IHS MARKIT LTD.
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is intended to help the reader understand the
financial condition and results of operations of IHS Markit Ltd. ("IHS Markit ,"
"we," "us," or "our") as of and for the periods presented. The following
discussion should be read in conjunction with our 2020 Annual Report on Form
10-K and the Condensed Consolidated Financial Statements and accompanying notes
included in this Quarterly Report on Form 10-Q. References to 2021 are to our
fiscal year 2021, which began on December 1, 2020 and ends on November 30, 2021 .
Executive Summary
Business Overview
We are a world leader in critical information, analytics, and solutions for the
major industries and markets that drive economies worldwide. We deliver
next-generation information, analytics, and solutions to customers in business,
finance, and government, improving their operational efficiency and providing
deep insights that lead to well-informed, confident decisions. We have more than
50,000 business and government customers, including 80 percent of the Fortune
Global 500 and the world's leading financial institutions. Headquartered
in London , we are committed to sustainable, profitable growth.
To best serve our customers, we are organized into the following four industry-focused segments:
•Financial Services, which includes our financial Information, Solutions, and Processing product offerings; •Transportation, which includes our Automotive and Maritime & Trade product offerings; •Resources, which includes our Upstream and Downstream product offerings; and •Consolidated Markets & Solutions, which includes our Product Design, Economics & Country Risk, and TMT benchmarking product offerings. Our recurring revenue streams represented approximately 89 percent of our total revenue for the three months endedFebruary 28, 2021 . Our recurring revenue is generally stable and predictable, and we have long-term relationships with many of our customers.
For the three months ended
•Increase in geographic, product, and customer penetration. We believe there are
continued opportunities to add new customers and to increase the use of our
products and services by existing customers. We plan to add new customers and
build our relationships with existing customers by leveraging our existing sales
channels, broad product portfolio, global footprint, and industry expertise to
anticipate and respond to the changing demands of our end markets.
•Introduce innovative offerings and enhancements. In recent years, we have
launched several new product offerings addressing a wide array of customer
needs, and we expect to continue innovating using our existing data sets and
industry expertise, converting core information to higher value advanced
analytics. We also intend to continue to invest across our business to increase
our customer value proposition.
•Improve efficiency, productivity, and financial strength. We are striving to
strengthen our operational excellence by consistently improving productivity and
efficiency, particularly as we work through the effects of the COVID-19
pandemic. We also continue to build on our strong financial foundation,
balancing capital allocation between returning capital to shareholders
(targeting an annual capital return of 50 to 75 percent of our annual capital
capacity through share repurchases and cash dividends) and completing mergers
and acquisitions, focused primarily on targeted transactions in our core end
markets that will allow us to continue to build out our strategic position. We
intend to continue to operate at the high end of our capital policy target
leverage ratio of 2.0-3.0x.
20
--------------------------------------------------------------------------------
Table of Contents
On November 29, 2020 , we, S&P Global Inc., and Merger Sub entered into an
agreement and plan of merger, which was subsequently amended on January 20,
2021 , pursuant to which Merger Sub will merge with and into IHS Markit , with IHS
Markit surviving such merger as a wholly-owned, direct subsidiary of S&P Global.
The merger intends to bring together a unique portfolio of highly complementary
assets, as well as innovation and technology capability to accelerate growth and
enhance value creation. At the completion of the merger, each IHS Markit share
that is issued and outstanding (other than dissenting shares and shares held by
IHS Markit in treasury) will be converted into the right to receive 0.2838 fully
paid and nonassessable shares of S&P Global common stock, and, if applicable,
cash in lieu of fractional shares, without interest, and less any applicable
withholding taxes. If the merger is completed, IHS Markit shares will cease to
be listed on the New York Stock Exchange and IHS Markit shares will be
deregistered under the Securities Exchange Act. The merger was approved by IHS
Markit and S&P Global shareholders on March 11, 2021 , but is still subject to
antitrust and regulatory approval requirements, as well as other customary
closing conditions.
