Slide 1: Third Quarter 2014 Earnings Presentation
Third Quarter 2014 Earnings Presentation October 30, 2014 MSCI
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 state
Slide 3: Summary of Third Quarter 2014 Results
Summary of Third Quarter 2014 Results Strong Financial Results Operating revenues increased 10% to $252 million Net Income declined 7% to $52 million and Diluted EPS fell 4% to $0.44 due to sale of ISS Adjusted EBITDA1 rose 1% despite impact of investments Adjusted EPS2 increased 6% to $0.50 Strong
Slide 4: Breakdown of Q3'13 vs Q3'14 Revenue Growth
Breakdown of Q3’13 vs Q3’14 Revenue Growth 4 (in millions; percentage changes refer to the comparable period in 2013) Year‐over‐Year Change in Revenues by Type $228.6 $251.7 $10.7 $9.9 $2.5 $200 $210 $220 $230 $240 $250 $260 Q3'13 revenue Subscription revenue Asset‐based fees Non‐recurring revenue Q
Slide 5: Run Rate Growth Trends: Q1'13-Q3'14
10% 11% 12% 7% 8% 8% 8% ‐2% 2% 28% 25% 21% 34% 21% 8% 9% 14% 10% 10% 12% 10% ‐5% 5% 15% 25% 35% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Subscription Total ABF MSCI Total Run Rate Growth Trends: Q1’13‐Q3’14 Year‐over‐Year Run Rate Growth as Reported Year‐over‐Year Subscription Run Rate Growth As Re
Slide 6: Summary of Third Quarter 2014 Operating Metrics
Summary of Third Quarter 2014 Operating Metrics 6 (in millions) �� Run Rate grew by 10% to $1 billion versus Q3’13 �� Subscription Run Rate grew by 8% �� Asset‐based fee Run Rate grew by 21% �� Impact of GMI acquisition offset FX impact on subscription Run Rate �� Total sales of $31 million, up 4% v
Slide 7: Index and ESG Products
10% 9% 9% 10% 10% 11% 11% 24% 23% 23% 10% 11% 12% 13% 0% 5% 10% 15% 20% 25% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Organic Subscription Run Rate Growth ex FX Subscription Growth as Reported Index and ESG Products 7 (in millions) Third Quarter Highlights: �� Revenues grew 15% to $148 million versu
Slide 8: Asset-Based Fees
Asset‐Based Fees 8 Third Quarter Highlights: �� Revenues grew 27% to $47 million �� Benefited from strong inflows into ETFs and increases in non‐ETF passive funds �� Asset‐based fee Run Rate rose 21% to $178 million �� 3.5 average basis point fee at quarter‐end �� Total ETF AUM increased by 25% to $
Slide 9: Risk Management Analytics
3% 4% 5% 6% 6% 4% 5% 5% 7% 9% 10% 7% 5% 3% 0% 2% 4% 6% 8% 10% 12% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Organic Subscription Run Rate Growth ex FX Subscription Growth as Reported $301 $73 $311 $77 $‐ $50 $100 $150 $200 $250 $300 $350 Run Rate Revenues Q3'13 Q3'14 9 Risk Management Analytics Risk
Slide 10: Portfolio Management Analytics
‐8% ‐8% ‐7% ‐4% ‐2% 2% 3% ‐10% ‐11% ‐10% ‐6% ‐2% 2% 2% ‐12% ‐8% ‐4% 0% 4% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Organic Subscription Run Rate Growth ex FX Subscription Growth as Reported $105 $26 $107 $26 $‐ $20 $40 $60 $80 $100 $120 $140 Run Rate Revenues Q3'13 Q3'14 10 Portfolio Management Ana
Slide 11: Adjusted EBITDA Expenses
11 Adjusted EBITDA Expenses1 2014 Adjusted EBITDA Expenses1 (in millions) 1 Adjusted EBITDA Expenses represent operating expenses, less depreciation and amortization and the lease exit charge. Please see page 19 for a reconciliation of Adjusted EBITDA Expenses as a non‐GAAP measure. �� Adjusted EBIT
Slide 12: Summary of Profitability Metrics
12 Summary of Profitability Metrics 1 Net income before income from discontinued operations, net of income taxes, provision for income taxes, other expense (income), net, depreciation and amortization and the lease exit charge. Please see page 18 for reconciliation of Adjusted EBITDA as a non‐GAAP m
Slide 13: Select Balance Sheet and Cash Flow Items
Sept. 30, 2014 December 31, 2013 Total cash and cash equivalents $448 $358 Current maturities of long‐term debt $20 $20 Long‐term debt, net of current maturities $773 $788 Total $793 $808 Q3'14 9M'14 Net Cash from Operations $108 $202 Select Non‐Operating Cash Inflows / (Outflows) Proceeds from ISS
Slide 14: Key Guidance: No Change
14 Key Guidance: No Change �� 2014 Adjusted EBITDA Expenses1 projected to be in the range of $595‐ $605 million �� Cash flow from operations projected to be $275‐$325 million in 2014 �� 2014 capital expenditures projected to be $50‐$55 million �� Full Year 2014 tax rate expected to be approximately
Slide 15: Summary of Third Quarter 2014 Results
Summary of Third Quarter 2014 Results 15 Strong Financial Results �� Operating revenues increased 10% to $252 million �� Net Income declined 7% to $52 million and Diluted EPS fell 4% to $0.44 due to sale of ISS �� Adjusted EBITDA1 rose 1% despite impact of investments �� Adjusted EPS2 increased 6% t
Slide 16: Use of Non-GAAP Financial Measures and Operating Metrics
16 Use of Non‐GAAP Financial Measures and Operating Metrics �� MSCI Inc. 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‐GA
Slide 17: Reconciliation to Adjusted Net Income and Adjusted EPS
17 Reconciliation to Adjusted Net Income and Adjusted EPS Three Months Ended Nine Months Ended Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30, In thousands, except per share data 2014 2013 2014 2014 2013 Net Income 51,714 $ 55,310 $ 107,660 $ 239,773 $ 175,300 $ Less: Income from discontinued opera
Slide 18: Reconciliation to Adjusted EBITDA
18 Reconciliation to Adjusted EBITDA . Three Months Ended Nine Months Ended Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30, In thousands 2014 2013 2014 2014 2013 Net Income 51,714 $ 55,310 $ 107,660 $ 239,773 $ 175,300 $ Less: Income from discontinued operations, net of income taxes 10 $ (5,374) $
Slide 19: Reconciliation to Adjusted EBITDA Expenses
19 Reconciliation to Adjusted EBITDA Expenses Full Year Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30, 2014 In thousands 2014 2013 2014 2014 2013 Outlook Total operating expenses 167,625 $ 144,704 $ 165,695 $ 493,503 $ 419,816 $ $665,000 - $677,000 Less: Depreciation and amortization of property,