Moody's Corporation · NYSE:MCO

Moody's — FY2014 Earnings Presentation

43 slides from Moody's's earnings presentation, Feb 6, 2015

1. Slide 1: Fourth-Quarter and Full-Year 2014 Earnings Call

   Fourth-Quarter and Full-Year 2014 Earnings Call February 6, 2015

2. Slide 2: Overview

   Overview SALLI SCHWARTZ GLOBAL HEAD OF INVESTOR RELATIONS Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 2

3. Slide 3: Agenda

   Agenda 1. Fourth-Quarter and Full-Year 2014 Results Ray McDaniel, President and Chief Executive Officer 2. Financial and Operating Highlights Linda Huber, Executive Vice President and Chief Financial Officer 3. 2015 Outlook Ray McDaniel, President and Chief Executive Officer 4. Q&A Ray McDaniel, Pre

4. Slide 4: 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 this

5. Slide 5: 1. Fourth-Quarter and Full-Year 2014 Results

   1. Fourth-Quarter and Full-Year 2014 Results RAY MCDANIEL PRESIDENT AND CHIEF EXECUTIVE OFFICER Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 5

6. Slide 6: Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013

   Fourth-Quarter 2014 Results and Comparison to Fourth- Quarter 2013 Moody’s Corporation » Revenue  13% to $878 million » Expense  14% to $533 million » Operating Income  11% to $345 million » Adjusted Operating Income  11% to $372 million » Operating Margin • 39.3% » Adjusted Operating Margin • 4

7. Slide 7: Full-Year 2014 Performance and Comparison to Full-Year 2013

   Full-Year 2014 Performance and Comparison to Full-Year 2013 Moody’s Corporation » Revenue  12% to $3.3 billion – MIS  9% to $2.3 billion – MA  19% to $1.1 billion » Expenses  9% to $1.9 billion » Operating Income  17% to $1.4 billion » Adjusted Operated Income  16% to $1.5 billion Fourth-Quart

8. Slide 8: Full-Year 2014 Performance and Comparison to Full-Year 2013 (continued)

   Full-Year 2014 Performance and Comparison to Full-Year 2013 (continued) » Operating Margin • 43.2% ( 170 basis points) » Adjusted Operating Margin • 46.0% ( 130 basis points) » GAAP EPS  28% to $4.61 » Non-GAAP EPS*  15% to $4.21 *Full-year 2014 non-GAAP EPS excluded a $103 million non-cash, pre

9. Slide 9: 2. Financial and Operating Highlights

   2. Financial and Operating Highlights LINDA HUBER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 9

10. Slide 10: Fourth-Quarter 2014 Moody's Corporation Revenue

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 Moody’s Corporation Revenue » Total Global  13% at $878 million • Foreign currency transaction unfavorably impacted revenue by 3% » U.S.  15% to $479 million » Non-U.S.  10% to $399 million • 45% of Total Global » Recurring Revenue

11. Slide 11: MIS Revenue by Geography

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 (continued) MIS Revenue by Geography » Total MIS  7% to $565 million • Includes results from ICRA • Foreign currency transaction unfavorably impacted revenue by 3% » U.S.  14% to $344 million » Non-U.S.  2% to $221 million • 39% of

12. Slide 12: MIS Revenue by Line of Business

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 (continued) MIS Revenue by Line of Business » Corporate Finance: $263 million – Global  9% – U.S.  15% – Non-U.S.  2% » Structured Finance: $119 million – Global  9% – U.S.  11% – Non-U.S.  5% Fourth-Quarter and Full-Year 2014 E

13. Slide 13: MIS Revenue by Line of Business (continued)

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 (continued) MIS Revenue by Line of Business » Financial Institutions: $85 million – Global  4% – U.S.  7% – Non-U.S.  2% » Public, Project & Infrastructure Finance: $90 million – Global  9% – U.S.  26% – Non-U.S.  14% » MIS Othe

14. Slide 14: MA Revenue by Geography

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 (continued) MA Revenue by Geography » Total MA  23% to $312 million • Foreign currency transaction unfavorably impacted revenue by 3% • Excluding revenue from acquisitions, MA revenue grew 18% » U.S.  15% to $135 million » Non-U.S.

15. Slide 15: MA Revenue by Line of Business

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 (continued) MA Revenue by Line of Business » RD&A: $150 million – Global  11% – U.S.  13% – Non-U.S.  7% – 48% of total MA revenue – 96% customer retention rate Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 15

16. Slide 16: MA Revenue by Line of Business (continued)

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 (continued) MA Revenue by Line of Business » ERS: $120 million – Global  42% – U.S.  10% – Non-U.S.  65% – TTM* Revenue  25% – TTM* Sales  16% » Professional Services: $43 million – Global  28% – U.S.  56% – Non-U.S.  18% *Tra

17. Slide 17: Fourth-Quarter 2014 Expense, Margin and Tax Rate

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 (continued) Moody’s Corporation » Total Expense  14% to $533 million • Foreign currency transaction favorably impacted expense by 2% » Operating Margin • 39.3% » Adjusted Operating Margin • 42.4% » Effective Tax Rate • 28.1% Fourth-Q

