subscription revenue, has a fixed amount of money paid on an annual or quarterly basis for typically 2 or 3 years. Variable recurring revenues, we have a long-term relationship with the customer, but the exact amount of money they are going to pay varies with some other factor. So, it could be that someone is more interested in ETF using one of the Markit iBoxx indices. We get paid based on sequential AUM that goes up and down. It could be you were handing the interest swap business to JP Morgan, the number of trades they do in each given month goes up and down. It could be we are handling the valuation for fixed fund managers of the exact number of positions they have goes up and down. So for that variable business, it’s a long-term relationship. It’s very sticky. The exact quantum does move up and down with other factors.

Thanks, Bill. Great question. And as we said, you put the two of us together and it’s almost 85% of our total revenue. For all practical purposes, as Jeff just described, very sticky, so it’s a great step forward. Next question.

Thank you. And our next question comes from the line of Paul Ginocchio with Deutsche Bank. Your line is now open.

Thanks. It seems like going forward this gives me lot more focus on product innovation than – or new products than acquisitions, is that the right message that for the next couple of years?

Great question, Paul. I will start and have Lance pick it up. That was one of the things when Lance and I actually had breakfast in December that we spent a lot of time talking about, because it provides a new scale for us of really outstanding developers on a worldwide basis. And the answer is, yes, Lance pickup with that, because it’s so critical for us.

Yes. No, I think when I met Jerre and we started to describe our company, then we really did spend a month over December talking everyday, talking about our cultures, our employees, our customers and really getting to know each other’s business. And at the center and heart of each business are these unique content sets. And when I look at the world we are in today, it is all of our customers, both IHS and Markit’s, which are completely complementary are demanding more content available to them in every way possible from a cloud, from a feed, from a FTP feed, from a website. And so for us, innovation will come by delivering on the customers the existing products that we are growing with them today, developing new products, which means combining the expertise of the two companies, but finally using a little bit of that $1 billion of approximate free cash flow to reinvest in technology transformation over the next few years to have a platform that can deliver our content at unique, highly demanded content when, how, where our customers want it in the right format. So, we see innovation coming both ways: product design and delivery.

Thanks. And just to pick up on that point, Lance. We have a headline number here of $1 billion buyback in 2017 and $1 billion buyback in 2018. So obviously, the shareholder return value here is significant, but it’s not all about shareholder return from a capital structure perspective. This is a business that will continue to have capital structure flexibility. And as we get to close, we will actually have a leverage level below the 3x that the combined companies are at right now. So, even as we are buying back $2 billion of shares over the next couple of years, we still retain capital structure flexibility to invest in the business and make strategic acquisitions. So, very important point.

Right. And that’s one thing Jerre and I spoke about with Todd and Jeff as we are putting this together. We have got a lot of focus on integration. So, you will see us quiet on the acquisition front. We will use our cash flows, Todd has described. And we see that combination will drive all the right shareholder returns and situate us very well for the future. Next question.

Next question, yes.

Thank you. Our next question comes from the line of Peter Appert with Piper Jaffray. Your line is now open.

Thanks. Good morning. Jerre, you are killing me with this one question thing.

If you are really good, Peter, you will be on the top of the line on the way back.

Okay, thanks. I am wondering if you could just get into the tax issues and combining the companies, is there going to be any regulatory pushback in terms of perception of this as tax inversion strategy driven?

For sure, not. I will have Todd pick up on that, but great question, Peter and thanks for asking that. The answer is no, Todd gives the...

Yes, Peter, this is a merger of equals. I mean, we have adopted some tax structure that we think that is the most appropriate for the combined company, certainly applies with all of the applicable tax rules and we don’t see this transaction as being implicated by the U.S. anti-inversion rules.

Thanks Peter. Next question.

Thank you. And our next question comes from the line of Andrew Steinerman with JPMorgan. Your line is now open.

Hi, gentlemen. I wanted to ask about the mid-teens accretion for EPS in 2018, how much revenue synergies are assumed in that number and what’s the share count assumption?

