Ladies and gentlemen, thank you for standing by and welcome to the IHS Second Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Eric Boyer, Senior Vice President of Investor Relations. Thank you. Please go ahead, sir.

Good morning and thank you for joining us for the IHS Markit Q2 2020 earnings conference call. Earlier this morning, we issued our Q2 earnings press release and posted supplemental materials to the IHS Markit Investor Relations website. Our discussion on the quarter based on non-GAAP measures are adjusted numbers, which excludes stock-based compensation, amortization of acquired intangibles and other items. IHS Markit believes non-GAAP results are useful in order to enhance understanding of our ongoing operating performance, but they are a supplement to and should not be considered in isolation from or as a substitute for GAAP financial information. As a reminder, this conference call is being recorded and webcast and is a copyrighted property of IHS Markit. Any rebroadcast of this information, whole or in part, without the prior written consent of IHS Markit is prohibited. This conference call, especially the discussion of our outlook, may contain statements about expected future events that are forward-looking and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from expectations can be found in IHS Markit's filings with the SEC and on the IHS Markit website. Before we get started, I want to direct your attention to our supplemental slides posted on our IR website which we will be referencing today. After our prepared remarks, Lance Uggla, Chairman and CEO; and Jonathan Gear, EVP and Chief Financial Officer will be available to take your questions. With that, it's my pleasure to turn the call over to Lance Uggla. Lance?

Okay, thank you, Eric and thank you everybody for joining us for the IHS Markit Q2 earnings call. In light of the recent events in the U.S., specifically, the murder of George Floyd, I want to say that IHS Markit stands in solidarity with our black colleagues and with all of those who face discrimination in our communities around the world. I’ve learned a lot in the last few weeks and have much more to learn. At IHS Markit, we are committed to inclusivity and equality. We will not tolerate any racial prejudice in our workplace and we’ll take aggressive actions in the coming weeks and months to improve diversity inclusion in our firm and in the communities around us. These actions will not be temporary reactions to current events, but long-term commitments to change. As expected, Q2 was a challenging quarter due to the COVID pandemic. However, I am extremely pleased with the way the organization responded and are positioned to deliver results within the scenario ranges we provided on our Q1 call. This includes, recurring organic revenue growth, strong margin expansion and double-digit earnings growth on a normalized basis. Through our strong cost management, we have also protected profit against further revenue downside and funded investments for our growth initiatives. A great result in a challenging period. And I personally want to thank my team globally for their hard work and dedication in this new adjusted work model. For today’s financial discussion, when we speak to the normalized results, we are excluding the impact of the Aerospace and Defense divestiture, as well as the events cancellation on growth rates for revenue, EBITDA, and EPS. So let’s start with the financial highlights in the quarter. Revenue of $1.08 billion, down 3% on a normalized organic basis. Adjusted EBITDA of…

Great. Thanks, Lance. Q2 results included the following: Revenue of $1.03 billion, organic decline of 7%, and total revenue decline of 10%; normalized organic decline was 3%; net income of $71 million and a GAAP EPS of $0.18; adjusted EBITDA of $454 million, which is an increase of 9% on a normalized basis, with margins of 44.2%. This represents a margin expansion of 320 basis points, and finally, adjusted EPS of $0.69, an increase of 11% on a normalized basis. Regarding revenue, our Q2 normalized organic decline of 3% included recurring organic growth of 1% and non-recurring organic decline of 26%. This decline in non-recurring was primarily driven by a tough year-on-year comp in Financial Services, lower OEM auto activities and lower Energy Consulting. Now moving on to segment performance; our Financial Services segment drove organic growth of 3%, including 6% recurring in the quarter. Information and Processing had their strong performances delivering 7% and 8% organic growth respectively, while Solutions had a 3% organic decline due to a difficult comp to prior year’s quarter and lower software and consulting delivery driven by COVID delays. Our Transportation segment delivered normalized organic decline of 16% in the quarter. This included a decline of 10% recurring and a decline of 31% in non-recurring, primarily driven by delays in digital marketing, recalls and the retail portion of our Used Car business. Our resources segment had 1% organic decline normalized for events which is comprised of 1% recurring growth and 15% in non-recurring declines. Q2 organic ACV decreased by $20 million in the quarter and our trailing 12-month organic ACV is negative 0.7% Our CMS segment delivered 2% total growth, including 2% recurring and flat non-recurring. Turning now to profits and margins, our adjusted EBITDA was $434 million, down $11 million versus the prior…

