Slide 1: First Quarter 2014 Earnings Presentation
com msci.com First Quarter 2014 Earnings Presentation April 30, 2014 MSCI We power investors globally with objective insight
Slide 2: Forward-Looking Statements and Other Information
©2014 MSCI Inc. All rights reserved. msci.com 2 msci.com Forward‐Looking Statements and Other Information �� Forward‐Looking Statements – Safe Harbor Statements �� This presentation may contain forward‐looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You
Slide 3: Summary of First Quarter 2014 Financial Results
©2014 MSCI Inc. All rights reserved. msci.com Summary of First Quarter 2014 Financial Results 3 �� Summary Financial Results from Continuing Operations �� Operating revenues increased 9% to $240 million �� Income from continuing operations fell 11% to $47 million as a result of higher income taxes �
Slide 4: Breakdown of Q1'13 vs Q1'14 Revenue Growth
©2014 MSCI Inc. All rights reserved. msci.com $219.5 $239.7 $15.3 $4.4 $0.5 $200 $210 $220 $230 $240 $250 Q1'13 revenue Subscription revenue Asset‐based fees Non‐recurring revenue Q1'14 revenue 4 Breakdown of Q1’13 vs Q1’14 Revenue Growth (Dollars in millions) Year‐over‐Year Change in Revenues by Ty
Slide 5: Summary of First Quarter 2014 Operating Metrics
©2014 MSCI Inc. All rights reserved. msci.com 5 Summary of First Quarter 2014 Operating Metrics MSCI Total Run Rate Total Sales and Retention �� Run Rate grew YoY by 10% to $955 million �� Subscription Run Rate grew by 8% �� Asset‐based fee Run Rate growth of 21% �� $5 million currency impact YoY bu
Slide 6: Index and ESG Run Rate and Revenues
©2014 MSCI Inc. All rights reserved. msci.com $344 $382 $134 $162 $‐ $100 $200 $300 $400 $500 $600 Q1'13 Q1'14 Run Rate $544 $478 6 Index and ESG Run Rate and Revenues First Quarter Highlights: �� Revenues grew 14% to $138 million �� Subscription revenues grew by 15% �� $5 million growth from IPD mo
Slide 7: Asset-Based Fees
©2014 MSCI Inc. All rights reserved. msci.com 7 Asset‐Based Fees ABF Revenues versus ETF AUM MSCI‐Linked ETF AUM by Market Exposure First Quarter Highlights: �� Revenues grew 12% to $41 million �� Strong inflows into ETFs and increases in non‐ETF passive funds more than offset the loss of Vanguard �
Slide 8: Risk Management Analytics
msci.com $288 $70 $307 $76 $‐ $50 $100 $150 $200 $250 $300 $350 Run Rate Revenues Q1'13 Q1'14 8 Risk Management Analytics First Quarter Highlights: �� RMA results now include Energy & Commodity Analytics products revenues and Run Rate �� Revenues grew by 7% to $76 million �� Additional month of reve
Slide 9: Portfolio Management Analytics
©2014 MSCI Inc. All rights reserved. msci.com 9 Portfolio Management Analytics Portfolio Management Analytics Run Rate and Revenues First Quarter Highlights: �� Revenues declined 6% to $26 million �� Run Rate declined by 2% YoY to $104 million �� Run Rate remained stable versus Q4’13 as sales exceed
Slide 10: Compensation Expense
©2014 MSCI Inc. All rights reserved. msci.com 10 Compensation Expense (Dollars in millions) �� Higher compensation expense driven by higher headcount �� Headcount (ex‐ISS) rose 17% versus Q1’13 �� Up 2% versus Q4’13 �� First quarter expense also reflects higher retirement expense �� Continued growth
Slide 11: Non-Compensation Expense
©2014 MSCI Inc. All rights reserved. msci.com 11 Non‐Compensation1 Expense (Dollars in millions) (1) Non‐compensation excludes amortization and depreciation. Please see page 22 for reconciliation to operating expenses. �� Non‐Compensation expense rose to accommodate future growth �� Increase in IT e
Slide 12: Summary of Profitability Metrics from Continuing Operations
