Slide 1: 4Q and Full-Year 2017 Earnings Conference Call
4Q and Full-Year 2017 Earnings Conference Call Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Chip Merritt Vice President, Investor Relations February 6, 2018 Comparison of adjusted information to U.S. GAAP information This presentation includes adjusted financial
Slide 2: Safe Harbor statement under the Private Securities Litigation Reform Act of 1995
“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995 This presentation contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future events, trends,
Slide 3: 2017 Overview
Doug Peterson President and Chief Executive Officer 2017 Overview
Slide 4: 2017 highlights
2017 highlights • Completed an exceptional year with strong fourth quarter results • Every division produced strong financial performance while investing in new products and productivity • Delivered impressive financial performance with 13% organic revenue growth and 29% adjusted EPS growth • Genera
Slide 5: Strong organic revenue growth and productivity efforts yield adjusted profit margin and EPS gains
Strong organic revenue growth and productivity efforts yield adjusted profit margin and EPS gains 2017 2016 Change Revenue $6,063 $5,661 +7% Organic revenue $6,030 $5,328 +13% Adjusted operating profit $2,857 $2,431 +18% Adjusted operating profit margin 47.1% 42.9% +420 bps Average diluted shares ou
Slide 6: Consistent growth of adjusted EPS continued in 2017
Consistent growth of adjusted EPS continued in 2017 Adjusted Earnings Per Share 20% CAGR $8.00 $7.00 $6.89 $6.00 $5.35 $5.00 $4.69 $3.99 $4.00 $3.35 $3.00 $2.00 $1.00 $0.00 2013 2014 2015 2016 2017 Note: McGraw-Hill Education and McGraw Hill Construction were sold in 2013 and 2014, respectively, and
Slide 7: 2017 global issuance led by high-yield and structured products
2017 global issuance led by high-yield and structured products 2017 Global Issuance $4,000 +1% $3,500 $3,000 2016 $2,500 2017 $2,000 $1,500 (18%) +18% $1,000 +53% (1%) $500 $0 IG HY US Public Structured Sovereign ($ in billions) Sources: Thomson Financial and Harrison Scott Publications 13 Global is
Slide 8: Leveraged loan volumes and percent rated by S&P both increased in 2017
Leveraged loan volumes and percent rated by S&P both increased in 2017 United States Europe $700 100% $160 100% $600 $140 80% 80% $500 $120 $400 60% $100 60% $80 $300 40% 40% $60 $200 $40 20% 20% $100 $20 $0 0% $0 0% Leveraged Loan Volumes Leveraged Loan Volumes S&P Rated % S&P Rated % Source: LCD,
Slide 9: 2018 Outlook
2018 Outlook Our economists expect 2018 GDP global growth of 3.8%, slightly higher than 2017 • U.S. – Low unemployment and tax cuts contribute to growth • Eurozone – Recovery is on track, led by Germany and the Netherlands • China – Implementing a more sustainable macro-credit path • LATAM – Stable
Slide 10: 2018 global refinancing highlights increase in global corporate debt maturities
2018 global refinancing highlights increase in global corporate debt maturities 2017 study totaled $9.6 trillion 2018 study totaled $10.2 trillion Global Corporate Global Corporate High- Debt Maturities Yield Debt Maturities $2.3 $700 ($, billions) ($, trillions) $600 $2.1 $500 $400 $1.9 $300 $1.7 $
Slide 11: 2018 areas of focus
2018 areas of focus • Creating shareholder value: ‒ Organic revenue guidance of mid single-digit growth ‒ Adjusted diluted EPS guidance of $8.45 to $8.60 ‒ Significant benefit from tax reform of over $1.00/share • Serving markets: ‒ Increase investments in new technologies, alternative data and ESG
Slide 12: 4Q 2017 Overview
4Q 2017 Overview Exceptional operating results 4Q 2017 4Q 2016 Change Revenue $1,589 $1,399 +14% Organic revenue $1,589 $1,393 +14% Adjusted unallocated expense $41 $35 +19% Adjusted total expense $837 $810 +3% Adjusted operating profit $752 $589 +28% Adjusted operating profit margin 47.4% 42.1% +53
Slide 13: Stock-based compensation creates tax benefit
Stock-based compensation creates tax benefit 1Q 2Q 3Q 4Q 2017 EPS impact $0.04 $0.02 $0.14 $0.08 FASB Accounting Standard requirement to record the tax effect related to share-based payments at settlement (or expiration) through the income statement results in lower reported taxes. 4th Quarter: Appr
Slide 14: 4Q 2017: Non-GAAP adjustments to operating profit