Okay, Andrew, Todd will start, Jeff will pickup. And if we don’t answer it, Lance and I are pretty good technically, so…

Well, I will give you a construct, how about that?

Yes.

So what we have said Andrew is just to make things simple, we have said at least a 20% adjusted EPS growth in 2017. And you can take the market consensus number and assume that growing north of 20% on that basis. For IHS, you can take the midpoint of our guidance, convert it into a market EPS number at the exchange rate and you can assume that we will be growing north of 20% on that basis. So, we have laid it out pretty clearly to make it – so that you would clear line of site. From a share count perspective, once again, you can take IHS shares, multiply it by the 3.5566. You can take the market shares out, add that to the market share count, certainly, you need to take account of market options and I think market provides a schedule that very clearly lays out options and strike price so you can do the Treasury method on that, and then you can layer on our buyback assumption. As far as stock-based comp, IHS has talked about moving the stock-based comp as a percent of total shares outstanding. This year, we moved it down to 1.25%. We talked about a target of moving that to 1% and we would expect that to continue with the combined companies. I think those give you all the pieces, Andrew, to walk through. Jerre, anything you want to add?

No, I think that’s it. Thanks. But I do want to emphasize what Todd said at the end, we spent a lot of time talking about it in our two companies. Lance and I agreed that we will target 1% in the future going forward. So, this is going to work out great for everybody. So thank you, Andrew. Next question.

Thank you. Our next question comes from the line of Sara Gubins with Bank of America. Your line is now open.

Hi, thanks. Good morning. Could you talk about how you plan to fund the $1 billion of share repurchase? Would you plan to take on more debt to do that given that it looks like free cash flow would be about, you were saying you were getting to a target of about $900 million a year?

Well, yes.

Yes.

In year one.

A couple of things. As of today, on a bank basis, the leverage ratio is 3x for the combined company. We will see some de-levering occur between the signing and the closing of the transaction. We also create capacity with EBITDA growth and this business will grow EBITDA. So, as we grow EBITDA and we look at the type of EBITDA growth that we get to with the synergies that we have talked about, we will see EBITDA then supporting additional capacity on an annual basis of some $300 million to $400 million. So, you have the free cash flow, you also have the capacity that’s created by the EBITDA growth. So with $1 billion buyback, this model will actually de-lever and we will continue to have capacity well below the 3x gross leverage ratio. Jeff, anything?

Yes. I think you hit the main points there, Todd. I think just to kind of reiterate some of the key things here. Yes, we are looking to run the company on 2x to 3x gross leverage basis. We can spike up the big deals if we need to. And obviously, the first couple of years, we are going to focus on that buyback program. But as Todd said, that will leave us into a fantastic position in the 2 years time. We have been returning cash to shareholders, but also we have a balance sheet that gives us lot of flexibility around future M&A activity and further buybacks beyond that point. So yes, I think we end up in the best of both worlds, where our choice is still open. As you know, Sara, we are very focused on Markit on smart use of capital, making sure we get the right returns as we deploy our capital and that’s not going to change.

Yes, this deal is a big step up for all of us. Thanks, Sara.

Thank you. And our next question comes from the line of Andrew Jeffrey with SunTrust. Your line is now open.

Hey, good morning. Thank you for taking the question. Jerre, I look at IHS business and think about the barriers and pricing power and competitive position, it’s pretty well distinguished I think. By contrast, I wonder if you could talk a little bit about Markit. It’s – the company operates in a pretty competitive environment that has some sizable, formidable competitors. I just wonder about the compare contrast and the competitive positioning and pricing power and barriers between the two companies?

Great question and I will have Lance pick up on that. As we look at all of that, Lance started this company 2003, done in our view an incredible job of meeting customer needs that were not being met by historical competitors and continues to. Lance?