18. Slide 18: ICRA Consolidation Update

    Fourth-Quarter 2014 Results and Comparison to Fourth-Quarter 2013 (continued) » Beginning in the fourth quarter of 2014, Moody’s consolidated ICRA’s results of operations on a three-month lag » In the fourth-quarter, ICRA contributed approximately $12 million of revenue to MIS » Details on changes t

19. Slide 19: Capital Allocation

    Capital Allocation » On December 16, 2014, increased quarterly dividend by 21% to $0.34 per share of common stock » During 2014, returned $236.0 million to shareholders via dividend payments » During 4Q14, repurchased 4.6 million shares at a total cost of $440.3 million and issued approximately thre

20. Slide 20: Balance Sheet and Free Cash Flow

    Balance Sheet and Free Cash Flow » As of December 31, 2014, Moody’s had: – $2.5 billion of outstanding debt – $1.0 billion of additional debt capacity under revolving credit facility – Cash, cash equivalents and short-term investments of $1.7 billion » Approximately 75 percent of our cash holdings w

21. Slide 21: 3. 2015 Outlook

    3. 2015 Outlook RAY MCDANIEL PRESIDENT AND CHIEF EXECUTIVE OFFICER Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 21

22. Slide 22: MCO 2015 Full-Year Financial Outlook

    MCO 2015 Full-Year Financial Outlook » Revenue  mid-single-digit % range • On a constant dollar basis would be approximately 300 basis points higher » Expense  mid-single-digit % range • On a constant dollar basis would be approximately 300 basis points higher » Operating Margin • Approximately 43

23. Slide 23: MCO 2015 Full-Year Financial Outlook (continued)

    MCO 2015 Full-Year Financial Outlook (continued) » Share Repurchase • Approximately $1 billion (subject to available cash, market conditions and other ongoing capital allocation decisions) » Capital Expenditures • Approximately $110-$115 million » Depreciation and Amortization • Approximately $120 m

24. Slide 24: MIS 2015 Full-Year Financial Outlook

    MIS 2015 Full-Year Financial Outlook » Global  mid-single-digit % range » U.S.  mid-single-digit % range » Non-U.S.  mid-single-digit % range » Corporate Finance  mid-single-digit % range » Structured Finance  mid-single-digit % range » Financial Institutions  mid-single-digit % range » Public

25. Slide 25: MA 2015 Full-Year Financial Outlook

    MA 2015 Full-Year Financial Outlook » Global  mid-single-digit % range » U.S.  approximately 10% » Non-U.S.  mid-single-digit % range » Research, Data & Analytics  high-single-digit % range » Enterprise Risk Solutions  mid-single-digit % range » Professional Services • approximately flat Fourth

26. Slide 26: 4. Q&A Session

    4. Q&A Session » Ray McDaniel President and Chief Executive Officer, Moody’s Corporation » Linda Huber Executive Vice President and Chief Financial Officer, Moody’s Corporation » Michel Madelain President and Chief Operating Officer, Moody’s Investors Service » Mark Almeida President, Moody’s Analyt

27. Slide 27: Investor Day 2015

    Investor Day 2015 Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 27

28. Slide 28: Replay Details

    Replay Details » Available from 3:30pm (Eastern Time) February 6, 2015 until 3:30pm (Eastern Time) March 7, 2015 » Telephone Details: – U.S. and Canada +1-888-203-1112 – Other +1-719-457-0820 – Passcode 1881175 » Webcast Details: – Go to http://ir.moodys.com – Click on “Events & Presentations” featu

29. Slide 29: Appendix

    Appendix Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 29

30. Slide 30: Consolidated Statements of Operations (Unaudited)

    Consolidated Statements of Operations (Unaudited) Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 30

31. Slide 31: Supplemental Revenue Information (Unaudited)

    Supplemental Revenue Information (Unaudited) Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 31

32. Slide 32: Supplemental Revenue Reclassification (Unaudited)

    Supplemental Revenue Reclassification (Unaudited) Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 32

33. Slide 33: Non-Operating (Expense) Income, Net

    Non-Operating (Expense) Income, Net Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 33

34. Slide 34: Selected Consolidated Balance Sheet Data (Unaudited)

    Selected Consolidated Balance Sheet Data (Unaudited) Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 34

35. Slide 35: Financial Information by Segment

    Financial Information by Segment Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 35

36. Slide 36: Financial Information by Segment (continued)

    Financial Information by Segment (continued) Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 36

37. Slide 37: Transaction and Relationship Revenue

    Transaction and Relationship Revenue Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 37

38. Slide 38: Transaction and Relationship Revenue (Continued)

    Transaction and Relationship Revenue (Continued) Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 38

39. Slide 39: Non-GAAP Financial Measures

    Non-GAAP Financial Measures Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 39

40. Slide 40: Adjusted Operating Income and Adjusted Operating Margin

    Adjusted Operating Income and Adjusted Operating Margin Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 40

41. Slide 41: Free Cash Flow

    Free Cash Flow Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 41

42. Slide 42: moodys.com

    42 moodys.com Website: http://ir.moodys.com Email: ir@moodys.com Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015 42

43. Slide 43: Fourth-Quarter and Full-Year 2014 Earnings Call, February 6, 2015

    © 2015 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, and affiliates (collectively, “MOODY’S”). All rights reserved. licensors and suppliers

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