Key Performance Indicators
We believe that revenue growth, Adjusted EBITDA (both in dollars and margin), and free cash flow are key financial measures of our success. Adjusted EBITDA and free cash flow are financial measures that are not prepared in accordance withU.S. generally accepted accounting principles ("non-GAAP"). Revenue growth. We review year-over-year revenue growth in our segments as a key measure of our success in addressing customer needs. We measure revenue growth in terms of organic, acquisitive, and foreign currency impacts. We define these components as follows:
•Organic - We define organic revenue growth as total revenue growth from continuing operations for all factors other than acquisitions and foreign currency movements. We drive this type of revenue growth through value realization (pricing), expanding wallet share of existing customers through up-selling and cross-selling efforts, securing new customer business, and the sale of new or enhanced product offerings.
•Acquisitive - We define acquisitive revenue as the revenue generated from
acquired products and services from the date of acquisition to the first
anniversary date of that acquisition. This type of growth comes as a result of
our strategy to purchase, integrate, and leverage the value of assets we
acquire. We also include the impact of divestitures in this metric.
•Foreign currency - We define the foreign currency impact on revenue as the
difference between current revenue at current exchange rates and current revenue
at the corresponding prior period exchange rates. Due to the significance of
revenue transacted in foreign currencies, we believe that it is important to
measure the impact of foreign currency movements on revenue.
In addition to measuring and reporting revenue by segment, we also measure and
report revenue by transaction type. Understanding revenue by transaction type
helps us identify and address broad changes in product mix. We summarize our
transaction type revenue into the following three categories:
•Recurring fixed revenue represents revenue generated from contracts specifying
a relatively fixed fee for services delivered over the life of the contract. The
initial term of these contracts is typically annual (with some longer-term
arrangements) and non-cancellable for the term of the subscription, and may
contain provisions for minimum monthly payments. The fixed fee is typically paid
annually or more periodically in advance. These contracts typically consist of
subscriptions to our various information offerings and software maintenance,
which provide continuous access to our platforms and associated data over the
contract term. Subscription revenue is usually recognized ratably over the
contract term or, for term-based software license arrangements, annually on
renewal.
•Recurring variable revenue represents revenue from contracts that specify a fee
for services, which is typically not fixed. The variable fee is usually paid
monthly in arrears. Recurring variable revenue is based on, among other factors,
the number of trades processed, assets under management, or the number of
positions we value. Most of these contracts have an initial term ranging from
one to five years, with auto-renewal periods thereafter. Recurring variable
revenue was derived entirely from the Financial Services segment for all periods
presented.
•Non-recurring revenue represents consulting, services, single-document product
sales, perpetual license sales and associated services, conferences and events,
and advertising. Our non-recurring products and services are an important part
of our business because they complement our recurring business in creating
strong and comprehensive customer relationships.
21--------------------------------------------------------------------------------
Table of Contents
Non-GAAP measures. We use non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and free cash flow in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be more reliable indicators of ongoing operating performance (Adjusted EBITDA) and our ability to generate cash flow from operations (free cash flow). We also believe that investors may find these non-GAAP financial measures useful for the same reasons, although we caution readers that non-GAAP financial measures are not a substitute forU.S. GAAP financial measures or disclosures. None of these non-GAAP financial measures are recognized terms underU.S. GAAP and do not purport to be an alternative to net income or operating cash flow as an indicator of operating performance or any otherU.S. GAAP measure. Throughout this MD&A, we provide reconciliations of these non-GAAP financial measures to the most directly comparableU.S. GAAP measures. •EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are used by securities analysts, investors, and other interested parties to assess our operating performance. For example, a measure similar to Adjusted EBITDA is required by the lenders under our revolving credit agreement. We define EBITDA as net income plus or minus net interest, plus provision for income taxes, depreciation, and amortization. Our definition of Adjusted EBITDA further excludes primarily non-cash items and other items that we do not consider to be useful in assessing our operating performance (e.g., stock-based compensation expense, restructuring charges, acquisition-related costs and performance compensation, exceptional litigation, net other gains and losses, pension mark-to-market, settlement, and other expense, the impact of joint ventures and noncontrolling interests, and discontinued operations). •Free Cash Flow. We define free cash flow as net cash provided by operating activities less payments for acquisition-related performance compensation and capital expenditures. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components ofU.S. GAAP financial disclosures. For example, a company with higherU.S. GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, excluding the effects of interest income and expense moderates the impact of a company's capital structure on its performance. However, non-GAAP measures have limitations as an analytical tool. Because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. They are not presentations made in accordance withU.S. GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance withU.S. GAAP or operating cash flows determined in accordance withU.S. GAAP. As a result, these performance measures should not be considered in isolation from, or as a substitute analysis for, results of operations as determined in accordance withU.S. GAAP.
