Q2 2021 IHS Markit Ltd Earnings Call
Thank you for standing by and what was the second quarter 2021, I says market earnings conference call. At this time, all participants on listen only mode.
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Now I will hand, the call over to Eric for you. Please go ahead.
Good morning, and thank you for joining us for the IHS Markit Q2, 2021 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 are based on non-GAAP measures or adjusted numbers, which exclude stock based compensation amortization of acquired intangibles and other items I just markit believes non-GAAP.
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 copyrighted property of IHS Markit any rebroadcast of this information in 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 subject to risks and uncertainties factors that could cause actual results to differ materially from expectations can be found in IHS markit filings with the SEC and on the IHS Markit website. After our prepared remarks, Lance Uggla, chairman and CEO, and Jonathan gear, EVP and Chief Financial Officer.
Would be available to take your questions with that it's my pleasure to turn the call over to Lance.
Thank you Eric Thank you for joining us for the IHS Markit Q2 earnings call.
We had another very strong quarter Q2 revenue was 118 billion with organic growth of 13% adjusted EBITDA $517 million and margin of 43, 8% up 30 basis points year over year, FX, adjusted and up 80 basis points now year to date.
Adjusted EPS up 8.1 or <unk> 81 up.
17% over the prior year. So overall, we're pleased with the first half of our year, which puts us in an excellent position to raise our full year guidance today.
In terms of core industry verticals, let me first start with our financial services segment, which had another strong quarter.
With 9% organic growth in Q2.
Within the division information performed solidly with organic growth of 5%.
Contributors included increased demand for our pricing reference data and valuations offerings as well as continued growth in our equities regulatory reporting and trading to analytics platforms.
Solutions had an excellent quarter with 15% organic growth and they continued to benefit from robust mark productivity in equities and loan markets combined with a broad based rebound because investment customers in our software solutions, and our corporate actions and regulatory and compliance offerings.
Finally, our processing business grew 6% organically strength at loans and derivatives performance as expected for.
For the full year, we still expect financial services to be in the 7% to 8% organic growth range.
Now moving on on the transportation, which had organic revenue growth of 39% in Q2.
Youll recall that the basis for comparison, the second quarter of 2020 was depressed by significant pricing concessions that we granted in our customers the hype for COVID-19 related lockdowns as well as by particularly challenging trading conditions in the automotive market.
However, there is more to this quarter than a lower comparison on.
I'm pleased to say that this quarter's performance also reflected strong underlying organic growth right across the transportation businesses.
Our dealer businesses.
Includes car faction mastermind are once again experiencing rapid growth.
In a retail environment that is marked by a shortage of inventory both used and new and by rapidly escalating used car prices for our products are critical to helping dealers acquire and sell more cars at the right price on the right time.
Demand for predictive solutions volumes plant in powertrain and emissions compliance supply chain and technology are all accelerating as the industry grapples with multiple supply chain disruption as.
As it faces major strategic decisions related to the technology Mega trends. Those include the connected car autonomous driving and electrification.
Our marketing on audience measurement business is rapidly expanding its footprint with automotive market tiers.
Recently, we announced a wide ranging partnership with Nielsen, which we are very excited about.
And finally, our maritime and trade business continued to deliver strong performance.
This has been the result of a very focused product strategy and disciplined execution over multiple quarters.
We also hosted a successful virtual ppm conference in March.
For the full year, we now expect transportation organic growth to be higher and then the 14% to 16% range, which is up from our previously noted 13% to 15% range. This represents a healthy underlying high single digit growth rate, excluding the favorable <unk>.
Year over year comparison due to the pandemic.
Moving on to resources.
Organic growth was flat for Q2.
Our resources business for.
<unk> was as expected with recurring revenue consistent with Q1 and nonrecurring revenue benefiting from the return on both Cerro week in the world petrochemical conferences.
As expected for <unk>.
<unk> experienced slight positive growth in Q2, which we believe should accelerate in the back half providing a stronger foundation for our 2020 to recurring revenue.
Our downstream organic revenue growth performed as expected and should accelerate throughout the rest of the year.
Downstream is now 50% of the overall provision and upstream 50%, that's a 10% shift year over year.
In 2021, we continue to expect organic revenue results within resources to improve compared to 2020 and to be down year over year on the low single digits as upstream improves as downstream continues its growth trajectory.