Okay. Thanks, Jonathan. I feel very confident in our 2020 guidance as shown by the tight ranges that Jonathan just provided you. Looking forward to 2021, I want to once again break with the traditional practice and actually give you a deep insight into our 2021 planning forecasts. We’ll look to taking these ranges as we enter 2021 and our starting point for 2021 is that we are going to have a gradual global economic recovery, no further major lock-ins and by major lock-ins complete world shutting down as we have seen in Q2, there may be small regional lock-ins like we’ve recently seen in Beijing, but that will be well managed and very conservative events revenue. Okay. So top-line, we expect organic revenue growth next year of 7% to 9%, which includes the following assumptions by segment. So first, Financial Services revenues will return to its longer term organic revenue growth range of 6% to 8%. Strength will continue in Information. We’ll return to our high-single-digit growth in Solutions, which is well supported by strong backlog and pipeline of orders. And Processing revenues moderate back to more normal levels. Transportation, we are expecting to grow in the range of 14% to 16%. Now this sounds high, but this is well supported by our usual growth of high-single-digits, plus a favorable year-over-year benefit due to 2020 dealer price concessions that were made and the resumption of a more normalized OEM service level. In Resources, we expect organic revenue growth to be in a range of down 2% to up 2%. And this is assuming continued downstream strength, which we are seeing on a growing portion of our energies division, offset by weakness in upstream as a result of lower 2020 bookings being fully reflected in our annual recurring revenue. And…

[Operator Instructions] Our first question comes from Gary Bisbee with Bank of America Securities. Your line is open.

Hey guys. Good morning.

Hi, Gary.

I guess, I am going to try to sneak in a two-parter here on Transportation. The first part, just how are you seeing the business trend in recent weeks as we are seeing the reopening begin to flow through and I would expect to impact the dealerships? And the second part, is there a lot of discussion in the press about auto sales moving online or a lot of the process for dealers moving online? I guess, just any thoughts on how your portfolio is impacted or plays in that transition of we see this continue both new and/or Used Cars seeing more of the process of going online? Thank you.

Okay. Great. Those are good questions. I’ve got my management team with me on today. So, Edouard Tavernier runs all transportation on and I’ll let Edouard take that and I’ll add to it if needed. Edouard?

Great. Thank you, Lance and thanks, Gary for the questions. I’ll take your two-parter. On the first part, obviously, we saw a strong drop-off in activity in late March, which lasted through end of April. But since late April, we have seen as you suggested an earlier than expected recovery in both used car sales and new car sales. At this point in time, the used car sales market is solid. The outlook remains solid for the rest of the year. There is a little bit of pent-up demand that’s supporting us and that we have seen a corresponding increase in the volume of activity at CARFAX in particular. cost drop despite: So, we still see a challenging environment in the new car markets and in particular some inventory challenges through Q3. So, two stories here, used car versus new cars, but we have seen dealers coming back online and stronger levels of activity. On your second question, you are right that this has been one significant shift in the market in the past few months, it has been a move to online retailing by dealers. We have aggressively embraced online retailing and we are supporting them in a number of ways. We have some great digital market assets with which we support automotive dealers. And then automotiveMastermind business unit with its sales and marketing platform has been helping dealers who were working online drive leads to their staffs who were working remotely and in that sense, we are participating in this shift to online retailing as much as we can.

Excellent. Thanks, Edouard. Next question?

Our next question comes from Manav Patnaik with Barclays. Your line is open.

Hey. Good morning guys.

Hi, Manav.

Lance, I just wanted to understand your guidance for the floor at 5% in 2021, maybe the assumption behind that – correctly means basically a similar shutdown to what we’re seeing this year. And so, just curious why the revenue resiliency is so much stronger, is that easier comps? Or how should we think about how you cut through that?

Yes, well, if I look at next year at 7% to 9% and putting a black swan scenario at 5%, it’s at least 2% below the range which is about $90 million of revenue. So it’s quite substantive and that would more than offset what we’ve seen in this global shutdown here around our automotive business. So, my view is, is that, that’s a solid planning tool that I use with my teams in terms of budgeting and looking on a forward basis. And I felt that instead of just sharing with you the 7% to 9%, and waiting for the question, what if there is another wave? Well, to me, how I challenge their numbers is if there was a substantive quarterly or several months shutdown globally again, what would that look like? My personal view as we plan is that there will be some second and third waves like we’ve just seen in Beijing. But I believe communities, governments, hospitals, a whole bunch of therapeutics and other things are starting to emerge and the management of the waves will be more contained and the return to business and resumption to business will be faster. So, I do think the 5% floor is a solid floor and one that provides our shareholders with the peak to how we think in terms of a second wave. But really our confidence is in the 7% to 9% and actually performing the businesses that we run, that we know how to run and returning to a more normalized approach to running our business. Jonathan, did you want to add anything else to that?