Global Operations
Approximately 40 percent of our revenue is transacted outside ofthe United States ; however, only about 20 percent of our revenue is transacted in currencies other than theU.S. dollar. As a result, a strengtheningU.S. dollar relative to certain currencies has historically resulted in a negative impact on our revenue; conversely, a weakeningU.S. dollar has historically resulted in a positive impact on our revenue. Our largest foreign currency exposures for revenue are the British Pound, Euro, and Canadian Dollar.
Results of Operations
Total Revenue
Revenue for the three months endedFebruary 28, 2021 , increased 4 percent compared to the three months endedFebruary 29, 2020 . The table below displays the percentage change in revenue due to organic, acquisitive, and foreign currency factors when comparing the three months endedFebruary 28, 2021 to the three months endedFebruary 29, 2020 . Change in Total Revenue Foreign Organic Acquisitive Currency First quarter 2021 vs. first quarter 2020 3 % - % 1 % 22
-------------------------------------------------------------------------------- Table of Contents Organic revenue growth for the three months endedFebruary 28, 2021 , compared to the three months endedFebruary 29, 2020 , was led by strong performance in the Financial Services segment and recovering performance in the Transportation segment, partially offset by negative organic revenue growth in the Resources and CMS segments. Foreign currency had a slight positive effect on revenue growth for the three months endedFebruary 28, 2021 , compared to the three months endedFebruary 29, 2020 . Due to the extent of our global operations, foreign currency movements could positively or negatively affect our results in the future. Revenue by Segment Three months ended February 28/29, Percentage (In millions, except percentages) 2021 2020 Change Revenue: Financial Services$ 484.5 $ 436.0 11 % Transportation 311.7 297.2 5 % Resources 202.7 225.6 (10) % CMS 121.0 122.0 (1) % Total revenue$ 1,119.9 $ 1,080.8 4 %
The percentage change in revenue for each segment was due to the factors described in the following table.
Change in revenue
First quarter 2021 vs. First quarter 2020
Foreign
Organic Acquisitive Currency
Financial Services 10 % - % 1 %
Transportation 4 % - % 1 %
Resources (10) % - % - %
CMS (1) % (1) % 1 %
Financial Services revenue for the three months ended February 28, 2021 ,
compared to the three months ended February 29, 2020 , experienced broad-based
organic growth. Within our Information product offerings, organic revenue growth
was led by increased demand for our pricing, reference data, and valuation
offerings, as well as continued growth in our SFTR reporting platform and
indices offerings. Within our Solutions product offerings, increased capital
market issuance and greater adoption of our corporate actions, private markets,
and regulatory and compliance offerings were all significant contributors to
very strong organic revenue growth. Within our Processing product offerings,
organic revenue growth increased primarily due to higher loan settlement
activities.
Transportation revenue for the three months ended February 28, 2021 , compared to
the three months ended February 29, 2020 , continues to recover across the
segment at varying speeds. The dealer-facing portion of our automotive offerings
experienced strong growth across CARFAX and automotiveMastermind, with revenue
growth rates approaching pre-pandemic levels. Other parts of our automotive
offerings, such as products supporting OEMs, parts manufacturers, and banking
and insurance clients are also recovering, albeit more gradually. In particular,
one-time revenues related to marketing and recall activities remain down on a
year-over-year basis. Our automotive product offerings continue to provide the
largest contribution to Transportation revenue, and our diversification in used
and new car product offerings allows for balanced opportunities for growth.
Resources revenue for the three months ended February 28, 2021 , compared to the
three months ended February 29, 2020 , declined, with our upstream product
offerings continuing to be negatively impacted by constrained industry capital
expenditure spend. We believe our Resources annual contract value ("ACV"), which
represents the annualized value of recurring revenue contracts, has bottomed in
the first quarter of 2021, and now expect it to slowly recover throughout the
rest of 2021. ACV decreased $7 million in the quarter and has declined 11
percent on a trailing annual basis.