Finally, CMS organic revenue growth was in line with our expectations of 1% for the quarter. We expect improving results continue in across CMS throughout the year for the full year, we expect CMS to deliver mid single digit organic growth.
The only update we have on the merger is what S&P global recently disclosed that we expect the deal could now close in calendar Q4.
And now I'll turn the call over to Jonathan.
Great. Thank you Lasse Q2 highlights included revenue organic growth of 13% adjusted EBITDA growth of 14%.
GAAP net income and EPS, both had growth of 122% and.
And adjusted EPS growth of 17% year over year regarding revenue. Our Q2 revenue was $1..1 8 billion with total growth of 15% organic growth in the quarter was 13%, which included recurring organic growth of 10% and non recurring organic growth of 41%.
Yeah.
This increase was driven by strong underlying growth in financial services and transportation.
As well as benefiting from favorable year over year comparisons due to the impact of Covid on some of our transportation and resources businesses.
Moving on to segment performance, our financial services segment drove organic growth of 9%, including 7% recurring in the quarter solutions in particular had strong performance delivering 15% organic growth per.
Primarily from strength in capital market issuances.
Corporate accidents and compliant offerings.
Well, well information had 5% growth driven by pricing on evaluations and our equities regulatory reporting and trading analytics platforms.
Processing had a 6% organic increase driven by volumes primarily in loans.
Our transportation segment delivered organic growth of 39% in the quarter.
This included growth of 38% recurring as Q2 continued to have strong growth within our car facts and automotive mastermind businesses and accelerating growth within our maritime and trade business.
Non recurring revenue increased by 41%, primarily driven by strong performance in car packs consumer and dealer transactions core automotive insights and maritime and trade events.
Our resource segment remained flat, which is comprised of an 8% recurring decline and 73% nonrecurring increase.
Q2, organic ACB increased by 2 million in the quarter and our trailing 12 month organic ACB is down 8% as we have now cycled through our subscription renewals since the North American energy market was severely impacted at the end of Q1 last year.
We had great success with our entirely virtual cera week and World Petro Chem conferences, and we continue to see strong demand in our downstream businesses, particularly in our products and services to support the energy transition and energy markets supply chains.
Our CMS segment had 1% organic growth, including 2% recurring and a decrease of 10% nonrecurring.
Moving now to profits and margins.
EBITDA was $517 million up $63 million versus prior year.
Adjusted EBITDA grew 14% with a margin of 43, 8% down 40 basis points and up 30 basis points FX adjusted.
Moving to our segments financial Services' adjusted EBITDA was $238 million with a margin of 48, 2% down 300 to 320 bps FX adjusted for.
<unk> services margins reflects a return to more normal margin levels post COVID-19.
<unk> adjusted EBITDA was 171 billion with a margin of 49, 6% up 870 bps FX adjusted we do expect margins to moderate in forward quarters, as we see more expense tied to revenue growth.
Resources adjusted EBITDA was 91 million with a margin of 41, 4% a decrease of 210 bps FX adjusted as a result of lower revenue.
CMS adjusted EBITDA was 29 million with a margin of 23, 3% down 520 bps FX adjusted.
This quarter's decrease was driven primarily by the return to more normal margins compared to the prior year. In addition to a mixed shift.
We do expect margins to continue to improve for the back half of the year.
Moving now to net income and EPS net income was $159 million and GAAP EPS was <unk> 40 cents. Adjusted EPS was <unk> 81, an increase of 17% over prior year or.
Our GAAP tax rate was 26% and our adjusted tax rate was 20%.
Q2 free cash flow was $301 million and our trailing 12 month free cash flow conversion has increased to 56 per cent.
Turning to the balance sheet, our Q2 ending debt balance was 5 zero billion.
And represented a gross leverage ratio of approximately $2.6 times on a bank covenant basis at 2.5 times net of cash.
We closed the quarter with 217 billion of cash and our Q2 Undrawn revolver balance was approximately 917 billion.
In the quarter, we paid off our 250 million 364 day term loan.
Our Q2 weighted average diluted share count was 400, <unk> 7 billion shares as we mentioned in Q for the merger agreement with S&P Global restricts our ability to purchase our shares and therefore, our share repurchase program is currently suspended.