Yes, good. Thanks, Jerre and hi, Andrew. So I guess the financial information services space, it is interesting, okay? It’s a big addressable market with large spending patterns that cross all financial market participants, insurance companies, hedge funds, asset managers, banks, the like. So there’s a large addressable market, and that extends into the corporate space. So the first word, I think, really important is, how these customer bases extend into each other. So that’s a great opportunity set. The place that Markit lies within the financial information services space, that gave us the ability to creep up, I think, on our competitors and take the $5.5 billion of market cap we have is that we focused on unique content, must-have content for decision-making. That’s exactly what it IHS does, must-have content, leveraging the news and analytics and research to deliver to their customers tools to make business decisions. Now, those customers’ decisions are generally about strategy, approach to their business decisions or their approach to their forward strategies. In the financial market, a lot of times, content is used for making the decision on a trading decision, pricing risk, something a little bit, a bit more short term, value an asset, buying an asset or selling an asset, so slightly different, but both rely on the same thing: unique content sets. So the one thing that we saw that Markit positioned really well is to have unique content with big moats that’s highly defensible and the leverage those into each of these services around there. So how has Markit grown and defended that? We took our strong OTC dataset, and we leveraged it into valuation. We took our strong position in the fixed income credit space and we leveraged it into a leading index franchise. We took our trusted partnerships and relationships, and we leveraged those into implementation of regulation and built out services like the Know Your Customer or Know Your Third Party. These get extended very naturally to each other’s content get each other’s customer set. And IHS’ data and information comes into the market customers very, very easily. And I think the competitive landscape has just changed. This is an information powerhouse together that is unparalleled. There really isn’t another of our size that has the reach and breadth of customers. And I can tell you Jerre and I, we had to slow our management teams down in terms of the opportunities lining up on the page. So, I think we pivoted ourselves us out of financial information and services as Markit and we are now information and services to the financial energy, transportation sectors. That’s one pivot. And I think for IHS what’s great is we have added a set of customers to leverage the content and take on the likes of those competitors that have been selling into the financial markets and there is a new game in town when we are together.

And it’s a great new game. Just one example is the people that have followed IHS, we talked about Vantage and how we have introduced it in the last 1.5 years. That’s a direct straight into financial community that we have a new opportunity to do like we never did before. We could go on and on with those. Thanks, Andrew. Next question.

Thank you. Our next question comes from the line of Manav Patnaik with Barclays. Your line is now open.

Yes, good morning gentlemen. So I think I have known you guys for a while and I see the cultural fit and the cost synergies sounds fine. I am trying to understand more so I think from IHS’ perspective, Jerre, you guys have always talked about you might get into new verticals, but it sounded like financial market data would be the last of them for you to get into. And Lance, from Markit’s perspective, I think you definitely alluded to the fact that you needed scale, but there was plenty of market data assets out there to give you scale. And I know you have gone through some of the examples, so maybe you can give us some background on when this thought came into your mind? I think you mentioned something about Christmas of last year, so was it just 3 months ago that you guys sat down and talked through this or maybe can you give us some context of how long you have had this vision in your mind?

Happy. Thank you, Manav. By the way, to my knowledge, I never remember saying I wasn’t going to invest or partner in the future in this part of the world. If you think about what we have been doing with the example I just gave you, Vantage, pretty straightforward. So, let me just make a couple of comments that Lance and I first started talking with each other when Lance was a still a private company preparing to go public. And I was fascinated by what he was doing, so impressed with what he had found as an attack mechanism to a huge market growing quickly. So stayed close, talked to him. I actually talked to him when he was doing his IPO, stayed in close view of the great work he was doing. We met, as we said, in December for a breakfast and then both spent our 2-week holidays on the phone about 80% of the time. So, when we have got done with holiday, we were pretty square on how we are going to go. I am very proud, just quick comment, Lance and I are very proud of what we did. I mean, you think about, we set a stake in the ground of announcing on March 21, less than 2 months ago, had an incredible job done by our team and our advisers. And where we are sitting today, I think is the best and I hesitate to use this word, but I will for starters, the best cross-selling opportunity I have ever seen and that’s where we will start from. And then Lance, pickup on Manav’s piece to you?