Well, I think you know that well, Lance. And I’ll just mathematically – it kind of goes back to your point is the year-on-year comp will kind of help us in that point. But I think the key thing as Lance said, we now have a clear line of sight to our own customers about how they would behave in a similar type shutdown. The impact as Lance said, would be primarily in automotive and we have a view both on how the customers will react and also how we can react and support customers to even provide commerce in a semi-shutdown situation.

Thanks, Jonathan. Next question?

Our next question comes from Bill Warmington with Wells Fargo. Your line is open.

Good morning everyone.

Hi, Bill.

So, a question for you on the cost cuts and maybe if you could talk a little bit about the cuts that you have been making on a permanent basis, those that you’ve been making on a variable basis so far, you hinted at the potential for doing some additional ones going forward. And then, I am asking this in the context of what gives you confidence that those cost reductions are not going to harm the revenue growth potential of the business going forward?

Right. Yes, no, I think that’s – those are fair points and I think since merger, I think we’ve been consistent in our approach to margin expansion heading to the mid-40s and we probably would have thought we’d be there in another couple of years, not now. But the pandemic for us, we have a called action in terms of my leadership team early in the year and we took the appropriate measures to protect our long-term earnings growth and also to protect 2020 against the potential for an even longer period of lockdown. And so, I think the teams did a good job. Now a big piece of the cuts in 2020 came around compensation cuts. Those will return and start to resume probably for some of the – not necessarily my direct reports, but potentially their direct reports. I’ll look to get a return to normal salary levels at the appropriate time in the second half of this year. For my reports and myself, I think the prudent is to see most of this year past and look at a return and resumption into next year depending on the second half performance. We have a large cash bonus to all that gave us some short-term reprieve for 2020. But as we perform at those levels in 2021, it will need to come back in. We took action on early on some leases that were coming up and on some smaller offices where we said we’ll have a changed footprint going forward. So those are more permanent cuts that require a little bit of restructuring. We executed those very rapidly with a SWAT team. We have the automotive cuts, actually are mainly around the marketing costs and so when the revenue declined, of course, those costs came into play,…

Our next question comes from Jeff Meuler with Baird. Your line is open.

Yes. Thank you. So, I guess, follow-up on transport or auto and the question is – and the answer maybe in your new car solid forecast which it looks like you still have done pretty materially. But it looks like you are kind of lofting the high-end of the guidance down for 2020. But then the 2021 outlook looks good in kind of two year CAGR. So, I guess, just any more detail on what are you seeing that’s leading both to kind of taking the top-end of the guidance range for transport in 2020. And then more importantly, at this stage, what’s giving you the confidence in that reacceleration to that magnitude in 2021? Thanks.

Edouard, do you want to take that?

Yes. Great. Thanks for the questions. So what do I see in as in an industry which broadly speaking in a better condition today than it was going into the 2008 to 2010 great recession. And so, the signals that we are getting from our customers, our partners, the OEMs and the suppliers is that they are pushing back discretionary expenditure they are holding on for cash, but they see the market recovery in 2021 and beyond and they believe in the growth of the industry. So what we are seeing from our standpoint is that along that discretionary spending which would result in one-time revenues this year are being pushed out into Q4 and into 2021. That’s why we see a moderate outlook for the second half of the year, especially driven by the new car business. But we feel good about the recovery outlook in 2021.

Thanks, Edouard. Nothing to add. I’ll go to the next question.

Our next question comes from Kevin McVeigh with Credit Suisse. Your line is open.

Great. Thank you. Hey Lance and Jonathan, if you see – this was been kind of a targeted conversation – most of margin extensions given some of the cost savings, it feels like that’s a little bit more structural, is still that 100 basis points and you are able to reinvest more in the business, just trying to accelerate the growth or should we expect a structural higher level of margin expansion as a result of some of the expenses that you’ve been able to really leverage as a result of COVID?

Yes, maybe I’ll start and I’ll pass it to Jonathan. So, I have a personal view that that since merger, that shifting from a high 30s, 40% margin and heading towards a 50% margin, that was a task that was in hand for us to do and that over the next five to seven years, we’d execute it. And so, here we sit at 44% margin looking forward into 2021 and my personal view, understanding if all our cost levers, technology and how it can save us money forward through use of the cloud, cloud-based services, and supporting a work from home and more flexible infrastructure that can support a more flexible work footprint, means that, we have opportunities to do two things. One, to change our footprint and take cost out over time without being disruptive, and two, through general attrition be able to continue to build our staff into better cost locations and to be better cost locations are Raleigh versus New York, our Manchester versus London, our Gurgaon versus Milan or it’s Gdansk versus Frankfurt. So we have – and even our CARFAX team has built up a great office across the border in Windsor, Ontario and achieved substantive cost savings in their forward planning. So when I look at our footprint, Kevin, my view is, until I say stop, it’s a 100 basis points a year and we have to be able and at 5% or better top-line growth with 3% general wage inflation, we are able to generate the appropriate amount of investments for our type of business and we’ll continue to do so. And I think the teams – the team and ourselves, it’s our fourth year post-merger. I think we’ve got a great cadence at executing and we haven’t missed yet and I don’t think we’ll be missing going forward. Jonathan?