Other than for the repurchase of shares associated with tax withholding requirements for share based compensation.
Moving to guidance, we had a strong first half for the year and are adjusting and raising our guidance ranges.
We are raising revenue guidance to $4.635 to $4.675 billion with organic growth of 7% 8%.
Approximately $30 million of this increase is due to changes in FX rates, which are benefiting revenue negative to margin percentage, but neutral to adjusted EBITDA.
Adjusted EBITDA is being raised to $2 zero to <unk> zero 3 billion with adjusted EBITDA margin expansion of approximately 100 basis points adjusted for FX.
Adjusted EPS is being increased to $3, 1.5 to $3.107 per share. Finally, we expect cash conversion in the mid <unk> as we lap our 'twenty 'twenty 1 type cash impacts.
I will turn the call back over to Lance.
Thanks, Jonathan we had another strong quarter as our end markets continue to recover and the teams have executed at a high level, we remain very confident in our ability to deliver strong results for the year as represented by our updated guidance and operator, we're now ready to open the lines for questions.
As a reminder to ask a question. Please press Star then 1 if your question has been answered and you wish to remove yourself from the queue. Please press the pound key.
First question comes from Kevin Mcveigh with Credit Suisse. Your line is open.
Great. Thanks, Good morning, everybody, Hey, Hi, Kevin.
Hey for you 8.
Really great numbers in transportation, and obviously easier comp, but what's interesting to me is we read a lot about constrained inventories things like that so it seems like the numbers would have been that much stronger if not for even if there was more inventory out there any puts and takes you'd call out in particular.
As for Jonathan just because again, it really amazing number there.
Yeah, why don't I start and then we'll pass it over to Edward actually because he's on with us, but I think the biggest thing is is in Edward can build on this some more if you took out 2020, what you really want to look at it as recurring revenue gross 19 to 21 and that's a mid to upper.
Teens number so that's the blow away number from my perspective, the team has done an amazing job that comes down with non recurring.
Revenue and if you take the overall quarter, 19% to 21.
High single digits and that's right in line. If you look back to 18, 19 et cetera. So my view is.
The teams were covered they've done the maximum they can.
<unk> innovated into new products.
They they work virtually well I really think.
It's been a stellar performance for them, but Ed where do you want to add a little bit to that.
In terms of just your own.
Your own color on the debt.
The numbers.
Yes, that's for the year on the guarantee loans.
Can you hear me now okay cool thanks, Kevin for the question on just to build on what Lance said good call out on the inventories. So the industry is still in a process of recovery and you'll like in this current environment, both dealers and car makers have less of a need to spend on marketing.
It does create a headwind for some of our products on the other hand, I would say that dealers in particular.
Currently seeing higher margins as the recorded and on and when our customers do well. That's obviously a good thing for us. So you sort of have a balance of headwinds and play Windsor for the takeaway for me is that it in market environments like today's auto industry I think we're showing that our products on critical mass.
Products that are helping dealers income it does sell more cars and also in the case for dealers.
On an as used cars in a really tough kind of used car market. So that's a big deal for us and I'm really happy with how the business has been moving in recent months.
Thanks next.
Next question.
Our next question comes from Gary Bisbee with Bank of America. Your line is open.
Hey, good morning I.
I guess on financial services continues to do quite well 2 part question, how how important is issuance in the last couple of quarters across equity and debt markets.
Side of the issuance benefit.
Else would you call out that continues to do quite quite well here. Thank you.
Okay, maybe I can start and then I'll hand, it over to Adam I guess for stop Yeah, I look at financial services and a high single digits and I just to me that Super strong quarter, So great performance.
I'd say, the 1 thing I'd call out, which if you are following markets than IHS markit over the years, we always viewed our solutions business is having.
Double digit growth opportunities and for a little while that slipped into high single digits. It's been.
Throughout.
19.
'twenty and now 21, we've started to see that recover in that 15% solutions. So on growth, albeit some of its non recurring.
What's really important is that.
Solutions growth brings and draw us recurring revenue so a really super performance by the solutions team I know Adam do you want to add in.
In terms of issuance et cetera.
Yes, I mean, 1 of the nice things about our business is the diversification of the asset classes in which we operate on the and the types of businesses that we have so strong issuance market. It gives us a bit of a lift but in other market environments, where you see volatility we have other platforms or other businesses that respond well.
