Moody's Corporation · NYSE:MCO
Moody's — Goldman Sachs Financial Services Conference 2016
58 slides from Moody's's conference presentation, Dec 7, 2016
Slide 1: Investor Presentation 3Q 2016
Investor Presentation 3Q 2016 November 2, 2016
Slide 2: Disclaimer
Disclaimer Certain statements contained in this presentation are forward-looking statements and are based on future expectations, plans and prospects for Moody’s business and operations that involve a number of risks and uncertainties. Moody’s outlook for 2016 and other forward-looking statements in
Slide 3: Table of Contents
Table of Contents 1. Financial Overview 2. Capital Markets Overview 3. Moody’s Investors Service (MIS) 4. Moody’s Analytics (MA) 5. Conclusion 6. Appendix November 2, 2016 3
Slide 4: Moody's Mission: To be the World's Most Respected Authority
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Mission: To be the World’s Most Respected Authority Serving Risk-Sensitive Financial Markets Risk Understanding Risk Understanding Risk Understanding Risk Risk
Slide 5: Financial Overview
1 Financial Overview November 2, 2016 5
Slide 6: Overview of Moody's Corporation
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Overview of Moody’s Corporation » Leading global provider of credit rating opinions, insight and tools for financial risk measurement and management » TTM 3Q16 revenue
Slide 7: Moody's Revenue is Diversified by Business, Geography and Type
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Revenue is Diversified by Business, Geography and Type TTM 3Q16 Revenue by Business TTM 3Q16 Revenue by Geography MIS MA U.S. Non-U.S. Public, Project & MIS Ot
Slide 8: Long-term Growth Opportunities Intact Despite Near-term Macro Challenges
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Long-term Growth Opportunities Intact Despite Near- term Macro Challenges Debt market Disintermediation Growth in Moody’s MA and MIS pricing issuance driven of credit
Slide 9: Consistently Delivered Strong Performance; 2016 More Challenging
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Consistently Delivered Strong Performance; 2016 More Challenging Revenue EPS1 $4.62 Low-single- to digit $5.00 $4.72 $4.0 % growth $4.50 $3.0 $4.00 $ Billions $3.50 $2
Slide 10: All Areas of the Company Undertaking Actions to Actively Manage Expense Growth
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix All Areas of the Company Undertaking Actions to Actively Manage Expense Growth Moody’s Investors Service Moody’s Analytics Moody’s Shared Services » Revised organizati
Slide 11: Moody's has a Disciplined Approach to Capital Allocation
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s has a Disciplined Approach to Capital Allocation Investing in Growth Opportunities Return of Capital Reinvestment Acquisitions Dividends Share Repurchases » In
Slide 12: Moody's has Returned ~$5 Billion to Shareholders Since 2013
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s has Returned ~$5 Billion to Shareholders Since 2013 Moody’s (2013 – 2016 YTD1) Peer Group Average (2013 – 2016 YTD2) 7% 5% M&A 30% 16% Capex 17% Dividends Retu
Slide 13: Overview of 2016 Transactions
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Overview of 2016 Transactions Full Year 2016 EPS Impact » Automated financial data collection and business intelligence solutions for the SME market N/A » Broadens sco
Slide 14: Full Year 2016 Guidance as of October 21, 2016
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Full Year 2016 Guidance as of October 21, 2016 » Revenue: Increase in the low-single-digit % range » Operating Expenses: Increase in the mid-single-digit % range » Ope
Slide 15: Capital Markets Overview
2 Capital Markets Overview November 2, 2016 15
Slide 16: Debt Leverage up in North America but Down in Europe
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Debt Leverage up in North America but Down in Europe; Interest Coverage Remains Reasonable Credit Metrics: North American Speculative Grade Companies 6.0x 5.0x 5.0x 4.