Yes, just to add a couple points, Lance. I think you hit the major ones is, I mean, first, I will say as Lance said, the easiest way to margin expansion is through a top-line organic growth and it what made this year so unusual as we manage to deliver over 200 basis points or will deliver expansion despite the fact it’s a challenging environment. And to me, it’s really the actions by our teams across the world in addressing cost in Q2 here, particularly the permanent cost, as Lance mentioned earlier on, we actually overshot the target that we had. And overshooting it gave us, obviously first, confidence in this year’s number, but equally it gave us ability to invest more right now as we do in the second half and to initiatives which are going to drive growth and drive margin in future years. So, that really has, has given us more flexibility than we normally have. But I think as Lance said, I think our focus is on, as we continue to grow with the nature of our business model that does drive through the margin expansion and that we will keep driving until we think we have a – until we tell you otherwise.

Thanks, Jonathan. Next question?

Our next question comes from Andrew Steinerman with JPMorgan. Your line is open.

Hi, Andrew.

Good morning. Good morning, it’s Andrew. In terms of the second half fiscal 2020 organic revenue growth recovery that’s embedded in the fiscal 2020 guide, could you just give us a sense of how much revenue lift is already underway in the current quarter? So I am talking about the third quarter.

Jonathan, do you want to grab that?

Yes, I’ll go ahead and tackle it, Andrew. So, I mean, the biggest – as you look to the lift, the biggest change is, the biggest change is obviously in Transportation. And this key signal which Edouard covered there is really the recovery of the used car market. And if you recall, we had this call 90 days ago, we talked about the uncertainty about the lock-ins would lock is lift or not and also when they did lift, what was consumer behavior be like. And I think we’ve answered the second part of that question. The consumer behavior in the U.S. around used car purchases actually was pent-up and so we are seeing this resurgence come back. So that’s driving a lot of confidence we have, particularly around the used car portion of our Transportation business. And as Edouard also said I think we’ve built in the appropriate amount of moderation around the new cars as OEMs has kind of build back-up inventory and then we should move sites, Financial Services had a very, very strong Q2 as they had a very strong Q1 and they continue to see the build into it. And the third element within Resources, Brian and the team, I think have done an incredible job of working closely with our customers, particularly in upstream, understanding the risk we have in our portfolio. They are working directly with our clients. And as a result are at a very detailed level, we have line of sight to the revenue build out second half for the year. So, I think at this point, Andrew, it’s an order in the year where arguably there is most uncertainty. I’d actually feel very, very good right now in terms of our revenue and margin for the rest of the year.

Okay. Thanks, Jonathan. Next question?

Our next question comes from Andrew Jeffrey with SunTrust. Your line is open.

Hi. Good morning. Appreciate you taking the questions. My question is around the Financial Services business and Ipreo, in particular, Lance, I wonder if you can give us an update on your thinking of – thinking around your positioning in alternatives and how that’s driving structural growth for Ipreo? And a sort of an add-on, can you just comment specifically on an apparently resurgent IPO market and how much that factors into your pretty sanguine outlook for Financial Services in the back half and into next year?

Yes. Okay. And, Adam is also with me on the call. So, I’ll ask him to add to what I have to say. So, first off, I have to say the Ipreo assets have all performed very well through this period. The one piece that hasn’t have the opportunity to perform well, but is definitely having its increasing share of activities is the equities portion of the Ipreo revenues. But when you get to alternatives in private markets, the private markets piece of Ipreo is growing in the 25% to 30% range. And when I look at our valuations business, that’s pinned against, that is growing in the 50% plus range. And so, I really think that our move into alternatives, our team have really taken a leadership role and we are one of a – couple of assets out there that will continue to benefit in that growth in alternatives, as well as the need for the independence around reporting in valuations and the tools that the other marketplaces that are more well developed have established. Adam, maybe you want to talk a little bit about munis, debt, equity issuance and then the investor services business and how they are performing and the prospects looking forward.