Those environments. So you do have a bit of a balance.
Heavy issuance market like we saw on Q1 in particular that started to moderate a bit into Q2.
It gives us some amount of lift but across the portfolio. The core is really the strength in our pricing our valuations continued growth in demand for those products and as Lance mentioned our solutions, we made a significant investment over the last couple of years and we're winning some pretty significant mandates and thats fueling growth I think that will be an area of.
Continued growth for us.
Over the over the midterm.
Thanks.
Next question.
Our next question comes from Jeff Mueller with Baird. Your line is open.
Thank you on the.
The the macro around connected cars that you called out in the prepared remarks, obviously, not new but I guess, what's the what's the strategy for car facts or IHS auto to collect connected car data in real time on near real time, and I guess, how important is that to you kind of intermediate to long term as you defer.
On your position or look to find new sources of revenue.
Edward do you want to take that 1.
Yes for sure. Thank you Jessa and on Great question, so overtime.
Overtime availability of connected cloud based is going to get bigger probably just going to get much better and we see a couple of opportunities for us both in terms of access to data.
To supplement what we do today and also new business models. Today, we are running a number of POC is across our business.
On the complex side of the business, but to figure out like what what can we get from them for them that based on how can we supplement with resources, but also buildings on datasets into work flow for carmakers, such as dealer network optimization network design. So on he's talking about for genetic Watson, we seek connected club.
Critical source losses in the future right now.
Melissa is limited.
Coverage is very light.
And there are still some significant question marks around access to reliable data who owns that data, which will have to go on over the next 2 or 3 years. So let's let's continue to watch this space together on these calls on but it will take for which we use for connected car data to emerge that's something that we can really leverage.
Thanks, Edward next question.
Our next question comes from Andrew Sandeman with Jpmorgan. Your line is open hi.
Lance I just wanted to share a little bit more specifically about what will drive the recovery in IHS as resources HCV for the balance of the year shortly.
And ice Brent Doyle's back into Saturdays, but just give us a sense of kind of where and why IHS is seeing additional subscription revenue coming into ACB. Okay.
Probably Brian can give you a real good detail on more granular so I'll pass it over to you Brian.
Yeah. So what we're seeing is really in high demand right now for our clean tech carbon biofuels crop science on our aggregate group and plastics for chemicals.
We've done this year as we have new or expanded offerings in all those areas. So we're just seeing that segment of the business really take off.
Yeah.
Okay. Thanks, Thanks Brent.
Sure.
I'd mentioned debt.
I think that.
5 or 60.40 now for the first time ever 50% downstream.
With AG rehab on the 10% quarter.
It really.
The diversifications much much better.
Better and we will continue to.
Balance.
Set of asset with the energy transition and the team has done a good job.
Thank you next question.
Our next question comes from Hamzah <unk> with Jefferies. Your line is open.
My question is more related to the actual b.
Merger could you maybe land stock up or.
Integration Preplanning, that's gone on maybe you could touch on employee morale clearly other deer closer as you mentioned Q for.
But how is it Florida morale shaping up in terms of culturally and with that configuration.
You know anything you can touch on any color you can provide there from a pre planning process and also for them on employee morale perspective. Thank you.
Right.
Well the.
A year or will be a year or December 1 to that final quarter. So you know.
It is a long time, but I have to say.
You know.
The team really got motivated together through bovid so.
I, just think that for rallied around COVID-19 and culturally.
Improved and and delivered great results and that that carried us through most of the last year.
Like anything we'd be worried that over time you can get.
Merger fatigue, we haven't noticed that at all.
I think S&P has done a great job working with my teams on.
Pre merger planning and because we probably had an extra 3 or 4 months, they really rolled up their sleeves and just went deeper.
Other thing you should know is we don't have that much.
Employee morale issues because on <unk>.
<unk> is completely different other plots opus overlap is going to create a sale that's been announced.
So even within Opus people are excited about the fact that.
They would be doing something on new again, so that's not an issue.
There is no overlap with our upstream and downstream businesses into platts really.
Financial services, Adam is going to be leading that and you know it's exciting integration given lots of opportunities automotive transportation no real need for overlaps.
So edwards' leading that.
Sally's, leading alliances and building a new team across S&P. So.