Slide 17: Outside of Commodities, Default Rates are Contained
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Outside of Commodities, Default Ra
Slide 18: North America and EMEA Non-Financial Corporates Have ~$3.1 Trillion of Refunding Needs
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix North America and EMEA Non-Financial Corporates Have ~$3.1 Trillion of Refunding Needs1 Debt Maturities: North America Moody’s-Rated Corporate Bonds and Loans $300 $26
Slide 19: Debt Refinancing and M&A are Most Frequently Stated Uses of Proceeds
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Debt Refinancing and M&A are Most Frequently Stated Uses of Proceeds Uses of Funds from USD High Yield Bonds and Bank Loans1 Debt Refinancing M&A Capital Spending Shar
Slide 20: Disintermediation of Credit is an Ongoing Trend in the Global Capital Markets
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Disintermediation of Credit is an Ongoing Trend in the Global Capital Markets European Non-Financial Corporate U.S. Non-Financial Corporate Bonds vs. Bank Loans Outsta
Slide 21: Disintermediation is a Key Driver of Moody's Global New Rating Mandates
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Disintermediation is a Key Driver of Moody’s Global New Rating Mandates Global New Rating Mandates1 EMEA United States Rest of World 1,200 1,026 990 854 # of New Manda
Slide 22: Moody's Investors Service
3 Moody’s Investors Service November 2, 2016 22
Slide 23: Moody's Investors Service: A Leading Provider of Credit Ratings, Research and Risk Analysis
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Investors Service: A Leading Provider of Credit Ratings, Research and Risk Analysis Proven rating accuracy Focus on research and deeply experienced leadership
Slide 24: Illustrative Value of a Moody's Rating
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Illustrative Value of a Moody’s Rating Example: 10 year $500 million corporate bond Unrated Rated by Moody’s $500,000,000 Bond $500,000,000 x 4.3% Interest rate x 4.0%
Slide 25: Moody's Continues to Invest in Key International Markets
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Continues to Invest in Key International Markets Americas EMEA APAC » 2015: Acquired 100% of » 2013: Opened MIS Warsaw » 2006: Joint venture in China Equilibri
Slide 26: Moody's Investors Service Financial Profile
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Investors Service Financial Profile TTM 3Q 2016 Revenue: $2.3 billion » 32% recurring revenue Recurring Transaction US Non-US MIS Other 1% Public, 37% Corporat
Slide 27: Moody's Analytics
4 Moody’s Analytics November 2, 2016 27
Slide 28: Moody's Analytics Provides Essential Insight Serving Global Financial Markets
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics Provides Essential Insight Serving Global Financial Markets Research Data & Analytics Enterprise Risk Solutions Professional Services » MIS research
Slide 29: Moody's Analytics Financial Profile
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics Financial Profile TTM 3Q 2016 Revenue: $1.2 billion Recurring Transaction US Non-US » > 95% recurring revenue » 96% retention rate 26% Research, 52%
Slide 30: Moody's Analytics has Multiple Platforms for Growth
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics has Multiple Platforms for Growth Added ~$600 Million in Revenue in 8 Years 2015 Revenue and 2008 – 2015 CAGR ~65% organic $1,200 Professional Servic
Slide 31: RD&A: Growth Driven by Retention, New Sales and Pricing
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix RD&A: Growth Driven by Retention, New Sales and Pricing Reported Revenue 8.0% 1H 2016 95.1% 7.9% 111.0% Growth $26.1 million Retained Base Upgrades and Price New Sales
Slide 32: ERS: Solid Track Record of Growth
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix ERS: Solid Track Record of Growth Overall CAGR Since 2011 of 14% » Growth drivers Recurring Revenue: Subscriptions & Maintenance – Regulation and accounting Non-Recurr
Slide 33: Professional Services: Extending the Brand Into New Markets and Deepening Relationships
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Professional Services: Extending the Brand Into New Markets and Deepening Relationships With Customers Financial services training » Provider of global learning capabi
Slide 34: Conclusion
5 Conclusion November 2, 2016 34
Slide 35: Why Invest in Moody's?