Sure. Thanks, Lance. I think you described it well. I think the way to think about the overall set of businesses is to think about the balance across asset classes. So, strong IPO markets. Obviously, desirable because you have a lot of new issuers coming into the market and that gives us opportunity to provide a range of services. But when IPO markets are slow in the current period, what we’ve seen is a significant uptick in fixed income, municipal issuance, and global activity in markets is actually been quite strong post the initial shock of the COVID shutdowns even into the early periods of June, late May, we are starting to see the IPO market even start to tick back up with a lot of activity in the last few weeks. So the numbers in our view of the business is, with asset classes largely offsetting each other, a resumption of normal levels of issuance in the IPO market which I hope drive some other businesses, but then you’ll see a bit of maybe moderation in the highly active fixed income markets that we’ve seen over the last few weeks. So, when you roll it altogether, you kind of have a balanced portfolio through the year, we think sustains the growth that we’ve seen.

Good. Thanks – thanks, Adam. Next question?

Our next question comes from Hamzah Mazari with Jefferies. Your line is open.

Hey. Good morning. My question is just on capital allocation. You touched on buybacks. You did your first transaction, a very small software deal this year. Has the outlook on M&A changed in terms of doing more tuck-ins as you are seeing sort of more visibility into a recovery. You’ve cut a ton of cost, margin profile is up, any thoughts if you already do more transactions?

Okay. Well, I think I said in the last quarter’s call that I felt the investments in some of our key organic growth initiatives looking forward were anchored around two or three key things across all our businesses. So, continued diversification of resources, we are very focused on climate and energy transition. We see it as a big TAM, a growth market and one that we’ve been investing in and those specific assets have been growing north of 10% in our current Resources division. So, we are very keen to continue to invest there. We invested through in acquisition into agriculture in our agro business. We also expect forward high-single-digits to double-digit growth there as we’ve invested in the business, re-staffed and Brian is working with the team to set it on a correct path going forward. So that’s organic and that’s a large TAM that we are focused on. We don’t see us needing to acquire further although there could be small tuck-ins associated to energy transition and climate-related activities. When I – we go into automotive, here Edouard is very focused with CARFAX and AMM teams on automotive, kind of OEM Mastermind which is looking at those digital marketing dollars and the spend. And you look at the amount for the first time ever, I think digital marketing spend has now surpassed everything else, I read it in the – I think it was the Financial Times or one of the U.S. papers yesterday and we are very well positioned to pull our assets together organically to drive OEM targeting of incentives and marketing dollars. And again, Edouard is very focused on that organically. The continuation in financial markets with asset managers looking to cut costs, we’ve been working on, I mentioned in Q2 asset management platform to draw together key market participants in the design host and build of new solutions for asset managers. That’s all organic. So, when I look at that, I go, I’ve got and we continue to invest and we have substantive organic complementary growth to our existing business. We don’t really need a lot of acquisitions. So therefore, I can see capital resuming at the upper-end of our range in terms of share buybacks forward. And keeping our leverage below three times and going to the maximum on that. And Jonathan and the team, Granat working for him that runs treasury, they are on top of that. They manage it and my view is, is use any excess capital for share buybacks. I don’t see a big acquisition slew needed to support our long-term growth initiatives. Jonathan, do you want to add anything else or?

No, I think you captured it Lance and I just emphasize what you said, we remain committed to our capital policy of remaining under three times, because it’s very important to us. And as we spend, the less on M&A, you have to deploy more on buybacks kind of where the cash goes.

Thank you. Next question?

Our next question comes from Seth Weber with RBC Capital Markets. Your line is open.

Hi guys. Good morning. Thanks for taking the question. Just, I think, I just wanted to go back to the transport segment for a second. I just want to make sure I am understanding the messaging, could you just have the dealer price concessions continued? Did they continue I guess into June and is that the expectation that could still bleed into the third quarter? I am just trying to understand really, whether transportation margins can turn positive on a year-over-year basis in the back half of the year? Thank you.

Edouard? Nigel, keep going on this one.

Yes, sure. So, we have already removed the vast majority of our pricing concessions and we still have a few in place to support some segments of the markets that these will have been phased out completely by the month of August. Did that answer the question?

Yes. Thank you, Edouard. I was on mute. Thanks. Next question.

Our next question comes from Alex Kramm with UBS. Your line is open.

Hey. Good morning everyone. Just on the prepared remarks you talked about some cancellations. I think it was primarily on resources, I think when you gave the ACV as well, but can you just talk about cancellation more broadly, what you saw in the second quarter across the business? I mean, anything that you would describe as customers are using this time to look at their spend and seeing some things that may not be as mission critical as they thought? Or has it been fairly limited any color would be great. Thanks.

