S&p Global Inc. · NYSE:SPGI
S&p Global — Mcgraw-Hill Companies — Investor Presentation (September 2011)
47 slides from S&p Global's investor presentation, Sep 12, 2011
Slide 1: Growth and Value Plan Investor Presentation
The McGraw-Hill companies Growth and Value Plan Investor Presentation September 12, 2011
Slide 2: Donald S. Rubin, Senior Vice President, Investor Relations
Donald S. Rubin Senior Vice President, Investor Relations The McGraw-Hill Companies
Slide 3: Agenda
Agenda |. Overview of Growth and Value Plat I. McGraw-Hill Markets Ill. McGraw-Hill Education IV. Conclusions
Slide 4: Comparison of Adjusted Information to U.S. GAAP Information
Comparison of Adjusted Information to U.S. GAAP Information This presentation includes adjusted operating income (loss) information. This information is provided to enable investors to make meaningful comparisons of the Company's operating performance between periods and to view the Company's busine
Slide 5: Forward-Looking Statements
Looking Statements The forward-looking statements in this Growth and Value Plan (identified by the future tense and words like “expects,” “targeted” and “projected”) involve risks and uncertainties, are subject to change, and actual results may differ materially from the Company's expectations, base
Slide 6: Harold McGraw III
Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies
Slide 7: Presenters
Presenters Harold McGraw III Chairman, President and CEO Jack Callahan Executive Vice President and CFO Lou Eccleston President, McGraw-Hill Financial Glenn Goldberg President, Information & Media Donald S. Rubin Senior Vice President, Investor Relations
Slide 8: Summary of the Growth and Value Plan
Summary of the Growth and Value Plan + As part of a comprehensive strategic portfolio review focused on shareholder value, McGraw-Hill's Board of Directors has previously announced acquisitions, intended divestitures, an increased share repurchase authorization and a review of G&A costs + Today, The
Slide 9: Two Focused Global Leaders
Two Focused Global Leaders McGraw-Hill Markets A leading provider of content and analytics to the capital and commodities markets, delivering integrated solutions across all asset classes through iconic brands with overlapping customer bases and interconnected markets McGraw-Hill Education The secon
Slide 10: Benefits of the Growth and Value Plan
Benefits of the Growth and Value Plan * Creates two focused and nimble operating companies with: — Deeper engagement with customers — Right-sized and aligned cost structures — Focused management accountability — Competitive infrastructure and capabilities + Enhances strategic and financial flexibili
Slide 11: Iconic Brands
Iconic Brands STANDARD | _ - 2 POOR'S Provides high-value benchmarks, information, data and solutions + Industry-leading global player RATINGS SERVICES — Catalyst for markets S&P INDICES + Serves interconnected markets — Capital markets S&P — Commodities markets CAPITAL IQ — Attractive commercial ma
Slide 12: McGraw-Hill Education: ~$2.4 Billion in Revenue
McGraw-Hill Education: ~$2.4 Billion in Revenue Iconic Brands CINCH learning m@icreate ©acurr. a connect ACCESS +Medicinetzswn 5m Tata Ea McGraw-Hi te: Ream rao Global education player Iconic brands: Trusted, high-quality content and services Multiple drivers of growth — Digital content uptake — Inn
Slide 13: Jack Callahan
Jack Callahan Executive Vice President and CFO The McGraw-Hill Companies
Slide 14: We are in the midst of an extensive cost reduction program
+ We are in the midst of an extensive cost reduction program — Initial scope is corporate expense, administrative and technology costs across the organization — Represents over $1 billion in current costs — Need to disaggregate shared services and establish two appropriately sized corporate centers
Slide 15: Agenda
Agenda |. Overview of Growth and Value Plan Il. McGraw-Hill markeaal Ill. McGraw-Hill Education IV. Conclusions
Slide 16: Harold McGraw III
Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies
Slide 17: McGraw-Hill Markets highlights
Double- igit growth with attractive returns Positioned to capture global growth Powerful range of distribution channels Enables capital, commodities and ‘commercial markets A pure-play focused on growth Interconnected markets Powerful brands and high-value content Leading scale and. market positioni
Slide 18: McGraw-Hill Markets: A Leader in Content and Analytics
ill Markets: A Leader in Content and Analytics Content and Analytics-led Platform-led McGraw csr Moos | @® FACTSET MC RnGsIR Bloomberg Indices. ¥ v ¥ v Pricing Data v y v v v v v Risk Analysis v i” v v ¥ v v v [isles v v v v a nmin v v v v v v Sec: Campy msc I ei fine 9201 he woe pegs i” ret sit es
Slide 19: Capital Markets growth drivers
Capital Markets Growing refinancing requirements ($8 trillion through 2015) Increased cross-border capital flows ‘Ongoing growth in equity / debt markets ‘Scarcity given rising demand Increasing price volatility due to demand / ‘supply-side shocks ‘Commodity-related asset classes to take a larger sh
Slide 20: The McGraw-Hill Markets Business Model
The McGraw-Hill Markets Business Model High-Value Content Sophisticated Customers STANDARD * Capital markets (asset managers, &POOR'S banks, exchanges, issuers) Semmes sep CAPITAL 1Q + Commodities markets (producers, traders, intermediaries) sap + Commercial markets (auto, aviation, INDICES platts.