Okay. Manav thanks for all your enthusiasm and support for us. We know you know us, and Jerre and I are – I couldn’t ask for a better person to get to work with and learn from. So, that’s part of what makes the transaction works is when two people come together and they want to be together. I did not need to do this deal nor did Jerre. We are doing it because we want to and we wanted to once we started to analyze this combination. And really, as Jerre said, if we analyze IHS content, unique content needed by our customers, my customers are all the asset managers, hedge funds and banks are all participating in automotive, energy, chemical and financial products. And they need information and content to make trading decisions, business decisions, investment decision and that’s the power of this first bit is the content and that cross-sell. The second bit it’s taken me a decade to get 3,500 trusted relationships in finance and it’s taken IHS 60 years to have 50,000 corporate relationships. Together, IHS Markit now has all of those relationships. And when you start looking at the products that we have and thinking about that cross-sell, I think you can see that the production of organic growth just became a lot easier. So, yes, you can say financials and energy doesn’t sound that interesting, but we don’t even look at it as financial and energy. We look at it as world leading content needed by corporate, government consumers financial market participants with world leading customer set, the best customers in the world at C suite level that between Jerre and I and our teams we know and employees together. When we brought our teams together, it was the excitement in the room for the opportunity in the future was substantive. So, I feel like I woke up in Aladdin’s cave and I know Jerre feels the same way.

Right.

So we have got a lot to do and we are going to do it. We are both executors. We have got great teams around us. And I don’t think we are worried about a lot except getting out there, selling the story and getting back to work.

Thanks, Manav. That’s great. Next question.

Thank you. And our next question comes from the line of Shlomo Rosenbaum with Stifel. Your line is now open.

Hi, good morning. Thank you for taking my question. Hey, I wanted to focus, maybe this is for Todd, a little bit more on the free cash flow potential of the business. You’ve got as IHS standalone you were at kind of targeting mid-60s%. If I look at it, you are merging with a company with lower leverage and lower tax rate. And I am actually a little bit surprised that the free cash flow conversion on Markit for last year, I would have thought it was a little bit higher. Maybe you could just talk a little bit about the opportunity to improve the free cash flow conversion of the combined businesses given some of the backdrop that we just discussed?

Well, I think when we look at the combination certainly the free cash flow on an absolute basis will increase from the synergies that we have talked about in terms of revenue and expense. We will see some cash benefit in terms of I think a better cost structure from a borrowing perspective. I think this is going to be a better credit, a stronger credit. And so we certainly believe that we can continue to maintain a good, strong cost of capital position. From a tax perspective, we have seen adjusted tax rate of the combined companies of the low 20s to mid 20s. So, I think we will see some benefit from there as well. So, I think when you take it all together, we see an ability to actually elevate the cash conversion on a going forward basis. I mean, Jeff, anything you would add to that?

Yes. I can say from a Markit perspective, we have also been very focused over the last 12, 18 months in improving cash flow. You heard in our earnings release a few weeks ago that we improved free cash flow generation 17% last year year-on-year. And if you remember, we had a $45 million class-action settlement. So, without that, we do have a very substantial increase in free cash generation. So, I know Todd is equally passionate about cash as I am in my team. So together, I think we can do a great job in getting that cash flow conversion number up a little bit.

Great answers, guys. Thanks. Next question.

Thank you. Our next question comes from the line of Andre Benjamin with Goldman Sachs. Your line is now open.

Thanks. Good morning.

Good morning, Andre.

I was wondering if you would be able to share the numbers behind how much of your revenue overlaps with the same customers, any insight to what industries those are primarily concentrated in and where you see the strongest near-term opportunities that the customer will be on that?

Thanks. That’s a great question. The answer is almost none. That’s what makes this so exciting, the ability to, as Lance has been such a great job of describing to move products both ways sets us up as clean as it can be. The other thing that’s so important like Lance said is it gives us C level capacity of relationships with at least 75%, up to 80% of the global Fortune 500. It’s just as good as it gets.