I am going to start and then let Brian add in here in a moment. I would always refer, I referred to actually in the written script I referred to – I think it was within automotive small cancellations. And I don’t think anything significant to discuss. But in the Energy space and really across the firm, I took a stance with the team in beginning of Q2 that look, this is an opportunity. I just market we’ve got a great reputation to work with our customers. We are going to have some troubled customers and I want us to be at upfront in price concessions and wherever we can increase the price concessions for longer term contracts. And I think the team did really well and where there was opportunities for us to execute longer term contracts and help our customers through a tough year, I think the team did that. And so, it’s going to have an impact within 2020, but also when I fit in our energy minus two, plus two, I am going to have that now dragging through into 2021 with the benefit coming back in 2022, 2023, 2024, because the contract extensions were in general for, three, five, seven years or longer. And so, I think the team did a great job and it’s exactly what a good firm should do in this environment. But I don’t actually see any long-term challenges beyond what we’ve modeled. Now within the Permian, and that lack of CapEx, lower energy prices, private equity and lenders looking for higher hurdle rates on their returns, I think there is a continued challenge. And therefore, we modeled that challenge into our numbers. And Brian, maybe you want to top up that commentary that I just gave with some of your specifics on how you are viewing the energy recovery and some of the moves we’ve made through this tough period.

You know it all Lance, you hit it on the head. I think it’s largely a North America issue. You have your production cost there higher than the price of crude. You are seeing bankruptcies go up. But what we are doing is, we are working with customers on price. So that we keep them and we get growth in our longer-term contracts. And again, in our international business for example, that’s actually growing in the upstream. So, I think the real focus for us has been trying to take care of those North America customers that are under a lot of pressure right now.

Thanks, Brian. Next question.

Our next question comes from Shlomo Rosenbaum with Stifel. Your line is open.

Thank you for taking my question. I am in there?

Sorry, I got you. Yes, I got you.

Just want to sneak in one, just back on the transport, just to make sure the 10% on the recurring revenue decline in the quarter, that was all just from the dealer concessions. There wasn’t anything else that was really significant in terms of that, that just being phased out at this point of time?

Yes, that’s correct.

Okay. Thank you.

Thanks, Shlomo. Next question.

Our next question comes from George Tong with Goldman Sachs. Your line is open.

Hi, thanks. Good morning. Do you expect Resources’ organic growth to be down 2%, up 2% in fiscal 2021 was downstream strength offset by weakness in upstream due to lower 2020 bookings being fully reflected in revenues. Can you describe how OPEC discussions and oil prices need to evolve over the next year for you to achieve this target?

Yes, I’ll start and again Brian you can add if I don’t have it all covered. So, I guess the minus two to plus two, remember, I’ve given you a – what isn’t normally done by a company. In Q2, we gave you the scenarios – previously we gave you the scenarios for 2020, now what I am doing is giving you my forecasting tools that I am doing throughout this July, August period, so that I am ready for a December 1 start. And currently, 6% to 8% Financial Services, mid-teens in Transportation recovering off of that low comp, which really is high-single-digits. Energy is a bit different. So, Energy, the whole supply/demand equation that went completely out of whack really caused some structural issues in that upstream marketplace and you know we have about $300 million which used to be $400 plus million of premerger of upstream data revenues that are very important to our customers and very sticky. But if the customer is not there, they are not buying any data. And the fact is, some of those structural supply/demand shifts in our view will cause some customers to disappear, but also some of our larger customers we gave price concessions to. Price concessions cost us in 2020, because they are not for full year. We get the full year impact in 2021. So that continues to cost us. And then, we built in growth going forward on our contracts from years two through years seven and even longer. So, I think the team has done a good job for that and that gives us a real nice certainty on the way forward. And as you get your data revenues in upstream become about $250 million of $1 billion business and above $4.5 billion company it starts to become an issue of small challenges. But in 2021, the minus two to plus two reflects the rolling out of that, those revenue concessions that were made, some customers disappearing. And our CapEx down 30%. On the other hand, the rest of the business has opportunities to grow at 7% to 11%. And in the planning period, I can’t tell you whether I am going to be precise to 7%, 9%, 10%. What I can tell you that rate of the moment, the combination of all I know about our Resources business would have us no worse than negative two and likely no better than plus two unless we – unless the $400 million of other revenues grew closer to double-digits. And in planning, that’s now how I plan and how I manage the firm with the division heads. I manage for certainty for reasonableness of error for strong customer pipeline and renewals with our customers and that’s what Brian and his team are doing. Brian, do you want to add anything to that?

Yes, the only thing I would mention is, there is a swing in events if we have events or we don’t have events, that’s going to definitely impact the range, as well.

