Msci Inc. · NYSE:MSCI

Msci — Q2 2013 Earnings Presentation

17 slides from Msci's earnings presentation, Aug 1, 2013

1. Slide 1: Second Quarter 2013 Earnings Presentation

   Second Quarter 2013 Earnings Presentation August 1, 2013 ©2013. All rights reserved. msci.com msci.com

2. Slide 2: Forward-Looking Statements and Other Information

   Forward-Looking Statements and Other Information  Forward-Looking Statements – Safe Harbor Statements  This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on forward-looking stateme

3. Slide 3: Second Quarter 2013 Highlights

   Second Quarter 2013 Highlights  Strong Financial Results  Operating revenues increased 8% to $258 million, or by 1% organically1  Net income increased 63% to $61 million  Diluted EPS rose 67% to $0.50  Adjusted EBITDA2 grew by 8% to $117 million, aided in part by seasonal revenues from IPD  Ad

4. Slide 4: Breakdown of Q2'12 vs Q2'13 Revenue Growth

   Breakdown of Q2’12 vs Q2’13 Revenue Growth (Dollars in millions)  By Revenue Type $260 $2.9 $1.0 $257.9 $15.4 $250 $238.6 $240 $230 $220 Q2'12 revenue Subscription revenue Asset-based fees Non-recurring Q2'13 revenue revenue  By Product Line $270 $2.5 $260 $22.2 $257.9 ($3.2) ($0.7) $250 ($1.5) $2

5. Slide 5: Summary of Second Quarter 2013 Operating Results

   Summary of Second Quarter 2013 Operating Results (Dollars in millions) MSCI Total Run Rate  Run Rate (“RR”) grew YoY by 8% to $1,050 $993 million $993  Subscription Run Rate grew by 9%, or $950 $920 $132 4% organically ABF RR $850 $129 Growth: +2 %  Asset-based fee (“ABF”) Run Rate growth of 2% i

6. Slide 6: Index and ESG Products

   Index and ESG Products (Dollars in millions) Second Quarter 2013 Highlights: Index and ESG Run Rate and Revenue  Revenues grew 20% to $132 million, $600 $140 $132 or 5% organically $483 $120 $500 $110 $37  Seasonally strong quarter for IPD as $415 $100 $132 forecasted $400 $34 $129 $80  Run Rate

7. Slide 7: Asset-Based Fees

   ETF AUM versus ABF Run Rate Asset-Based Fees (in millions) (in billions) Second Quarter 2013 Highlights: $140 $327 BN $350 Q2'12  Revenues grew 8% to $37 million $135 $300 Q2'13 $132 M $270 BN $129 M  Strong inflows into other ETFs and increases $130 $250 in non-ETF passive funds more than offset

8. Slide 8: Risk Management Analytics

   Risk Management Analytics (Dollars in millions) Risk Management Analytics Second Quarter 2013 Highlights: Run Rate and Revenue  Revenues grew by 4% to $67 million, or $300 $281 1% organically $259 Q2'12 $250 Q2'13  Run Rate grew by 9% YoY to $281 $200 million, or 5% organically $150  Hedge funds

9. Slide 9: Portfolio Management Analytics

   Portfolio Management Analytics (Dollars in millions) Portfolio Management Analytics Second Quarter 2013 Highlights: Run Rate and Revenue $140  Revenues declined 11% to $26 million $117 $120 $105  Run Rate declined by 11% YoY to $100 Q2'12 $105 million $80 Q2'13  F/X remained a drag: $3.3 million

10. Slide 10: Governance

    Governance (Dollars in millions) Governance Run Rate and Revenue Second Quarter 2013 Highlights: $140 Q2'12  Revenues rose 3% organically to $29 $120 $114 $112 million - down 5% due to sale of CFRA $100 Q2'13  Run Rate increased 6% organically to $80 $112 million - declined by 2% as $60 reported $

11. Slide 11: Compensation and Non-Compensation EBITDA Expense

    Compensation and Non-Compensation EBITDA Expense (Dollars in millions)  Comp1 and Non-comp expenses2 increased 8% to $141 million  Compensation expense rose 9% Comp and Non-Comp  Increase driven by the impact of the Expenses1,2 acquisitions of IPD and InvestorForce $102 +9% $94 $100 +7%  Total h

12. Slide 12: Summary of Profitability Metrics: Net Income, EPS and Adjusted EBITDA

    Summary of Profitability Metrics: Net Income, EPS and Adjusted EBITDA1  Net Income increased 63%  Interest expense fell due to $20.6 million of refinancing Net Income and Adj. EBITDA1 Diluted and Adjusted EPS2 expense in 2012 and lower debt $ in millions +63% $ per share +67% level +8% +16% $117 $

13. Slide 13: Select Balance Sheet, Cash Flow and Other Items

    Select Balance Sheet, Cash Flow and Other Items As of Total Cash & Investments June 30, December 31, In thousands 2013 2012 $335M Cash and cash equivalents $ 334,701 $ 183,309 Short-term investments - 70,898 Accounts receivable, net of allow ances 160,101 153,557 Total Debt Deferred revenue $ 347,47

14. Slide 14: Use of Non-GAAP Financial Measures and Operating Metrics

    Use of Non-GAAP Financial Measures and Operating Metrics  MSCI has presented supplemental non-GAAP financial measures as part of this presentation. A reconciliation is provided that reconciles each non-GAAP financial measure with the most comparable GAAP measure. The presentation of non-GAAP financ

15. Slide 15: Reconciliation of Adjusted Net Income and Adjusted EPS

    Reconciliation of Adjusted Net Income and Adjusted EPS Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, June 30, In thousands, except per share data 2013 2012 2013 2013 2012 Net Incom e $ 61,053 $ 37,546 $ 58,937 $ 119,990 $ 81,512 Plus: Non-recurring stock-based compensation

16. Slide 16: Reconciliation of Adjusted EBITDA to Net Income

    Reconciliation of Adjusted EBITDA to Net Income Three Months Ended June 30, 2013 Three Months Ended June 30, 2012 Performance Performance In thousands and Risk Governance Total and Risk Governance Total Net Incom e $ 61,053 $ 37,546 Plus: Provision for income taxes 30,206 19,715 Plus: Other expense

17. Slide 17: Reconciliation of Operating Expenses

    Reconciliation of Operating Expenses Three Months Ended % Change from June 30, June 30, March 31, June 30, March 31, In thousands 2013 2012 2013 2012 2013 Cost of services Compensation $ 61,768 $ 55,492 $ 61,149 11.3% 1.0% Non-recurring stock based compensation - 94 - (100.0%) n/m Total compensation

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