©2014 MSCI Inc. All rights reserved. msci.com 12 �� Income from continuing operations declined 11% �� Diluted EPS from continuing operations fell 7% to $0.40 �� Adjusted EBITDA1 was $97 million, down 2% �� Adjusted EPS2 fell 8% to $0.46 �� Q1’14 tax rate from continuing operations of 36% �� 3% decre
Slide 13: Select Balance Sheet, Cash Flow and Other Items
©2014 MSCI Inc. All rights reserved. msci.com (Dollars in millions) March 31, 2014 December 31, 2013 Total cash and cash equivalents $260 $358 Current maturities of long‐term debt $20 $20 Long‐term debt, net of current maturities 783 788 Total $803 $808 Q1'14 Net Cash from Operations $25 Select Non‐
Slide 14: Key Guidance Unchanged
©2014 MSCI Inc. All rights reserved. msci.com Key Guidance Unchanged 14 �� 2014 Adjusted EBITDA1 includes expenses in the range of $569‐$582 million �� Cash Flow from Operations projected to be $275‐$325 million in 2014 �� 2014 Capital expenditures projected to be $45‐$55 million �� Full Year 2014 t
Slide 15: Use of Non-GAAP Financial Measures and Operating Metrics
©2014 MSCI Inc. All rights reserved. msci.com 15 Use of Non‐GAAP Financial Measures and Operating Metrics �� MSCI has presented supplemental non‐GAAP financial measures as part of this presentation. A reconciliation is provided that reconciles each non‐GAAP financial measure with the most comparable
Slide 16: Income from Continuing Operations: Q1'13 – Q1'14
©2014 MSCI Inc. All rights reserved. msci.com 16 Income from Continuing Operations: Q1’13 – Q1’14 Three Months Ended Year Ended March 31, March 31, June 30, Sept. 30, Dec. 31, December 31, In thousands, except per share data 2014 2013 2013 2013 2013 2013 Operating revenues 239,688 $ 219,469 $ 228,42
Slide 17: Operating Revenues by Product Category: Q1'13 – Q1'14
©2014 MSCI Inc. All rights reserved. msci.com 17 Operating Revenues by Product Category: Q1’13 – Q1’14 Three Mths Ended Year Ended March 31, March 31, June 30, September 30, December 31, December 31, In thousands 2014 2013 2013 2013 2013 2013 Index and ESG products Subscriptions 97,343 $ 84,888 $ 95
Slide 18: Operating Expenses Detail: Q1'13 – Q1'14
©2014 MSCI Inc. All rights reserved. msci.com 18 Operating Expenses Detail: Q1’13 – Q1’14 Three Mths Ended Year Ended March 31, March 31, June 30, September 30, December 31, December 31, In thousands 2014 2013 2013 2013 2013 2013 Cost of services Compensation 56,282 $ 49,404 $ 51,669 $ 49,300 $ 52,1
Slide 19: Key Operating Metrics: Q1'13 – Q1'14
©2014 MSCI Inc. All rights reserved. msci.com 19 Key Operating Metrics: Q1’13 – Q1’14 March 31, March 31, June 30, September 30, December 31, Dollars in thousands 2014 2013 2013 2013 2013 Run Rates Index and ESG products Subscription $ 382,383 $ 344,267 $ 350,833 $ 360,042 $ 371,511 Asset-based fees
Slide 20: Reconciliation to Adjusted Net Income and Adjusted EPS
©2014 MSCI Inc. All rights reserved. msci.com 20 Reconciliation to Adjusted Net Income and Adjusted EPS Three Months Ended March 31, March 31, December 31, In thousands, except per share data 2014 2013 2013 Net Income 80,399 $ 58,937 $ 47,257 $ Less: Income from discontinued operations, net of incom
Slide 21: Reconciliation of Net Income to Adjusted EBITDA
©2014 MSCI Inc. All rights reserved. msci.com 21 Reconciliation of Net Income to Adjusted EBITDA In thousands March 31, 2014 March 31, 2013 December 31, 2013 Net Income 80,399 $ 58,937 $ 47,257 $ Less: Income from discontinued operations, net of income taxes (33,253) $ (5,979) $ (6,384) $ Income fro
Slide 22: Reconciliation of Operating Expenses
©2014 MSCI Inc. All rights reserved. msci.com 22 Reconciliation of Operating Expenses March 31, March 31, December 31, March 31, December 31, In thousands 2014 2013 2013 2013 2013 Cost of services Compensation 56,282 $ 49,404 $ 52,146 $ 13.9% 7.9% Non-compensation 19,145 15,896 20,108 20.4% (4.8%) T