And maybe I can add to that, it was quite funny I was in the Geneva last week and I was at an energy company. Of course, Markit has some energy relationships, commodities trading firms that need some of our solutions. But a big piece of our growth, one of our top 10 products globally is enterprise data management and that’s a piece of technology that sells for between $200,000 to $1 million per year for an installation of software and generally, we have been selling it 140 of the world’s leading financial asset managers, with trillions of assets across them, use our technology to manage the data flow that comes into their firms and then to apply those to their accounting systems, risk systems, regulatory reporting, forward reporting to create the golden copy of data inside the firm. So, here I am inside a commodities company in Geneva. I have never been there before. Of course, I am heading in, I am seeing a CTO and a CIO and I was feeling like, God, I don’t know a lot about this company at all. I picked up the phone to Jerre. I told where I was going he said, say hi to the CEO and he is the personal friend of mine and it just – it clicks over and over like that for us where our combined relationships are going to allow us to deliver solutions, deliver content, build relationships and drive long-term organic growth. That’s what this combination is about. Our employees are excited. We are excited. Our customers will be excited. And when you guys figure out the story, you are going to be excited as well and it’s – this is a good one. So, let’s grab the next question.

Yes, it’s as good at it gets. Next question, please.

Thank you. Our next question comes from the line of Joseph Foresi with Cantor Fitzgerald. Your line is now open.

Hi. This is a question for Jerre. Jerre, I was wondering if you spoke with anyone else sort of strategic alternatives? And how much, if anything, did the impact of the recent oil prices and some of that’s impact in the business have to do with making this decision?

No, that’s good question. Thank you. Zero from an oil standpoint. We have been crystal clear where we are at. This is the first time in my career of 221 quarterly calls that I haven’t had any questions or actually good comments about what a good quarter we delivered. So, I will forget that for today, but it’s very consistent with what we said we were going to do, so it has zero impact. As you heard when I talked about this morning, oil is going to come back and in fact by the third quarter or early 2019, there will be a shortage again. And in fact, your number of where it will be and we will be back in great business. I will say that over the years, if you go back to 2009, I said that our commitment to our shareholders over time was to reduce the 51% of our revenue of energy down, and actually, we did. We are at about 33% now with gas and oil and this will get us down to 27%, 28%, which is a good thing. And when we look at the balance, actually, if you look at the anti-cyclical pieces of our businesses together, it really plays almost in any up or down economically on a global basis. So, that’s very positive. And we have looked towards that for years. The answer to your first part of the question was I didn’t talk to anybody else. This was – we are always looking at acquisitions as you know. And in fact, while we were busy, Lance and I were busy talking we were closing two important acquisitions for our company. So this one was I think a deal made in heaven to be straightforward with it, because it gives us the opportunity to do something nobody has ever done for our customers going forward. So, the answer was nobody else. Thank you.

Thank you. And our next question comes from the line of Anj Singh with Credit Suisse. Your line is now open.

Hi, good morning. Thanks for taking my question. I have a multiple part question on the synergies.

No, no, I said no ABC, so make it a long A.

Okay, I will try to make it a long A. Could you help us slice up how much of that $100 million revenue synergy is coming from Markit solutions into IHS customers, then how much from IHS solutions to Markit customers? And then if you could just slice up what you are assuming to accomplish in the separate years for the cost synergies, it seems like you have got an incremental $60 million in ‘18 over ‘17, just trying to get a sense of what’s driving that? Thanks.

Let’s work backwards, thanks. That was a good job. Jeff, you want to give just the answer on the cost synergies?