Now, that’s a story, Brian. I missed that. Yes, so, right now, in our forecast, we put – we haven’t put events returning at the 2019 level. And honestly what, there is some people – if I guess if I was the U.S. President, I’d put full events in for 2021. But in fact, my personal view is that, in analysis with my team, we see some virtual events definitely and some smaller events potentially to come together. But we haven’t put that back in. And if you remember right, at the time of last quarter when I disclosed some of the challenges with the events, you are talking a $40 million that’s 4% of growth in that division, or 4% of the revenue potential coming back in that division. And I don’t think it’s right to put that back in. Jonathan, do you want to add to that? Just to make sure I didn’t boggle any numbers there.

No, no. You had it right. But it’s that – I mean, I just call out what Brian said, is on the high-end of the range, we assume events coming back strong and on a low-end, we would assume events coming back in a very moderate fashion. So that is a swing item in that range.

Right. And would you – in our top range, would we see events returning to 2019 level or a little less or a little more?

It’s a little less. A little less than the 2019 levels, you assumed.

Yes, yes. Okay. So that’s how I said. Good. Okay, perfect. Thank you. Next question.

Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.

Thank you. Good morning. Could you talk about the sales cycle within Solutions? And I assume the pipeline is strong, but just trying to get a sense of, if there is any improvement in new sales conversions at this point. It sounded like some of your comments that COVID implementation delays are over. But just wanted to try and understand about customers’ willingness to pull the trigger on new sales.

Okay. No. Good question. I’ll start, Adam, if can ready to follow-up here. So, Solutions sales for us, I have to say, even though the number is not reflecting in this quarter, actually if you normalize the year-over-year on last year’s big Q2, I think normalize over eight or ten quarters, we are probably running at 9%, 10%. So it’s a – it might delay this, normalize Solutions still very strong. The pipeline is also at an all-time high. So therefore, there is lots of interest in the pipeline. And we generally feel that we’ll return slowly for the rest of this year and better into next year, those customers closing that pipeline and putting it into production. And so, I think if I look forward, I view Solutions as a strong growth contributor to Financial Services back to pre-COVID levels. Adam, do you want to add some of the highlights, low lights, some of the challenges and just your forecast of how we look at 2021?

Yes. I think you summed it up well, Lance. The interesting thing I think from the COVID experience is a lot of our customer base has looked at the Solutions that they use to maintain most efficient and risk management tools and it’s actually accelerated some of their decision-making and implementing lot of the types of solutions that we offer. And that’s been the biggest driver of the growth in pipeline. Coupled with six months to a year ago, we really formalized to bringing together of a lot of our solutions and looking at larger packages of services for our customers where our solutions can work with each other and give customers larger overall opportunity for efficiency. So, I think through this period, it’s been a little bit of an accelerant. There will be a little delay in that, because these are larger deals that takes a little bit more time to close. But customers are quite interested in doing that. I think what you saw through the early part of Q2 is, larger software implementations as customers were adjusting to work from home environments and our markets have largely stayed open. Financial Markets have been active and operating through this period. But in adjusting to working from home, some of the larger software implementations maybe got delayed by four to six weeks, all of which have basically restarted at this point. That gives you a little bit of an insight into what that little low might have looked like and why we are pretty optimistic about the forward path.

Good. Thanks – thanks, Adam. Next question.

Our next question comes from Ashish Sabadra with Deutsche Bank. Your line is open.

Thanks for taking my question. I just want to drill down further on the automotiveMastermind growth opportunities. The company launched AMM for CPU and used car vehicle actually earlier this year. So my question is just, what is the current penetration of AMM at existing dealership using CARFAX? And is it possible to quantify the cross-sell opportunity both for new cars, as well as the used car sales? And just to follow-up to that question, AMM was growing at least 30% prior to the crisis and can AMM growth reaccelerate to strong double-digit going forward as we come out of the crisis? Thanks.

Good. Thanks. Edouard?

Right. So, I will start with the end of your question, Ashish, which is the growth of Mastermind. So, we actually saw accelerating growth in the past few quarters until Q1. You may remember in Q1, Mastermind delivered 36% organic growth year-on-year. So really, really strong acceleration and now I’ll pick-up on your first point, which is what is driving that growth? And it is actually the synergies that we’ve been building between Mastermind and other parts of the automotive organization. So to give you few examples, we now have the Conquest capability in Mastermind that is built using organ safer that we have in our automotive business. We have a service to sales capability in Mastermind that is built using CARFAX and Transient data. And as you just said, we are launching in July a pre-owned kind of used car capability which is perfect timing for the market, because that is the activity that will support many dealers in the second half of the year and again, we use – we launched this used car capability leveraging assets we have within other parts of the automotive kind of portfolio. So, Mastermind is a growth story, which is anchored on our automotive data as a foundation and we expect that growth to resume quickly as the market opens up towards the end of this year.