The teams are all highly motivated on where the overlap is of course in the services and we did a really good job both firms are treated the employees very well through this merger period and.
So we haven't had a lot of people at all leaving the firm and.
I feel I feel my teams have done an exceptional job and are still highly motivated.
Jonathan has been leading the I M O from our side. So maybe he can add a little bit of additional color to that.
Sure Lance will do what it does.
As you lift your question I mean, certainly there's been some very intensive integration planning going on really going back to separate for the first 1 we announced this and our teams are being stood up across all the different functions. All the different areas of course being careful not to jump the gun, but really get ahead on the integration integration planning and then that process on a couple of things have come out first I think as we identified.
Synergies at debt, let me know steel we've taken the last few quarters to really begin to solidify exactly the path to achieve those synergies net increase in confidence on how to how to get there and the second thing culturally to your question. It's been a great opportunity for the teams to really work with 1 another and get to know each other and it gets no. There there are future colleagues extremely well and I think.
What's come out of it is certainly less than I do from our discussions on the fall is the values of the 2 firms are very very similar and I think as the 2 teams we got to know each other it's been relieving if you will for them to get to know that their colleagues are going to be working whether people that they want to work with so that's b, we're making great progress on both culturally as well as the integration planning and we should be well set up.
When we close.
Thanks, Jonathan next question.
Our next question comes from Shlomo Rosenbaum with Stifel. Your line is open.
Hi, This is Adam on for Shlomo what level of costs were injured reintroduced to the business due to the reopening and how might this have impacted margins in the quarter.
Jonathan do you want to do that 1.
Sure. So is it a couple of different areas, where he does so for your call last year.
<unk> Q2 call last year, when we were entering Covid, we took some significant cost reductions some of those were permanent those permanent cost savings have been permanent they have crept back in but some were certainly temporary there was impacts on executive salaries.
A few other things we did we pull back on marketing spend for example on car back given that the dealers have shut down in North America, and so those costs would be certainly built into our plan and our guidance. This year those costs have been have been reversed and so it does create a I'll call. It somewhat odd dynamic on the absolute margin of the segment segment level where for.
Transportation for example, where we took significant cost reductions in Q2 of last year, you see a significant year on year margin accretion.
Which is it's a little bit of a false economy I would say you should see that normalize going forward, but those would be the main costs that have cut back and then of course, we continue to invest for the business and where we see strong performance make sure we're making investments to fund fund future growth, but the key thing I'll call out is really you see the year on year, a reversal of some of those temporary cost reductions from <unk>.
Last year.
Thanks, Jonathan next question.
Our next question comes from George Tong with Goldman Sachs. Your line is open.
Hi, Thanks. Good morning, you increased your for your guidance for organic revenue growth given the strength in transportation.
Do you expect your updated guide to flow through to your fiscal 2022 outlook given current trends in each of your segments.
Yes, I think I'll, let Jonathan add.
After me.
No.
For the key thing that I think people should look at is it's a very you know we're over halfway through our fiscal year, we've given you a very narrow.
$40 million of revenue guidance and in EBIT narrow our EBITDA guidance.
And if you look at our track record.
Over the last many years, we don't Miss our guidance. So the fact is is we've given you a very accurate picture for this year.
Flowed all the way through into earnings.
Of course.
We also.
Feel debt.
Our strong.
You know mid to upper single digit revenue.
Our profile as a firm is 1 that's very intact and we expect that to continue and so I don't see us changing the percentage.
Revenue growth expected into.
Into 'twenty 2 'twenty 3 'twenty for.
That's not to say that as we go into those years, if we have a strong for.
Second quarter, we don't have any issue with raising our view.
Forward and we'd love to beat our or our guidance.
But.
I don't see us changing.
Across the mix of our businesses.
So.
High mid to high single digit revenue growth and 22 off of our closing the 'twenty 1 numbers, Jonathan do you want to add anything else for that.
No, but maybe it's a couple of comments that add to yours lands for me first of all we did give our 2021 guidance. This time last year coming out of all the noise of Covid I'm actually really proud of the team that even with all the uncertainties back then we are landing the plane kind of as we expected and as.
Lance has alluded to great great performance by the team now for I would say George in terms of a raise the guidance. This time, obviously, we're doing that on the back of what we saw on first half of the year and what we're seeing go forward I think at this point, we're not prepared to really give formal guidance for for 2022 and it will be back to a normal normal cadence, obviously you'd much rather be in a position of <unk>.