Yes. So, I think, as Jerre or Lance mentioned in their earlier comments, in terms of the cost synergies, we have about $125 million we are targeting at the moment. We expect to get rid of those. As we break those over the 3 years, we think we will in a run-rate basis of $35 million in year 1, $95 million in year 2, then bring up to $425 million in year 3. As Lance mentioned here, from a business perspective, there is not a lot of overlap, which is one of the fantastic things about this field. We believe from an administrative perspective there are things that we can do to bring cost together. And also both firms have had aspirations to do things in terms of lower cost, more efficient locations and we will continue to work on that strategy. So from a cost perspective, Jerre, that’s really the story.

Thanks, Jeff. Okay, Lance. This is great question. And where the revenue is coming from, the $100 million?

Yes. Well, so we did a lot of detailed work on the revenue side building up our models, but the $100 million for us that we are committing in the first 3 years, this is our low hanging fruit. It doesn’t include any of our transformative, bigger things that we will work on and we see providing long-term growth, but if you really want to take it down to what’s easy to do? What can people get off the ground running immediately? So, Markit has nearly $100 billion of AUM against its indices built up over the last several years. So, we are an active player in the index market. Passive investment, as you know, is increasing. In equities, it’s about 3.5% of the market. But in fixed income, it’s less than 1%. I think it’s a 0.25%. So, passive investment strategies are growing. Markit’s position, but the way you make money in the index space is having unique content. And Markit’s unique content is generally around our credit market expertise. Now, our unique content as IHS Markit is across multiple content sets, energy, automotive, defense, aerospace, chemicals, all of economic and country risk, political risk. These are all very interesting what you would call index overlays. So, that’s going to easily drive a 1% organic growth as a kind of a low hanging fruit that we will go after over the next 3 years. Second one that we see is very low hanging fruit. IHS has created some great products that they already sell into the finance area. But guess what, they only have 25 salespeople selling into finance. Now, we have ’ve got several hundred sales people selling into finance and we are going to sell IHS Vantage, Mint, global view and the products of IHS that are actually ready for financial market participants. And we will expand the content in them to be even more valuable. So, that be the second, so throw another 1% down to the IHS products coming across. The third 1% building up into this $100 million is Markit is positioned to lead, win and execute in Know Your Customer and Know Your Third Party. We are 1 of 1, 1 of 2, maximum 1 of 3 players that has invested tens of millions in building out the platforms to deliver transformational change and help the industry reduce costs. You have to realize the big financial market participants in the future like payroll was in the late 80s, no institution does payroll anymore. And guess what? No institution will collect corporate and financial documents to make a KYC decision. They need those, but they don’t all need to collect them individually. Not everybody is going to do a due diligence on their supply chain individually. Everybody needs to do it. So, these are managed services where together, 50,000 customers gives us an unparalleled competitive advantage, low hanging fruit to accelerate the growth of those two platforms. We also have a tax utility that we sell into the financial markets that’s growing with the global need for U.S. for FACTA, but also 200 countries now signing up to common reporting standards to collect tax. We have the world’s leading tax utility, tax service led out of our offices in Andover near Boston. And guess what, we are already moving into that corporate space, but in a challenging way, but guess what, we don’t have any sales force covering corporates. Now we have hundreds. So coming up with $100 million was not a tall order. That’s a defensible, achievable, identifiable number that we hang our hats on. But our future gains in revenue will come from taking some of our free cash flow and any additional savings that we can create and investing them back into our future. And our future will be platforms for delivery allowing us to leverage the cloud for storage, processing and delivery and distribution to put us on an unparalleled path relative to our peers. And secondly, which will also continue to feed into improved margins relative to the installed and the CapEx required in the old business models. And then secondly, taking our combined content and creating new products. That’s what’s excited for our team. When we look in the eyes of our colleagues and we say this is what our combined asset set is, that’s when it gets exciting. It’s not just about doing what we do today. It’s about looking forward and doing things new for tomorrow that’s going to motivate and excite our employees, because we are people-based companies. And when your employees are excited, your customers are excited and you make money and that’s what we plan to do.