Slide 21: The Ubiquitous Benchmarks We Create Bring Transparency to Catalyze Markets
The Ubiquitous Benchmarks We Create... ... Bring Transparency to Catalyze Markets S&P rates ~96% of U.S. corporate issuance ~ ~91% of European corporate issuance = ~85% of Asian corporate issuance Beyond the S&P 500, S&P Indices cover 10,000+ securities in 80+ countries ~ Case-Shiller Home Price Ind
Slide 22: Enabling Customers in their Markets — Case Studies
Enabling Customers in their Markets — Case Studies ‘Customer Needs: + Manage risk + Manage risk + Buy and sel oil + Obtain customer feedback + Support consulting / + Research companies / + Finance large capital + Stay abreast of industry advisory business markets expenditures, ‘developments + Resear
Slide 23: Channels and platforms
Proprietary CAPITAL 1Q JOROMR, Specialized proprietary platforms like Capital 1Q, Platts on the Net and the Power Information Network (PIN) database Channel Partners @CMEGroup CBOE Global exchange-based platforms for trading of index-based derivatives in equities and energy Lice High-Value Content D
Slide 24: Credit Markets are Attractive and S&P Ratings is Well Positioned for Growth
Credit Markets are Attractive \gs is Well Positioned for Growth Refinancing Requirements are Enormous Tremendous Global Breadth and Depth of Coverage| + Estimated $8 trilion of debt maturing through 2015 in] | + Coverage of more than: global corporate loan / bond markets 965,000 government securitie
Slide 25: Lou Eccleston
Lou Eccleston President, McGraw-Hill Financial The McGraw-Hill Companies
Slide 26: Global Presence and International Growth Acceleration
Global Presence: Leading Credit Research Team International Growth Acceleration + India — Third largest intemational source of revenue ~ CRISIL, a majority-owned subsidiary of McGraw. Hill, has 70% penetration in the bond markets and ‘over 60% in the loan markets = 90% of banks in India subscribe to
Slide 27: Reasons for 2010 Realignment
Reasons for 2010 Realignment + Customer opportunity — Complexity and growth of multi-asset portfolios — Need for cross-asset pricing and analytics + McGraw-Hill Financial is uniquely well- positioned to offer customers: — One scaled operation offering high-value content across all asset classes ~ Ca
Slide 28: Glenn Goldberg
Glenn Goldberg President, Information & Media The McGraw-Hill Companies
Slide 29: Scalable capabilities across Capital, Commodities and Commercial Markets
Capital Commodities Commercial Markets Markets Markets Markets : Customized Content / Solutions Increasing of Offerings Commonality Research / Analytics Benchmark Dat Product Technology, Sales Systems, Technical Architecture Scalable Global Data Operations Capabilities Legal / Compliance ‘Administra
Slide 30: Growth in Oil-Related Financial Products and Platts' Rapid Growth
Growth in Oil-Related Financial Products Platts’ Rapid Growth + Platts operates in a growing commodities ss information market, which is driven by: ~The growth of underlying commodities market 200 ~ Physical trading market ~ Financial trading market 250 vo + Platts 8,500 daily oil price assessments
Slide 31: Jack Callahan
Jack Callahan Executive Vice President and CFO The McGraw-Hill Companies
Slide 32: McGraw-Hill Markets' Strong Momentum
McGraw-Hill Markets’ Strong Momentum (Sin millions) Cem> _s00 ETAT 51379 “<a 2009 2010 1H2010 1H 2011 ‘Annual Segment Adjusted Operating Income ‘YTD Segment Adjusted Operating Income 1H2010 1H 2011 meee ins ue Seeing ae ue Seman fd pig hen es nce lcteng an Bunsen 209s cs omens re ater Sa nent onset
Slide 33: High Revenue Growth, High Margins, Strong ROIC
High Revenue Growth Double-digit growth profile ‘Strong fundamental global macro drivers New market entry to drive growth and marketing of full product suite to key customers Attractive Revenue Characteristics Predominantly subscription-based / recurring revenue, about two-thirds of revenue Growing
Slide 34: Strong Competitive Positioning and Basis for Valuation
