Moody's Corporation · NYSE:MCO
Moody's — Raymond James 36th Annual Institutional Investors Conference 2015
59 slides from Moody's's conference presentation, Mar 16, 2015
Slide 1: Investor Presentation 4Q and Full-Year 2014
Investor Presentation 4Q and Full-Year 2014 MARCH 16, 2015
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 2015 and other forward-looking statements in
Slide 3: Table of Contents
Table of Contents 1. Financial Overview 2. Moody’s Market Overview 3. Moody’s Investors Service (MIS) 4. Moody’s Analytics (MA) 5. Conclusion 6. Appendix March 16, 2015 3
Slide 4: Overview of Moody's Corporation
Introduction | Financial Overview | Moody’s Market 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 » Full-Year 2014 re
Slide 5: Financial Overview
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Slide 6: Secular Trends Continue to Provide Long-Term Growth Opportunities
Introduction | Financial Overview | Moody's Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Secular Trends Continue to Provide Long-Term Growth Opportunities Debt market Disintermediation Growth in Moody’s MA and MIS pricing issuance driven of credit markets A
Slide 7: Moody's Has Consistently Delivered Strong Performance
Introduction | Financial Overview | Moody's Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Has Consistently Delivered Strong Performance Revenue EPS* Mid-single- digit $5.00 $4.0 % growth $4.50 $4.55 $3.0 $4.00 $4.21 to $ Billions $3.50 $4.65 $3.65 $2
Slide 8: Disciplined Approach to Capital Allocation and Returning Capital
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s has a Disciplined Approach to Capital Allocation and Continues to Return Capital to Shareholders Investing in Growth Opportunities Return of Capital Reinvestmen
Slide 9: Successful Execution of Recent Transactions
Introduction | Financial Overview | Moody's Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Successful Execution of Recent Transactions » One of three leading India-based domestic rating agencies » Moody’s increased its ownership stake from 28.5% to just over
Slide 10: Well-Spaced Maturity Profile Reduces Refinancing Risk
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Well-Spaced Maturity Profile Reduces Refinancing Risk » Moody’s current credit rating from S&P is BBB+ - Moody’s leverage metrics remain within S&P’s stated criteria fo
Slide 11: Moody's Market Overview
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Slide 12: Non-Financial Corporates Have Refunding Needs of Nearly $3.2 Trillion
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Non-Financial Corporates Have Refunding Needs of Nearly $3.2 Trillion Debt Maturities: US Moody’s-Rated Corporate Bonds and Loans $250 $210 $200 $172 $164 $151 $151 $14
Slide 13: Bond Issuance Primarily Used for Refinancing; M&A Activity Increased
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Bond Issuance Has Primarily Been Used for Refinancing; Recently, M&A Activity Has Increased Uses of Funds from USD High Yield Bonds Growth in Buyback, M&A and Capex and
Slide 14: Disintermediation of European Capital Markets Continues
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Disintermediation of European Capital Markets Continues European Non-Financial Corporate European Non-Financial Corporate Bank Loans Outstanding Bonds Outstanding €6,00
Slide 15: Moody's Recurring Revenue Base Provides Stability
Introduction | Financial Overview | Moody's Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Recurring Revenue Base Provides Stability Recurring Revenue* $1,700 MA Drivers » Growth in RD&A $1,275 » Growth in ERS maintenance and subscription revenue $ Mi
Slide 16: Growth in Newly Rated Corporate Issuers
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Growth in Newly Rated Corporate Issuers Annual Count of Newly-Rated Non-Financial Corporate Issuers* Europe US Emerging Markets (ex-Europe) Rest of World 1,000 800 # of
Slide 17: Rising Rates Have Not Had Significant Impact on Revenue
Introduction | Financial Overview | Moody’s Market 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 Revenue: $M (L) 10-yr U.S. Treasury Yield (R)* $4,000 9%
Slide 18: Moody's Revenue Does Not Directly Tie to Issuance