Thanks, Lance and that’s great question. The way I would think about it is, we both are aware our whole companies are that we don’t usually get full credit for the upfront synergies on revenue. We will demonstrate that so you clearly and consistently, including showing you good examples that Lance just gave you. So, he described it perfectly. That’s just the opening bells. Thank you. Next question.

Thank you. And our next question comes from the line of Jeff Silber with BMO Capital Markets. Your line is now open.

Thanks so much. Can you give us an indication about the specific milestones that are needed to get this deal closed and how those will be communicated to shareholders and investors? Thanks so much.

Yes. Todd, you start with that and I will pick up on it, too.

Well, the primary approvals will be regulatory and shareholder vote. And regulatory, we will file the necessary regulatory documents over the next several weeks. And we need regulatory approval, I believe in the U.S., Germany and Russia. We don’t anticipate significant challenges, because there really is very little overlap in these companies. But from a shareholder approval perspective, really, the long pole in the tent will be to get the proxy and get through the SEC review process on that. It’s always hard to predict whether or not there will be comments or not, but we think if we lay out timeline and look at if things go reasonably well, we would hope that we would be in a position to close this transaction in the Q3, Q4 timeframe. I mean anything you want to add there?

No, I think the only thing about sort of merger logistics just to make it clear is that as a result of this combination, we will be moving to U.S. GAAP at the moment.

Yes.

IFRA filer. We are also a foreign private issuer and in the current U.S. distinct rules.

Yes.

The intention is to run this as a standard U.S. GAAP, domestic listings we research for that.

Thanks for bringing that up. So, the reporting basis will be an IHS reporting basis. As Jeff said, we will convert Markit to U.S. GAAP. Year end will continue to be 11/30. And then from a balance sheet perspective, effectively, Markit comes on to the IHS balance sheet via purchase accounting. So, that’s how to think about it from that perspective.

We will put on both websites decks that we will be using as we visit investors. And in that deck is a pretty complete – will be a pretty complete step by step of what we have got accomplished. And as I said, this is – we are in a race now. We want to get this done, because the quicker we get it done, the better for our customers, the better for our shareholders and the better for our colleagues. Thanks for the question. Next?

Thank you. And our next question comes from the line of Ashwin Shirvaikar with Citi. Your line is now open.

Ashwin? Okay, let’s go to the next question…

Sorry, I was on mute. Hello. I beat the buzzer there.

You do it all the time, Ashwin. So, it’s okay.

The question was on revenue synergies and cross-sell. So the vision I can understand, but it seems like synergies rely on a lot on products and services potentially not yet developed. In other words, this is about creating markets not just about tapping existing ones. So, is that accurate? Can you then describe the investments needed to get to these projects, to get these projects going and also tell me how each of your businesses perform on an organic basis during the last downturn?

Fine. Great question. Go ahead.

So, it’s Jeff, why don’t I take that one, Ashwin? I think that $100 million of revenue synergies over the early years of this deal, that is really around cross-selling slightly modifying existing product. That’s not about build anything new. We have very basic things there are enormous opportunities in the first 6 to 9 months of the deal. I mean a couple of which Lance has already mentioned we already have tax solutions which are used by some of the S&P 500, which Markit sells today. We have no sales force or reach to get to the other potential customers. That is very easily fixed through this combination. We have fantastic, unique datasets which IHS owns, which are enormously valuable to financial institutions. Historically, they have not been packaged in a way that’s financial market friendly. They have been packaged with a corporate engineering customer base. Some great work happened in the last couple of years with Vanguard to change that situation. Then the combination of that delivery tool without relationships means we can rapidly accelerate the growth of putting those products in. The final thing, which Lance mentioned here of the KYC, KY3P, we always talk about those things anyway as you know. But in the index business, the whole business index today is smart meter, index overlays finding unique perspectives on markets to make those indexes more effective. We have fantastic technology to do that already. What we need today to receive it as somebody else is doing from this deal very quickly. So, this is not about building fantastic new products, I am sure we are going to do that, I am sure in future earnings calls, we’ll be talking about those kind of things. This day one stuff is real basic blocking and tackling of cross-sell, small modifications to products we think very achievable.