<unk> exited the year with an addition of weakness, but its lance was saying I think at this point, that's really no new news in terms of changes to future growth will should they get back to you later in the year once we finalize our plans.
Thanks, Jonathan next question.
Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.
Thank you I wanted to ask about ESG.
You think about the $70 million of ESG revenue spans across a number of different.
On areas emissions day at our supply chain solar wind hydrogen et cetera, I guess competing against you in these areas and are there any capabilities or datasets that you don't have right now that you would like to.
Thank you.
Yeah. That's a good question Toni thanks, Thanks for that so we.
Think we're.
IHS Markit Standalone has an edge in ESG is clearly around the E and <unk>.
Scope 123 admissions science based targets the challenges of.
For corporations governments, who will want to regulate coming out of the cop 26.
These are these.
These are areas, where we have real substantive detail climate analytics.
We have data that plays into climate analytics, so location data around energy assets.
Our maritime and trade group.
Very detailed.
Ply chain.
Prince for all the Merit Maritime fleet.
We.
Some great new products and services that play into.
Research and development around E. So I think we have a competitive edge as IHS markit in E. When you marry that with.
S&P global.
We think the combination gets even stronger and they do have the <unk>.
<unk>, Sam true cost and other assets that are very very valuable in terms of competing with the likes of.
Oh.
Uh huh.
Ci.
FTSE the LSE group.
Various providers of <unk>.
<unk> ratings and scores that are much more driven off the public.
Public knowledge, yes, and GE.
Versus the debt E. So I think our combination is going to give us a competitive edge and gives us a lot of opportunity to grow into and I think.
Across S&P global and IHS Markit. This is a very strong double digit growth engine for you know at least a decade.
Because.
Yeah.
Theres, 1.5 trillion a year being spent on.
On climate change now and that number is expected to grow to something like $4.5 trillion and so I think we've got lots to offer and.
We'll watch this space closely.
Next question.
Our next question comes from Jeff Silber with BMO capital markets. Your line is open.
Thank you. So much this is actually a follow up from <unk> question on your internal workforce. You said you have not had a lot of people leave since the merger announcement, that's great I'm, assuming you've been hiring sense. If you could just confirm the size of your workforce has increased since the merger announcement and if so how difficult is it to find these people on.
Are you having to pay higher than normal wages.
No update.
The team at this 1 so I'll go to Jonathan or if he wants to pass it to any of the division heads you can.
We're definitely hiring and we're definitely.
The growth numbers.
We're growing and in many cases, we're growing into new spaces.
In our in the markets for the operate in so I haven't seen this happen any.
Challenges are.
To hire.
You know on a portion of merger, we make sure that we retain.
Our people and look after them on so I don't notice anything that stands out.
From my perspective, but.
If any other division heads want to add anything in terms of hiring et cetera, maybe you can start Jonathan if you know our overall.
Employment growth across the group.
Year over year, and then if any of the division heads want to add.
Sure maybe I'll just give a general overview and then as the division has can supplement as they like so so first step to your to your point is firstly the attrition we've seen kind of year to date, it's been very much in line with what we normally see and.
No no abnormalities, there we are growing and youre absolutely right, we are growing and investing in all the different businesses that that Adam Edward and Brian.
Lead in particular growing in India, that's always been a gross headroom for US India is a hot market.
All of us, but we're very very attractive employers all of us.
Challenge to find great people I would say that the challenge we have finding people. This year really is is not that different from other years, it's all of us.
Look for Scott is the best people.
Pull them and it's never easy, but we always kind of weighted to get it done. So the we are growing certain markets are hotter than other markets certain segments, particularly in technology data science et cetera. The usual places you would expect all of it all is difficult, but I wouldn't say dramatically different this year for prior years, but happy to open it up to the divisional lease add some more.
Color.
Yes.
Yes.
Yes.
Just add something system for Jonathan said I would say it's in pockets Rod I think that's a great question technologies 1 of those buckets.
I have seen in someplace, there's an uptick in attrition and we have for those to hire great talent in some locations and so on strategy here is to diversify the sources of talent.
You know we are actively engaged in.
On a globalizing all kind of footprint and that's helping us on in some cases adjusted wages.