CMS revenue for the three months ended
23
--------------------------------------------------------------------------------
Table of Contents
Revenue by Transaction Type
Three months ended February
28/29, Percentage change
(in millions, except percentages) 2021 2020 Total Organic
Revenue:
Recurring fixed $ 825.6 $ 804.1 3 % 2 %
Recurring variable 172.9 146.8 18 % 17 %
Non-recurring 121.4 129.9 (7) % (7) %
Total revenue $ 1,119.9 $ 1,080.8 4 % 3 %
As a percent of total revenue:
Recurring fixed 74 % 74 %
Recurring variable 15 % 14 %
Non-recurring 11 % 12 %
Recurring fixed revenue organic growth increased 2 percent for the three months
ended February 28, 2021 , compared to the three months ended February 29, 2020 ,
largely due to contributions from our Financial Services and Transportation
recurring offerings, partially offset by declines in our Resources recurring
offerings. Recurring variable revenue was composed entirely of Financial
Services revenue, which experienced strong performance.
The non-recurring organic revenue decline for the three months ended
February 28, 2021 , compared to the three months ended February 29, 2020 , was
primarily driven by lower automotive recall activities, lower energy consulting
activities, and lower transactional content purchases for Resources Upstream
offerings and CMS Product Design offerings compared to the first quarter of
2020.
Operating Expenses
The following table shows our operating expenses and the associated percentages of revenue.
Three months ended February 28/29, Percentage
(In millions, except percentages) 2021 2020 Change
Operating expenses:
Cost of revenue $ 415.2 $ 415.8 - %
SG&A expense 302.2 316.2 (4) %
Total cost of revenue and SG&A expense $ 717.4 $ 732.0 (2) %
Depreciation and amortization expense $ 151.6 $ 145.3 4 %
As a percent of revenue:
Total cost of revenue and SG&A expense 64 % 68 %
Depreciation and amortization expense 14 % 13 %
Cost of Revenue and SG&A Expense
In managing our business, we evaluate our costs by type (e.g., salaries and benefits, facilities, IT) rather than by income statement classification. The decreases in cost of revenue and SG&A expense were largely due to the execution of our cost reduction activities that we put in place at the onset of the COVID-19 pandemic. Within our cost of revenue and SG&A expense, stock-based compensation expense decreased by approximately$17 million for the three months endedFebruary 28, 2021 , compared to the three months endedFebruary 29, 2020 , which was largely due to lower employer tax impacts associated with the exercise of stock options in 2021. 24 -------------------------------------------------------------------------------- Table of Contents Depreciation and Amortization Expense
For the three months ended
Acquisition-Related Costs
Please refer to Note 9 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for a discussion of costs associated with our integration and other acquisition-related activities. During the three months endedFebruary 28, 2021 , we recorded approximately$13.1 million of direct and incremental costs associated with acquisition and divestiture activities.
Other Expense (Income), Net
Other income for the three months ended
Segment Adjusted EBITDA
Three months ended February 28/29, Percentage
(In millions, except percentages) 2021 2020 Change
Adjusted EBITDA:
Financial Services $ 232.9 $ 205.4 13 %
Transportation 146.7 118.0 24 %
Resources 74.2 90.2 (18) %
CMS 26.1 29.4 (11) %
Shared services (13.1) (11.4)
Total Adjusted EBITDA $ 466.8 $ 431.6 8 %
As a percent of segment revenue:
Financial Services 48 % 47 %
Transportation 47 % 40 %
Resources 37 % 40 %
CMS 22 % 24 %
For the three months ended February 28, 2021 , compared to the three months ended
February 29, 2020 , Adjusted EBITDA increased primarily due to strong Financial
Services revenue performance and improving Transportation revenue growth, as
well as our continued cost containment efforts in the current COVID-19 pandemic
environment. We continue to focus our efforts on organic revenue growth and cost
management to improve overall margins. Financial Services segment Adjusted
EBITDA and associated margin continued to increase because of strong organic
revenue growth and investment in segment product offerings. The increase in
Adjusted EBITDA for the Transportation segment was primarily due to organic
revenue growth, although we expect slower growth through the rest of the year as
we see more expense tied to revenue growth. Resources Adjusted EBITDA and
associated margin decreased due to the organic revenue decline as a result of
the COVID-19 pandemic, and the decrease in CMS Adjusted EBITDA and margin was
driven primarily by mix shift, which we expect to improve during the year.
Provision for Income Taxes
Our effective tax rate is estimated based upon the effective tax rate expected to be applicable for the full year.