Very well said, Jeff. Thank you. Thanks, Ashwin. Next question.

Thank you. Our next question comes from the line of Vincent Hung with Autonomous. Your line is now open.

Hi, good morning.

Good morning.

So maybe I missed this, but is there a break fee for the transaction?

Absolutely, there is a break fee, 3.5%. And you will see that in the publicized details. Thank you. Next question.

Thank you. And our next question comes from the line of Toni Kaplan with Morgan Stanley. Your line is now open.

Good morning.

Good morning, Toni. How are you?

Okay. Jerre, congratulations, this is a very creative way to diversify away from energy.

It’s just a great step of being two wonderful companies together, Toni.

That, too. Can you just give a little bit more color on why an acquisition was the right move not just partnering and creating indices? And Jeff or Todd, if you could just give us the pro forma EBITDA margin on a GAAP basis for ‘15, if you have it? Thanks.

You want to pick that up, Todd, please? Thanks, Toni.

On an adjusted GAAP basis, the pro forma EBITDA margin is 37. On a GAAP basis, I will need to take a minute or two to calculate it. So, I will get back to you at the end of this as we cycle through a couple of calls.

And the first part of your question, Toni, about why did we do a merger of equals, because the opportunities this gives us for scale far exceed anything we would ever find on either side of our companies if we were doing an acquisition. This one gives us scale in every way. I have said and we have talked about it, but if you think about – I have not – I said I have never seen one like this. Remember, there is three 20s here, 20% plus accretion, 20% plus EPS growth and 20% or thereabouts of share buyback. That’s about as good as it ever gets. So, I would hope today, among other things, we recognize that remember that 20, 20, 20 – and that’s a rock solid numbers that we are going to deliver. Thanks, Toni. Next question.

And Toni, in the back of the deck, we have the reconciliation to adjusted EBITDA for both companies, so for you to do the calculation.

Yes and that deck is on both websites?

Yes, on both websites.

Thanks, Toni. Next question.

Thank you. And our next question comes from the line of Jeff Meuler with Robert W. Baird. Your line is now open.

Thank you. I guess a clarifying question. What is the baseline EPS figure that you are using that you are building the 20% growth in 2017 and mid-teens accretion in 2018 off of, i.e. is it Markit’s current estimate? Is it Markit’s current estimates on a GAAP basis? And then the growth rates are those all-in including underlying growth, cost synergies, revenue synergies, tax synergies, buyback, etcetera? Thank you.

Great question. Yes, the underlying number for IHS that we are building this 20% target, 20% plus target is the midpoint of our guidance. So, if you take the IHS guidance of $6.15 and convert for the exchange rate, the $1.73 base that we are building that target, that 20% growth target. For Markit, where we are using consensus, which is $1.52, so Markit is lower than IHS. And obviously, if IHS will be above the 20%, so Markit will be well above that. And what was the -- I am sorry, what was the second part of the question.

That was it. Thanks. Next question.

Thank you. And our next question comes from the line of Paul Ginocchio with Deutsche Bank. Your line is now open.

That was my exact question. Thank you.

Okay. I think that ends the questions. I would just want to say on behalf of all of us, thank you very much for the attention. We look forward to getting this done as quickly as we can and delivering as we said. I have never looked forward to anything more than what Lance and I are thinking about today, which is go, go, go, because this is a good one. Lance, last words?

I think you covered it all. And as my new partner, friend, colleague and boss, I am looking forward to all of it and...

That will work.

You got all of it. Thank you.

Thank you all very much.

We thank you for your interest in IHS Markit. This can be accessed via replay at 855-859-2056 or international dial-in 404-537-3406, conference ID 32163235, beginning in about 2 hours and running through the next couple of weeks. In addition, the webcast will be archived for 1 year on our website at ihs.com and markit.com. Thank you and we appreciate your interest and time.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone, have a great day.