My announcement with funding the tonnes a day.
Adam do you want to add anything more for Brian.
No no on the only comment maybe I'd make lenses we.
Obviously, we're all operating in competitive job market, we put a lot of attention into our internship and our early careers programs, where we brought large groups of young people into the firm in that pipeline.
And finally on gives us great strength forward, that's a real investment in the future of the firm and I think that's a place where we've seen real progress both in our diversity and equality as well as just bringing great talent that continues to join and progress within our firm.
Okay.
Brian anything.
No I mean, I think I agree I'm seeing the same things that Edward.
And definitely our internship programs really help onboard good talent as does our grad. So I think we're firing on all cylinders there.
Yeah.
We have over 250 in turns in 250 graduates join I think so.
That fuels, a lot of our growth and manage our expenses.
Next question.
Our next question comes from Andrew Nicholas with William Blair. Your line is open.
Great. Thanks for taking my question.
I know, it's a smaller piece of the business, but I was wondering if you could speak a bit to the performance of CMS in the quarter and what the medium term outlook looks like for that segment I think recurring revenue held up decently well throughout the past kind of year, plus and I know you get some nonrecurring revenue from the boiler pressure.
Vessel codes in the back half of this year, but excluding that do you think CMS can get into the mid single digits range longer term and if so what are the primary drivers to getting there. Thank you.
Yeah I'll start out.
So on I think we can add if he needs to but.
We really retooled CMS for mid single digit growth, we called it out in this quarter that we expect for full year to be mid single digits. So.
And I think you guys have.
Strong confidence in the numbers, we give you.
And we expect to hit them so.
But long term organic growth means you do it over and over and over again.
And then people will give you that valuation expectation and CMS has been.
You know in need of.
On the tooling and building out.
Our tech platform and the team has done a great job.
They are seeing demand and south flow through to better recurring revenue.
So I think the team has done a great job.
I think moving from low to mid single digits is step 1 and we expect that the team will be able to do that through this year and then again into next year Jonathan.
Great Lance maybe just 2 things I would add because if you look at CMS are are really.
2 debates with 2 major divisions in it when its product design when it is economic and country risk. So within product designed it has been a multiyear investment back in technology, and a new platforms and products ever begin to see that lift lift take place that drives as Lance said, not just simple urea, but kind of a multiyear sustainable organic growth.
<unk> certainly see as we as we look for the first half of the year then look at what's building in the second half of the year, we do see a path for that to get to the mid single digits for.
Full year based upon what we're seeing in that that we think it should be a sustainable growth rate on their economic country risk that that Adam mentioned is being some significant investments in terms of new products and new packaging around how we get much more of a persona based approach with our products there and similar story where those.
For those investments were made to kind of end of last year early this year and receive the benefit in our growth for our pipeline, we expect to see that lift second half of the year. So it's as you know.
All of our port divisions, our lowest growth rate first half of the year, we would expect it to get to mid singles by end of the year.
Thanks, Jonathan.
Next question.
Our next question comes from Andrew Jeffrey with true Security. Your line is open.
Hi.
Good morning, everybody appreciate taking the question.
Just wondering a little bit Lance the tree.
<unk> business has been fantastic and it sounds broad based some of what you described in terms of the end market dynamics.
Peak cycle.
Wonder if you could address.
At next year, obviously compares aside assuming supply chain solutions up a little bit.
Used car prices, perhaps normalize anything we need to think about in terms of 'twenty, 1 as being sort of an exceptional year that sets up just.
Tougher.
Sort of macro backdrop for transportation next year.
Right, well I guess since.
The merger of IHS and Markit.
That's a I.
Got used to that question every single quarter. So.
20 quarters of that same question. So it's a good debt. It obviously, it's a good question because it's the 1 that's on the minds of the Bolivar analysts and I think what you should be really looking at is high single digit growth for transportation and it does that time and time again in a very diversified way.
And sometimes it's used car markets, sometimes it's new product markets.
Sometimes its marketing and advertising sometimes it's.
Supply chain.
And predictive analytics and so when everything is ticking, we can peak into double digits, but in general I look at transportation, Let's say, it's a it's a strong high single digit performer with <unk>.
Handful opportunity in its markets to maintain on that and it's not reliant on new or used car sales alone.