Introduction | Financial Overview | Moody's Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Revenue Does Not Directly Tie to Issuance MCO Revenue vs. Rated Issuance* YOY % Change 2010 2011 2012 2013 2014 2010 - 2014 CAGR Issuance -16% 2% 11% 1% 5% 5% R
Slide 19: Steady Moody's Analytics Revenue Growth Complements Ratings Revenue
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Steady Moody’s Analytics Revenue Growth Complements Variability of Moody’s Ratings Revenue Revenue by Quarter – YoY % Change 50% MIS MA 40% MCO 30% 23% 19% 16% 20% 15%
Slide 20: US Corporate Debt Issuance Should Grow Along With Corporate Profits
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix US Corporate Debt Issuance Should Grow Along With Corporate Profits US Corporate Debt Issuance and US Corporate Profits Total Issuance: US Corporate Bonds and Leveraged
Slide 21: Euro Debt Issuance by US Companies has Increased
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Euro Debt Issuance by US Companies has Increased » European bond issuance by US companies (“Reverse Yankee”) has increased significantly over the past two years » Drive
Slide 22: Moody's Investors Service
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Slide 23: Moody's Investors Service Financial Profile
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Investors Service Financial Profile 2014 Revenue: $2.3 billion Transaction Recurring US Non-US » 30% recurring revenue MIS Other 1% Public, 41% Project, & Corpo
Slide 24: Over Half of the US Bank Loan Market Has Been Rated
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Over Half of the US Bank Loan Market Has Been Rated US Non-Financial Corporate Speculative-Grade Bank Loans* $800 Unrated – includes term $ Billions $600 loan A (retain
Slide 25: Emerging Markets Issuance has Grown Substantially, but Will Remain Volatile
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Emerging Markets Issuance has Grown Substantially, but Will Remain Volatile Emerging Markets Rated Corporate Bond Issuance* $350 $300 $250 $ Billions $200 $150 $100 $50
Slide 26: Moody's Analytics
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Slide 27: Moody's Analytics Financial Profile
Introduction | Financial Overview | Moody's Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics Financial Profile 2014 Revenue: $1.1 billion Transaction Recurring US Non-US » ~100% recurring revenue » 96% retention rate 27% Research, 56% Data and
Slide 28: RD&A Revenue Has Grown Despite Flat Financial Services Employment
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix RD&A Revenue Has Grown Despite Flat Financial Services Employment RD&A Revenue US and UK Financial Services Employment (L)* TTM RD&A Revenue (R) 7.5 $700 $650 7.0 $600
Slide 29: Managing Growth in RD&A
Introduction | Financial Overview | Moody's Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Managing Growth in RD&A Sales Production by Year 3.4% 7.5% 109.2% 4.1% 94.1% Reported Revenue Growth 2012* $38.0 million 8.5% Retained Base Upgrades** Price Increase Ne
Slide 30: ERS' Renewable Book Growing, But Revenue Dependent on Project Timing
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix ERS’ Renewable Book Growing, But Revenue Dependent on Project Timing ERS Sales by Type ERS Revenue by Type $120 $120 $100 $100 $ Millions $80 $80 $ Millions $60 $60 $40
Slide 31: ERS' Sales and Revenue Growing at Mid-Teens Rates
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix ERS’ Sales and Revenue Growing at Mid-Teens Rates TTM* ERS Sales and Revenue 2010 - 2014 TTM Sales TTM Revs $400 $350 $300 $250 $ Millions $200 $150 $100 $50 $0 *TTM =
Slide 32: Growing Regulatory Requirements for Financial Institutions
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Growing Regulatory Requirements for Financial Institutions EMEA TLAC2 Concentration & BoE/PRA ST Large Exposures BoE/PRA ST Review of NSFR trading book New securitizati
Slide 33: Copal Amba is a Market Leader in Analytics and Research Support Services
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Copal Amba is a Market Leader in Analytics and Research Support Services London New Delhi / Gurgaon New York Beijing Bangalore » Provider of research, analytics and bus
Slide 34: Conclusion
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Slide 35: Why Invest in Moody's?