Strong Competitive Positioning and Basis for Valuation McGraw-Hill Markets Offers a Compelling Combination of Growth, Profitability & Scale ° &) @werinose Revenue Growth cu tH0 tH) @-- McGraw Be msc Factset 10% O Circe size = LTM Operating income (Sm) 0 5 2 % 20 35 0 6 20 LTM Operating Margin (%) ao
Slide 35: Agenda
Agenda |. Overview of Growth and Value Plan I. McGraw-Hill Markets II, McGraw-Hill Education | il) IV. Conclusions
Slide 36: Harold McGraw III
Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies
Slide 37: McGraw-Hill Education highlights
Powerful brands and high-quality content Leading scale and market positioning Deep and broad sales coverage A pure-play focused on growth and value Poised to lead digital education transformation Financial flexibility and highly cash generative Well-positioned for success in global ‘growth markets S
Slide 38: McGraw-Hill Education
McGraw-Hill Education Leading content, software and services- based education company More than 100-year track record of solutions that improve learning outcomes around the world Leading Education Companies 2010 Revenue ($ in billions) a s24 mo 15 Products and Services Teaching and learning solution
Slide 39: MH Education 2010 Revenue
MH Education 2010 Revenue ($ in millions) International Offers learning solutions in more S41! than 65 languages to students in i” over 110 countries canada Global product teams to develop { } and leverage content tools and solutions Osoms/ Digital 95+% of McGraw-Hill Education's K-12 Digital Revenu
Slide 40: Growth opportunities: digital, international, services
Existing content library and capabilities increasingly critical component of the value chain Direct to consumer / personalized content distribution Online Courses Taken Toate eats International Global footprint to exploit expanding educational demand in global growth markets Rapid urbanization suppo
Slide 41: McGraw-Hill Education Strategy: Summary
McGraw-Hill Education Strategy: Summary Accelerate growth by aligning McGraw-Hill Education's key strengths with market forces Capitalize on digital transformation, maintain and grow leadership position in individualized learning Expand international presence to meet rising demand for education in g
Slide 42: Agenda
Agenda |. Overview of Growth and Value Plan I. McGraw-Hill Markets Ill. McGraw-Hill Education IV. Conclusions |
Slide 43: Results of the Portfolio Review and Growth and Value Plan
Results of the Portfolio Review Growth and Value Plan + Organizational structure: the creation of the MH Financial segment, to accelerate focus and leadership attention on growth + Exit of non-core assets: the planned divestiture of the Broadcasting Group + Commitment to expand Platts’ global growth
Slide 44: One multi-sector company vs. two pure-play companies
ee ee * One multi-sector company + Two pure-play companies + Holding company structure * Tailored, lower-cost operating company structures + Diverse business characteristics + Distinct growth and return profiles + Diverse shareholder base * Two distinct shareholder bases We are excited about the opp
Slide 45: Growth and Value Plan
The McGraw-Hill companies Growth and Value Plan Investor Presentation September 12, 2011
Slide 46: Replay Information
The McGraw-Hill companies Growth and Value Plan Investor Presentation Replay Information Internet replay available approximately two hours after the end of the call and will remain available for one year - Go to www.mcgraw-hill.com/investor_relations Telephone replay available through October 12, 20
Slide 47: Reconciliation to Reported Financials
Reconciliation to Reported Financials ($ in millions) um wn 10 eyto _Fy-09 Revenve ‘Consolidated - As Reported s63e7 $2063 $2664 $6168 $5,952 Less MeGraw-4ill Education 2.380 29 982 2.433 2.388 Broadcasting a“ “4 8 at BusinessWeck ‘ i ‘ : 8 MeGraw-Hil Markets FEE Sig _ S07 S36o___ sae ‘Adjusted Oper
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