4Q 2017: Non-GAAP adjustments to operating profit Pre-tax expense excluded from adjusted results 4Q 2017 Legal settlement reserve ($53) Restructuring and lease exit charges ($38) Deal-related amortization ($25) UK pension related charge ($8) Total ($124) ($ in millions) After-tax expense excluded fr
Slide 15: Ratings: Delivered outstanding revenue growth and profit margin expansion
Ratings: Delivered outstanding revenue growth and profit margin expansion 4Q 2017 4Q 2016 Change Revenue $789 $658 +20% Adjusted segment operating profit $439 $313 +40% Adjusted segment operating profit 55.6% 47.5% +810 bps margin Full-year adjusted segment 53.8% 49.8% +400 bps operating profit marg
Slide 16: Ratings: Revenue growth in every category
Ratings: Revenue growth in every category $900 Revenue $789 $800 $86 $700 $658 +7% $73 $600 $80 +17% $94 CRISIL, Other* $63 $500 +29% Governments $72 $122 $400 $104 +17% Structured Financials $300 Corporates $200 +22% $414 $340 $100 $0 4Q 2016 4Q 2017 ($ in millions) *Other includes intersegment roy
Slide 17: Market Intelligence: Continuing to deliver strong organic revenue growth
Market Intelligence: Continuing to deliver strong organic revenue growth 4Q 2017 4Q 2016 Change Revenue $440 $407 +8% Organic revenue $440 $401 +10% ($ in millions) 4Q 2017 HIGHLIGHTS: • Organic revenue increased 10% with growth across all major categories • Realized a 15% increase in Market Intelli
Slide 18: Market Intelligence successfully completed $100 million synergy program
Market Intelligence successfully completed $100 million synergy program Synergy Program Completed ~$20 ~$105 • Originally introduced in 2015 as a $70 million program and later ~$85 increased to a $100 million program • $75 million of synergies are reflected in our 2017 results • Projects with $85 mi
Slide 19: Platts: Every category achieved revenue growth
Platts: Every category achieved revenue growth Revenue $197 $200 $188 +8% $14 $180 $13 $10 $9 +10% $160 $36 $36 +2% $140 $120 Metals & Ag $100 Petrochemicals $80 +5% Power & Gas $130 $137 $60 Petroleum $40 $20 $0 ($ in millions) 4Q 2016 4Q 2017 Details may not sum to total due to rounding 37 S&P Dow
Slide 20: S&P Dow Jones Indices: Asset-linked fees and exchange-traded derivatives generated growth
S&P Dow Jones Indices: Asset-linked fees and exchange-traded derivatives generated growth $200 Revenue $191 $180 $171 Data & Custom $36 $160 (3%) Subscriptions $37 $140 $34 Exchange-Traded $120 +12% Derivatives $30 $100 Asset-Linked Fees $80 +17% $60 $121 $104 $40 $20 $0 4Q 2016 4Q 2017 ($ in millio
Slide 21: Capital position remains solid
S&P Dow Jones Indices: Exchange-traded derivatives volume was mixed Transaction (exchange-traded Key Contracts derivatives): (Average Daily Volume) • S&P 500 index options and 3,000 VIX futures & options activity 2,500 S&P 500 increased 18% and 23%, Index Options 2,000 respectively, while the CME eq
Slide 22: Continued strong free cash flow
Continued strong free cash flow 2017 2016 Cash provided by operating activities $2,016 $1,560 Capital expenditures (123) (115) Distributions to noncontrolling interest holders (111) (116) Free cash flow $1,782 $1,329 Tax on gain from sale of assets (SPSE and CMA in 67 200 2017 and J.D. Power in 2016
Slide 23: Impact from U.S. tax reform on capital deployment
Impact from U.S. tax reform on capital deployment • Impact from U.S. tax reform: - Our free cash flow generation will substantially increase - We now have access to cash generated offshore and are evaluating our options for how and when to deploy it • Return to shareholders: - Our capital management
Slide 24: Introducing 2018 adjusted guidance
Introducing 2018 adjusted guidance Guidance Revenue Mid single-digit increase Unallocated expense(A)(B) $160 - $170 million Pension benefit(B) $25 - $30 million income Deal-related amortization $95 million Operating profit margin 47.5% - 48.5% Interest expense $145 - $150 million Tax rate 21% - 22.5
Slide 25: 4Q and Full-Year 2017 Earnings Call
4Q and Full-Year 2017 Earnings Call REPLAY OPTIONS Internet: Replay available for one year Doug Peterson Go to http://investor.spglobal.com President and CEO Ewout Steenbergen Executive Vice President and CFO Telephone: Replay available through March 5, 2018 Chip Merritt Domestic: 866‐429‐0569 Vice