25
--------------------------------------------------------------------------------
Table of Contents
Our effective tax rate for the three months ended February 28, 2021 was 17
percent, compared to 1 percent for the three months ended February 29, 2020 . The
low 2020 tax rate is primarily due to excess tax benefits on stock-based
compensation of approximately $64 million and the tax-efficient divestiture of
the A&D business line (U.K. share sales are exempt from tax) of approximately
$29 million . The 2021 tax rate includes excess tax benefits on stock-based
compensation of approximately $23 million , partially offset by U.S. minimum tax
of approximately $19 million .
EBITDA and Adjusted EBITDA (non-GAAP measures)
The following table provides reconciliations of our net income to EBITDA and Adjusted EBITDA for the three months endedFebruary 28, 2021 andFebruary 29, 2020 . Three months ended February 28/29, Percentage (In millions, except percentages) 2021 2020 Change Net income attributable to IHS Markit Ltd. $ 149.3$ 485.0 (69) % Interest income (0.1) (0.4) Interest expense 55.5 61.2 Provision for income taxes 30.3 4.3 Depreciation 56.1 51.1 Amortization 95.5 94.2 EBITDA $ 386.6$ 695.4 (44) % Stock-based compensation expense 65.8 82.6 Restructuring and impairment charges 1.0 4.5 Acquisition-related costs 9.2 0.7 Acquisition-related performance compensation 3.9 0.2 Gain on sale of assets (0.1) (372.3) Pension mark-to-market and settlement expense - 21.2
Share of joint venture results not attributable to Adjusted EBITDA
0.7 0.3
Adjusted EBITDA attributable to noncontrolling interest (0.3) (1.0)
Adjusted EBITDA $ 466.8 $ 431.6 8 %
Adjusted EBITDA as a percentage of revenue 41.7 % 39.9 %
Our Adjusted EBITDA dollar and margin performance for the three months ended
February 28, 2021 , compared to the three months ended February 29, 2020 ,
increased primarily because of organic revenue growth without proportionate
growth in expense as we continue to focus on cost management activities as a
result of COVID-19 and the current economic environment.
Financial Condition
(In millions, except As of February 28, As of November 30,
percentages) 2021 2020 Dollar change Percentage change
Accounts receivable, net $ 981.9 $ 891.7 $ 90.2 10 %
Accrued compensation $ 95.9 $ 206.1 $ (110.2) (53) %
Deferred revenue $ 1,049.8 $ 886.2 $ 163.6 18 %
The increases in accounts receivable and deferred revenue were due to increased
billing activity in 2021. Accrued compensation decreased primarily due to the
2020 bonus payout made in the first quarter of 2021, partially offset by the
current year accrual.
26
--------------------------------------------------------------------------------
Table of Contents
Liquidity and Capital Resources
As of February 28, 2021 , we had cash and cash equivalents of $172.0 million . Our
principal sources of liquidity include cash generated by operating activities,
cash and cash equivalents on the balance sheet, and amounts available under a
revolving credit facility. We had approximately $5.12 billion of debt as of
February 28, 2021 , consisting primarily of $227.0 million of revolving facility
debt, a $250.0 million term loan, and $4.67 billion of senior notes. As of
February 28, 2021 , we had approximately $1.0 billion available under our
revolving credit facility. Subject to certain exceptions, the merger agreement
with S&P Global restricts our ability to borrow more than $500 million in the
aggregate without the prior consent of S&P Global. We do not believe this
restriction will impact our liquidity to meet our ongoing working capital and
capital expenditure needs.
Our interest expense for the three months ended February 28, 2021 , compared to
the three months ended February 29, 2020 , decreased primarily because of lower
floating interest rates in 2021 compared to the prior year, as well as decreased
borrowings on our revolving facility debt.
Our Board of Directors approved a quarterly cash dividend of $0.20 per share
during the first quarter of 2021, compared to a quarterly cash dividend of $0.17
per share during the first quarter of 2020. These dividends resulted in cash
payments of $79.3 million and $67.7 million for the three months ended February
28, 2021 , and February 29, 2020 , respectively.
Our Board of Directors has authorized a share repurchase program of up to $2.5
billion of IHS Markit common shares through November 30, 2021 , to be funded
using our existing cash, cash equivalents, marketable securities, and future
cash flows, or through the incurrence of short- or long-term indebtedness, at
management's discretion. This repurchase program does not obligate us to
repurchase any set dollar amount or number of shares and may be modified,
suspended, or terminated at any time without prior notice. Under this program,
we are authorized to repurchase our common shares on the open market from time
to time, in privately negotiated transactions, or through accelerated share
repurchase agreements, subject to availability of common shares, price, market
conditions, alternative uses of capital, and applicable regulatory requirements,
at management's discretion. The merger agreement with S&P Global restricts our
ability to purchase our shares and therefore our share repurchase program is
currently suspended through November 2021 , other than for the repurchase of
shares associated with tax withholding requirements for share-based
compensation.