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Why Invest in Moody’s? » We strive to be the world’s most respected authority serving risk-sensitive financial markets » We have had strong revenue and earnings growth
Slide 36: Moody's Awards
Moody's Awards Moody's is the proud recipient of over 20 awards from publications around the world. Spanning both Moody's Investors Service and Moody's Analytics, this recognition helps expand Moody's position as a leader in the global capital markets and reflects the hard work and contributions of
Slide 37: Appendix
6 Appendix November 2, 2016 37
Slide 38: Corporate Finance: Revenue and Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Corporate Finance: Revenue and Issuance Historical Revenue1 Mix: By Quarter Global Rated Non-Financial Bonds and $350 U.S. Speculative Grade Bank Loans (Quarterly)3 $6
Slide 39: Corporate Finance: Revenue Diversification
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Corporate Finance: Revenue Diversification Revenue1 Distribution: Geography Revenue1 Distribution: Recurring vs. Transaction 100% 100% 29% 26% 27% 30% 28% 27% 31% 29%
Slide 40: Structured Finance: Revenue and Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Structured Finance: Revenue and Issuance Historical Revenue1 Mix: By Quarter Global Rated Structured Finance (Quarterly)2 $120 $0 $1 $0 $0 $1 $250 $100 $0 $0 $41 $0 $3
Slide 41: Structured Finance: Revenue Diversification
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Structured Finance: Revenue Diversification Revenue1 Distribution: Geography Revenue1 Distribution: Recurring vs. Transaction 100% 100% 38% 34% 38% 33% 36% 80% 80% 42%
Slide 42: Financial Institutions: Revenue and Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Financial Institutions: Revenue and Issuance Global Rated Financial Bonds Historical Revenue1 Mix: By Quarter (Quarterly)2 $120 $500 $2 Issuance $ Billions $2 $3 $3 $1
Slide 43: Financial Institutions: Revenue Diversification
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Financial Institutions: Revenue Diversification Revenue1 Distribution: Geography Revenue1 Distribution: Recurring vs. Transaction 100% 100% 80% 40% 41% 42% 40% 44% 42%
Slide 44: Public, Project and Infrastructure: Revenue and Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Public, Project and Infrastructure: Revenue and Issuance $120 Historical Revenue1 Mix: By Quarter Long-Term Rated U.S. Municipal Bond Issuance $0 $120 $0 (Quarterly)2
Slide 45: Public, Project and Infrastructure: Revenue Diversification
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Public, Project and Infrastructure: Revenue Diversification Revenue1 Distribution: Geography Revenue1 Distribution: Recurring vs. Transaction 100% 100% 80% 80% 39% 40%
Slide 46: Moody's Analytics: Financial Overview
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics: Financial Overview $350 Historical Revenue1 Mix: By Quarter Historical Revenue1 Mix: By Year $1,200 $300 $43 $38 $150 $38 $36 $1,000 $168 $37 $37 Pr
Slide 47: Historically, Rising Rates Have not had a Significant Impact on Moody's Revenue
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Historically, Rising Rates Have not had a Significant Impact on Moody’s Revenue MCO Revenue and Interest Rates 1 MIS Revenue MA Revenue MCO Revenue 10-yr U.S. Treasury
Slide 48: Revenue Growth by Quarter: MCO, MIS and MA
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Revenue Growth by Quarter: MCO, MIS and MA Year-over-Year % Change MIS MA MCO 50% Fears Euro debt crisis may Oil prices crash Euro / Greece standoff Crimean crisis U.S
Slide 49: Moody's Investors Service's Recurring Revenue Provides Stability
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Investors Service’s Recurring Revenue1 Provides Stability MIS Recurring Revenue Corporate Finance Structured Finance Financial Institutions Public, Project, &
Slide 50: MIS Revenue vs. Rated Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix MIS Revenue vs. Rated Issuance1 Year-over-Year 2011-2015 2011 2012 2013 2014 2015 YTD2 2016 Percent Change CAGR Issuance 2% 11% 1% 5% -5% 3% 1% Revenue 12% 20% 9% 9% 3
Slide 51: U.S. Regulatory Developments Affecting Securitization
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix U.S. Regulatory Developments Affecting Securitization » Risk Retention rules (minimum 5% “skin in » FRTB (Fundamental Review of Trading the game”) are causing “indiges
Slide 52: Moody's is a Seasoned Capital Markets Issuer
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s is a Seasoned Capital Markets Issuer Public Bond Offerings » 2010: $500m 10yr bond » 2012: $500m 10yr bond Private Placement » 2013: $500m 10yr bond » 2007: $3
Slide 53: Moody's Global Presence
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Global Presence 2016 3,417 7,440 10,857 U.S. employees non-U.S. employees total employees1 2015 3,302 6,945 10,247 U.S. employees non-U.S. employees total empl
Slide 54: Reconciliation of Non-GAAP Financial Measures to GAAP
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Reconciliation of Non-GAAP Financial Measures to GAAP Adjusted Operating Income and Adjusted Operating Margin Reconciliation (in $ millions) 2011 2012 2013 2014 2015 A
Slide 55: Reconciliation of Non-GAAP Financial Measures to GAAP (cont.)
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Reconciliation of Non-GAAP Financial Measures to GAAP (cont.) Moody's Corporation EPS Reconciliation 2010 2011 2012 2013 2014 2015 2016F1 Diluted EPS - GAAP $2.15 $2.4
Slide 56: Reconciliation of Non-GAAP Financial Measures to GAAP (cont.)
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Reconciliation of Non-GAAP Financial Measures to GAAP (cont.) Moody's Corporation EBITDA Reconciliation TTM1 ($ Millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 57: Website and Email
Website: http://ir.moodys.com Email: ir@moodys.com November 2, 2016 57
Slide 58: November 2, 2016 58
© 2016 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot licensors and affiliates (collectively, “MOODY’S”). All rights reserved. be excluded) on the part
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