But many things that are actually needed by the automotive suppliers and the Oems regardless of the environment. We're in so they all need to market for cars. They all need to spend their incentives they all need to measure their emissions. They all need to order parts and and studied the supply chains.
They all need to.
Do R&D and look into the future car the connected car.
The electrification.
Vehicles next there'll be hydrogen.
There's always stuff to be done.
Then we get on the dealer floor and the marriage of car facts mastermind and helping dealers sell cars in a in a connected digital world those types of tools become even more important and.
So I think.
You can expect more of the same in that high single digit range for transportation.
But on this.
Is an outsized quarter.
That's catching up from Covid.
Covid period, where.
You know really the comparison.
It's exciting to get to say, 39%, we actually team the team that it wasn't 40.
Because would've been a nicer number to shout out, but the fact is its really a high single digit.
<unk> gross scenario, where the teams for covered really well.
I'll end there.
That was our final question operator.
We do have a question from Doug Arthur with Huber Research your.
Your line is open.
Yeah, So I'll make it quick last just on the ACB.
Just on the ACB turning up would you.
I mean, you've given various updates on your kind of cash.
Pendulum swinging there on HCV is it sort of as expected at this point or is it a little ahead of schedule.
No I'd say as expected.
We're definitely not ahead of schedule.
<unk>.
What I really like.
The debt.
On the continued shift to a division that's highly diversified like financial services like transportation, where we've got strong diversification across you know many facets of.
Global economies that are.
Dealing with energy transition new sources of energy.
Circular economy and demands waste. This division is with its expertise in chemicals to agricultural business.
Continued need for you know.
1990 to 100 million barrels a day of oil oil prices at 70, when it wasn't long ago. They were sub 50.
So this team is always in thought leadership in center stage and Yeah. We've had it's been 1 of the toughest divisions as we've come out of had to go through Covid.
But we're back to a.
Expected, probably low to mid single digit growth year in 'twenty 2 for energy and.
22 could be the first year, where you've got CMS, you've got energy in the mid single digits, and you've got transportation and financial services in high single digits, that's kind of that's the home run.
And we're going to deliver this firm very strong into the S&P global strategic merger.
I think that might be the final question, but let me know operator.
Our final question is from Manav Patnaik with Barclays. Your line is open.
Thank you.
Oh I'm sorry.
I just wanted to unpack, maybe I'll keep it quick that low to mid single digit growth you talked about resources can you just help break it down you know clearly everyone's talking about energy transition growing well, but that's probably a smaller part of the business and I just wanted to understand how you guys see the dynamics between you know, obviously oil prices going up but the energy companies still pressured in.
The zero carbon world or whatever so how do you see those moving pieces there.
Yeah, I think the easiest thing to do.
You take 50% of that division and you call. It high single digits Agriculture had a tan.
On chemicals has been consistently mid to high single digits Opus has been consistent mid to high single digits, even occasional quarter in double digits.
And then you go to upstream and if you really want to be tough on upstream.
You could say, it's flat and that your.
Low single digits upstream recovering, though off of the price concessions et cetera to be low to mid single digits puts the whole coal division at 5.
5% to 7% and so.
I don't think it's a tall order to see.
Those types of revenue gross in 2022 and.
We're well set up for that and the demand around.
Just understanding.
Energy related assets in a world of.
Driven by regulatory change climate change investor perceptions, and and demands I actually think our teams roles to help energy market participants navigate these forward challenges I think theres a lot of growth we saw Sarah.
A week virtually.
<unk>.
I was shocked at the turn out in the.
The.
The needs of the teams to engage market participants and thought leadership, we saw the same in the world Petrochemical conference and our maritime and trade, which is more around supply chain.
<unk>.
And the trade.
Analytics, so I really yeah, I guess I just you know you know I'm not a crazy optimist, but I.
I think debt.
When we say mid <unk>.
Single digits, we mean, it and I think that Brian and the team have.
Navigated COVID-19 very well, but it was tough for was the toughest division to run.
From a strategic point of view.
Through this challenging period. It just had the most moving parts and the team.
To say they don't have the highest results.
<unk>.
For me.
Give him a badge of honor so great job.
We will end there I think operator I'll try it 1 more time unless somebody came in for another question I think where there are no further questions.
I'll turn it back to Eric.
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