Our Board of Directors has separately authorized, subject to applicable
regulatory requirements, the repurchase of our common shares surrendered by
employees in an amount equal to the exercise price, if applicable, and statutory
tax liability associated with the vesting of their equity awards, for which we
pay the statutory tax on behalf of the employee and forgo receipt of the
exercise price of the award from the employee, if applicable. Such repurchases
have been authorized in addition to the share repurchase program described
above.
Based on our cash, debt, and cash flow positions, we believe that we will have
sufficient liquidity to meet our ongoing working capital and capital expenditure
needs. Our future capital requirements will depend on many factors, including
the number and magnitude of future acquisitions, amount of share repurchases and
dividends, the need for additional facilities or facility improvements, the
timing and extent of spending to support product development efforts,
information technology infrastructure investments, investments in our internal
business applications, and the continued market acceptance of our offerings.
Given current market conditions as a result of COVID-19, we are focused on
maintaining higher levels of liquidity and capital structure flexibility. We
maintain a solid balance sheet, investor grade rating, a well-positioned debt
maturity ladder, and a strong diversified bank group. We expect to continue to
operate within our capital policy target range of 2.0x-3.0x gross leverage.
Cash Flows
Three months ended February 28/29,
(In millions, except percentages) 2021 2020 Dollar change Percentage change
Net cash provided by operating activities
105 %
Net cash (used in) provided by investing
activities $ (263.8) $ 387.0 $ (650.8) (168) %
Net cash provided by (used in) financing
activities $ 56.7 $ (462.1) $ 518.8 (112) %
The increase in net cash provided by operating activities was primarily due to
the comparative reduction in cash payments in the first quarter of 2021 for
acquisition-related performance compensation associated with the aM acquisition
described in Note 2, as well as growth in our Adjusted EBITDA.
27
--------------------------------------------------------------------------------
Table of Contents
The decrease in net cash provided by investing activities was primarily due to
the sale of the A&D business line in the first quarter of 2020, partially offset
by the current year acquisition of Cappitech and the investment in Gen II.
The increase in net cash provided by financing activities is primarily due to
the decrease in share repurchases in the first quarter of 2021, compared to the
first quarter of 2020, of $500 million , partially offset by the higher 2020
proceeds from stock option exercises.
Free Cash Flow (non-GAAP measure)
The following table reconciles our non-GAAP free cash flow measure to net cash provided by operating activities.
Three months ended February 28/29,
(In millions, except percentages) 2021 2020 Dollar change Percentage change
Net cash provided by operating activities $ 244.5 $ 119.5
Payments for acquisition-related performance
compensation - 75.9
Capital expenditures on property and equipment (72.6) (78.0) Free cash flow$ 171.9 $ 117.4 $ 54.5 46 % The increase in free cash flow was primarily due to increased operating performance, lower capital expenditure activity and improved working capital balances. The payments for acquisition-related performance compensation are associated with the exercise of put provisions by aM equity interest holders, as further described in Note 2. Our free cash flow has historically been positive due to the robust cash generation attributes of our business model, and we expect that it will continue to be a significant source of funding for our business strategy of growth through organic and acquisitive means.
Credit Facility and Other Debt
Please refer to Note 6 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for a discussion of the current status of our debt arrangements. Share Repurchase Programs
Please refer to Note 14 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and to Part II, Item 2 in this Quarterly Report on Form 10-Q for a discussion of our share repurchase programs.
Off-Balance Sheet Transactions
We have no off-balance sheet transactions.
Critical Accounting Policies
Our management makes a number of significant estimates, assumptions, and judgments in the preparation of our financial statements. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates" in our 2020 Annual Report on Form 10-K for a discussion of the estimates and judgments necessary in our accounting for revenue recognition, business combinations, goodwill and other intangible assets, income taxes, and stock-based compensation.
Recent Accounting Pronouncements
Please refer to Note 1 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements and their anticipated effect on our business.
© Edgar Online, source
