Moody's Corporation · NYSE:MCO
Moody's — Barclays Americas Select Franchise Conference 2015
54 slides from Moody's's conference presentation, May 7, 2015
Slide 1: Investor Presentation 1Q 2015
Investor Presentation 1Q 2015 MAY 7, 2015
Slide 2: Disclaimer
Disclaimer Certain statements contained in this release 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 thi
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 May 7, 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 » TTM 1Q15 revenue
Slide 5: Financial Overview
1 Financial Overview May 7, 2015 5
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: 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 10: Moody's Market Overview
2 Moody’s Market Overview May 7, 2015 10
Slide 11: 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 $1
Slide 12: 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 13: Disintermediation of Capital Markets: Europe and U.S.
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Disintermediation of Capital Markets: Europe and U.S. European Non-Financial Corporate U.S. Non-Financial Corporate Bonds vs. Bank Loans Outstanding Bonds vs. Bank Loan
Slide 14: 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* MA Drivers $1,700 » Growth in RD&A » Growth in ERS maintenance $1,275 and subscription revenue » Se
Slide 15: Moody's New Rating Mandates
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s New Rating Mandates Global New Rating Mandates* EMEA United States Rest of World » Historically, the first quarter is seasonally slow 1,200 for new mandates » 1
Slide 16: Macro Environment: Low Leverage Ratios, Default Rates, Interest Rates
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Macro Environment is Characterized by Historically Low Leverage Ratios, Default Rates, and Interest Rates Ratio of Debt to Pre-Tax Profits High Yield Default Rate 25 22
Slide 17: 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 1Q 2015 Issuance -16% 2% 11% 1%
Slide 18: Steady Moody's Analytics Revenue Growth Complements MIS Variability
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 19: 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 (“Reverse Yankee Issuance”) has Increased EUR yields continue to outperform USD yields Reverse Yankee issuance has increased sharply
Slide 20: Oil & Gas Bond Issuance Has Avoided Worst Case Scenarios
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Oil & Gas Bond Issuance Has Avoided Worst Case Scenarios Despite 50%+ Drop in the Price of Oil Global Oil and Gas Bond Issuance * $100 $103 $120 $97 $80 $100 $73 $80 $
Slide 21: Moody's Investors Service
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Slide 22: 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 TTM 1Q15 Revenue: $2.3 billion Transaction Recurring US Non-US » 29% recurring revenue MIS Other 1% Public, 40% Project, & C
Slide 23: Bank Loan Issuance Has Decelerated
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Bank Loan Issuance Has Decelerated US Non-Financial Corporate Speculative-Grade Bank Loans* » Heightened regulation and fewer LBOs are constraining loan volume in 2015
Slide 24: 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 25: Moody's Analytics
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Slide 26: 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 TTM 1Q15 Revenue: $1.1 billion Transaction Recurring US Non-US » ~100% recurring revenue » 96% retention rate 26% 55% Research, Data
Slide 27: 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 28: 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 $140 $120 $120 $100 $100 $ Millions $80 $ Millions $80 $60 $6
Slide 29: 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 30: 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 » Provider of research, analytics and business intelligence services to global financial instit
Slide 31: Conclusion
Le) Conclusion Moopy’s May 7, 2015 31
Slide 32: 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 33: Appendix
Appendix Moopy’s May 7, 2015 33
Slide 34: Full-Year 2015 Guidance as of May 4, 2015
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Full-Year 2015 Guidance as of May 4, 2015 » Revenue: Mid-single-digit % growth range » Operating Expenses: Mid-single-digit % growth range » Operating Margin: Approxima
Slide 35: 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 36: 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% 2
Slide 37: 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 38: 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% 39% 80% 47% 48%
Slide 39: 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 40: 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 41: 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 42: 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 43: 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 44: Incentive Compensation – Funding Metrics
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Incentive Compensation – Funding Metrics » Pool funding metrics differ based on level and individual areas of responsibility » Payout to individual employees based on a
Slide 45: 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 46: 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) QM Effective January 10, 2014, mortgage lenders must comply with the Consumer Fi
Slide 47: 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) Reg. AB II The Reg. AB II Final Rules became effective on November 24 , 2014 and
Slide 48: Moody's Global Presence
Introduction | Financial Overview | Moody’s Market Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Global Presence 2015 3,202 6,768 9,970 US employees non-US employees total employees* 2014 2,860 5,665 8,525 US employees non-US employees total employees** *As
Slide 49: 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 – TTM TTM 1Q15 (in $ millions) 2010 2011 2012 2013 2014 1Q15 CAGR Corporate Finance $ 155 $ 190 $ 226 $ 273 $ 327 $ 336
Slide 50: 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 51: 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 2015F* Cash Flo
Slide 52: 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 1Q14 2Q14 3Q14 4Q14 2014 1Q 2015 Diluted EPS -
Slide 53: Investor Relations Contact
Website: http://ir.moodys.com Email: ir@moodys.com May 7, 2015 53
Slide 54: Copyright and ratings disclaimer
© 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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