Introduction | Financial Overview | Moody’s Market 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: Appendix
Appendix Moopy’s March 16, 2015 36
Slide 37: Full-Year 2015 Guidance as of February 26, 2015
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Full-Year 2015 Guidance as of February 26, 2015 » Revenue: Mid-single-digit % growth range » Operating Expenses: Mid-single-digit % growth range » Operating Margin: App
Slide 38: Corporate Finance: Revenue and Issuance
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Corporate Finance: Revenue and Issuance Historical Revenue* Mix: By Quarter Global Rated Non-Financial Bonds and $350 US Speculative Grade Bank Loans (Quarterly)*** $60
Slide 39: Corporate Finance: Revenue Diversification
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Corporate Finance: Revenue Diversification Revenue* Distribution: Geography Revenue* Distribution: Recurring vs. Transaction 100% 100% 27% 29% 26% 27% 29% 26% 31% 30% 3
Slide 40: Structured Finance: Revenue and Issuance
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Structured Finance: Revenue and Issuance Historical Revenue* Mix: By Quarter Global Rated Structured Finance (Quarterly)** $120 $300 $100 Issuance $ Billions Revenue $
Slide 41: Structured Finance: Revenue Diversification
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Structured Finance: Revenue Diversification Revenue* Distribution: Geography Revenue* Distribution: Recurring vs. Transaction 100% 100% 80% 37% 34% 38% 80% 47% 48% 42%
Slide 42: Financial Institutions: Revenue and Issuance
Introduction | Financial Overview | Moody's Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Financial Institutions: Revenue and Issuance Global Rated Financial Bonds Historical Revenue* Mix: By Quarter (Quarterly)** $100 $700 6% Issuance $ Billions $90 $600 5%
Slide 43: Financial Institutions: Revenue Diversification
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Financial Institutions: Revenue Diversification Revenue* Distribution: Geography Revenue* Distribution: Recurring vs. Transaction 100% 100% 80% 41% 40% 41% 42% 41% 38%
Slide 44: Public, Project and Infrastructure: Revenue and Issuance
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Public, Project and Infrastructure: Revenue and Issuance $120 Historical Revenue* Mix: By Quarter Long-Term Rated US Municipal Bond Issuance $120 (Quarterly)** $100 $10
Slide 45: Public, Project and Infrastructure: Revenue Diversification
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Public, Project and Infrastructure: Revenue Diversification Revenue* Distribution: Geography Revenue* Distribution: Recurring vs. Transaction 100% 100% 80% 80% 41% 42%
Slide 46: Moody's Analytics: Financial Overview
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics: Financial Overview $350 Historical Revenue* Mix: By Quarter Historical Revenue* Mix: By Year $1,200 $300 $1,000 Professional Services Revenue $ Milli
Slide 47: Select Regulations Related to Structured Finance
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Select Regulations Related to Structured Finance Dodd-Frank Act Volcker Rule The Volcker Rule prohibits banking entities from engaging in short-term proprietary trading
Slide 48: Select Regulations Related to Structured Finance (continued)
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Select Regulations Related to Structured Finance (continued) Dodd-Frank Act (continued) QRM Exempts from risk retention requirements asset-backed securities (“ABS”) tha
Slide 49: Select Regulations Related to Structured Finance (continued)
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Select Regulations Related to Structured Finance (continued) Dodd-Frank Act (continued) Rule 17g-10 The Exchange Act requires the issuer or underwriter of any asset-bac
Slide 50: MA is Well-Positioned to Help Banks Manage Stress Testing Requirements
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix MA is Well-Positioned to Help Banks Manage their Stress Testing Requirements Stress Testing is Becoming a Fundamental Part of How Banks are Regulated » To address regul
Slide 51: Anatomy of a Stress Test
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Anatomy of a Stress Test Economic Credit Models Capital Adequacy Results Projections Scenarios (PD, LGD) and Regulatory Reports Baseline Year 1 Year 2 + 1Q C&I Loans Q’
Slide 52: Moody's Analytics is Relevant to Financial Markets at All Stages of Development
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics is Relevant to Financial Markets at All Stages of Development » Moody’s Analytics enables us to increase our presence in emerging markets, selling pro
Slide 53: Moody's Global Presence
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Global Presence 2014 3,138 6,746 9,884 US employees non-US employees total employees* 2013 2,847 5,517 8,364 US employees non-US employees total employees** *As
Slide 54: Recurring Revenue Detail
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Recurring Revenue Detail Recurring Revenue 2010 – 2014 (in $ millions) 2010 2011 2012 2013 2014 CAGR Corporate Finance $ 155 $ 190 $ 226 $ 273 $ 327 21% Structured Fina
Slide 55: Reconciliation of Non-GAAP Financial Measures to GAAP
Introduction | Financial Overview | Moody’s Market 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) 2010 2011 2012 2013 2014 As
Slide 56: Reconciliation of Non-GAAP Financial Measures to GAAP (cont.)
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Reconciliation of Non-GAAP Financial Measures to GAAP (cont.) Moody's Corporation Free Cash Flow Reconciliation (in $ millions) 2010 2011 2012 2013 2014 Cash Flow from
Slide 57: Reconciliation of Non-GAAP Financial Measures to GAAP (cont.)
Introduction | Financial Overview | Moody’s Market 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 Diluted EPS - GAAP $2.15 $2.49 $3.05 $3.60
Slide 58: Website and Email
Website: http://ir.moodys.com Email: ir@moodys.com March 16, 2015 58
Slide 59: March 16, 2015
© 2015 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or licensors and affiliates (collectively, “MOODY’S”). All rights reserved. damages caused to any person
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