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Posted: April 21, 2011

Colorado’s best-kept billion-dollar secret

Corporate Growth Award winner IHS aims for diversification, global leadership

David Lewis

IHS just may be the fastest growing billion-dollar, Big Board-traded, Colorado-based business you never heard of.

"People often say IHS is the best-kept secret in Colorado, and I think there's some truth in that," chairman and CEO Jerre L. Stead says.
IHS could have won this year's ACG Outstanding Corporate Growth Award on the numbers. The award recognizes companies with annual sales exceeding $100 million that have exhibited steady growth for at least five years, so the company's income statement alone easily would have made the Englewood-based information, analysis and consulting company an outstanding choice.

And it must be noted that a business that operates in 57 languages in more than 170 countries can be of interest in addition to the numbers, impressive as they are.

IHS could maintain headquarters almost anyplace. So why Colorado?

"Once we get people here, they never leave," Stead says.

Getting back to the numbers for a moment, IHS' net income grew to a record $141.3 million in the year ended Nov. 30, while the company's revenue rose to $1.075 billion, breaking the billion-dollar barrier for the first time.

Yet, the company's big growth spurt began right around the time of the award's five-year timetable. Prior to 2005, IHS (formerly Information Handling Services) had been a privately held company with a data portfolio that leaned heavily toward energy-related information.

In 2004-2005, a series of changes pointed the company in its present arc. IHS went public, going straight to the New York Stock Exchange. The company asked Stead, the executive chairman, to step into the CEO role as well. And five years ago it began a series of acquisitions that enabled it to build a strategy around diversification into five arenas.

"We laid out four information domains we wanted to be global leaders in: security, environment, product life cycle and energy," Stead says, "and encompassing all of those was micro- and macroeconomics. You can put every acquisition that we have made into one of those five categories."
These acquisitions have included some of the crown jewels of the information business, notably Jane's Information Group, the defense and security data and analysis leader, and Lloyd's Register-Fairplay, ditto in the maritime industries.

Also, IHS revenue grew from about $450 million before going public to today's guidance of $1.24 billion for fiscal year 2011.

"We laid out a road map of continued progress on that road, and we're very proud to be a $1 billion-plus corporation with headquarters in Colorado, and, I would have to say, even more proud to be a $5.5 billion market-cap company headquartered out of Colorado."

Stead also notes that, since IHS' initial public offering in November 2005, the company has scored the third-highest return to shareholders among all IPO offerings worldwide with a starting market capitalization of $1 billion or more.

"It has been said, and we believe it is accurate, that we are the ninth- or 10-largest private database company in the world," Stead says.

Also, "You know, we're blessed that about 80 percent of our revenue is subscription-based, which means our customers pay us upfront at the time they renew, so we have a very good view of who those customers are, what the renewals are, when they'll come up, and what the expected price realization is."

Here are a few more IHS numerals: 11 people report to Stead; the company keeps to a maximum of six administrative levels from top to bottom; 97 percent of employees responded to the company's most recent Colleague Engagement Survey, the highest percentage ever tallied by human resources consultant Kenexa; 70 percent of them added written comments, "and we got through all those, too," Stead says. "We give them 100 percent feedback each year."

IHS registers 10 percent average organic growth, with average acquisition growth of about 8.5 percent. (IHS reports acquisitive growth the first year after an acquisition.)

IHS annually reports these statistics as well as exchange rate impact: "If the currency was today what it was three years ago we would actually be about a $90 million larger company in revenue reporting than we are now," Stead says.

IHS reports about 4,400 worldwide "colleagues," or employees, an increase of nearly 100 percent in three years.

How many are in sales? Stead is asked.

"Six hundred twenty-one," he answers "That's a number I stay very current with."

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David Lewis is a freelance writer based in Denver.

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