Thanks, Edouard. Next question.

Our next question comes from Andrew Nicholas with William Blair. Your line is open.

Hi, good morning. In terms of the events business, you obviously touched on the range of potential outcomes you’ve embedded in 2021 guidance earlier. But I am just curious, how you are thinking about the longer term impacts of the pandemic and clients’ willingness to travel to and attend conferences? Is it’s a business you think is permanently impaired or is it something that will just take some time to ramp back and review? Thanks.

Yes. No, I guess, I have a personal view and I imagine if we pooled everybody on the phone, we’d all have slightly different views. One I’ve been quite pleased with the virtual dialogue going on in IHS Markit with our customers. So, we have no issues with supporting our products and our services, our research, our datasets, out data science. And therefore, I feel we are really lucky to be so resilient against COVID. Our revenue globally from events is probably about 1% of what we do. So therefore, it’s – we’ve taken that impact. It’s in the numbers and so, to put it back into the numbers at any reasonable scenario, my view is that, there is got to be a vaccine to support that. Otherwise, I think there is going to be a mixed bag of people want to fly, want to on subways, want to be in crowded rooms, speakers want to be in crowded rooms themselves as they help companies provide thought leadership. So my own view is that, we should expect at our 9% scenario, something a little less than 19% as Jonathan said. So, we are at 45, maybe it’s 35 to 40. Maybe it’s 30. But it’s not as high. And at our low-end of the scenario, little to no events and in our black swan, a 5% growth – my view would definitely be none. So, as I look forward and sculpt our business, I am very careful with the teams to be not looking at substantive. I want to maintain our flagship big CERAWeek, Chem Week, TPM. Those are three flagship events. We are also leaders now around the climate dialogue. We got to support that. We will be world-class virtually. We’ll have small meetings and small events where our customers want us to. And if there is a vaccine or a trend back to bigger gatherings, we will be prepared to go. But, it’s not something I put a lot of face in for 2021. But a lot of that’s more personal than it is a total view of IHS Markit. But you will get in our forecast numbers, you should know that events will be a tempered revenue that is never going to be the reason for us to hit numbers. Jonathan?

Yes, you always had one point you said at Lance is, in Q2 we announced the event cancellation we talked about $0.09 of EPS impact. That was a result of losing all the revenue while still having all the cost. And as Lance said, I think the events, particularly those three flagships are important to us for branding reasons, thought leadership and [a sense of almost] community within the industries we serve. But financially, the events themselves are frankly not that important to our profitability at the end of the day.

Good. Thanks, Jonathan. And, I – all I can say is for our teams that lead those events, they are now focused on leading virtual events and I have to say, just go online and catch the CERAWeek conversations and it’s everybody from world leaders to key energy markets thought leaders, Dan Yergin, who, along with Jamey Rosenfield are founders of the CERAWeek. They’ve just done an outstanding job to make sure we are supporting our customers in the right dialogues. But they are having to do it virtually. And that at a minimum will be world-class at and let’s see what happens. Next question.

Thank you. And I am showing no further questions at this time. I would like to turn the call back over to Eric Boyer for any closing remarks.

Now we thank you…

Before you go, Eric, Eric, Just before you go, I just want to say one last word. The first thing I’d like to say is thank you for the support our shareholders have given us. These are tough times. I never thought I could have experienced anything like this in my life. And I have to say that having a strong team around you, strong shareholders and great, great people throughout the firm globally working with our customers, we’ve been able to navigate and I know from many companies they are not – haven’t been as fortunate. So, I feel very lucky to be able to do what we’ve been able to do. But I couldn’t have done that with all the teams and I know our shares have been well supported by our investors and I just want to say, thank you for that. And I hope the transparency that we are providing, you will allow us to return to pre-COVID levels once we get through this. But up through that point, I feel that we want to show market leadership in our reporting to help you navigate the challenging waters that we are navigating ourselves and fortunately also performing well in. So, thank you very much. Also thanks to all the employees. And I want to close that the – some of the challenges that we are dealing in communities around us, in particularly we are at out to all our black colleagues in the U.S. I am appreciating all of their support through us setting strategy forward for IHS Markit. And once again, we want to be a firm that’s action-oriented where out front we are making change happening and I appreciate all of the support from those colleagues in the firm that have been helping me. So, thank you. Eric, do you want to close?

Yes. Great. We thank you for your interest in IHS Markit. This call can be accessed via replay 855-859-2056 or international dial-in 404-537-3406. Conference ID 1089105 beginning in about two hours and running through June 30, 2020. In addition, the webcast will be archived for one year on our website. Thank you and we appreciate your interest and time.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.