S&p Global Inc. · NYSE:SPGI
S&p Global — FY2022 Earnings Presentation
57 slides from S&p Global's earnings presentation, Feb 9, 2023
Slide 1: 4Q and Full-Year 2022 Earnings Conference Call
4Q and Full-Year 2022 Earnings Conference Call Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Mark Grant Senior Vice President, Investor Relations February 9, 2023 1
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 Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in for
Slide 3: Comparison of adjusted information to U.S. GAAP information
Comparison of adjusted information to U.S. GAAP information This presentation includes Company financials on an as-reported basis, and on a pro forma basis The Company’s non-GAAP measures include adjustments that reflect how management as if the merger had closed on January 1, 2021, for periods incl
Slide 4: EU regulation affecting investors in credit rating agencies
EU regulation affecting investors in credit rating agencies European Union Regulation 1060/2009 (as amended) applies to credit rating Any person obtaining direct or indirect ownership or control of 5% or more or agencies (CRAs) registered in the European Union (“EU”) and therefore to the 10% or more
Slide 5: Doug Peterson
Doug Peterson President and Chief Executive Officer 5
Slide 6: Execution and discipline in 2022 position the company well for profitable growth
Execution and discipline in 2022 position the company well for profitable growth Financial highlights: • Adjusted revenue* decreased 4% year-over-year, or 3% ex-FX, as the business continued to benefit from more diverse revenue streams partially offsetting a decrease in Ratings revenue • Adjusted ex
Slide 7: Progress on 2022 key strategic initiatives
Progress on 2022 key strategic initiatives • Realized synergies well above stated 2022 targets (Cost synergies of $276M vs $210-$240M target) • Completed integration of key software systems and consolidated 27 office locations Integration and • Generated 6,700 intra-division and inter-division cross
Slide 8: Acquisitions and strategic investments in 2022 highlight heightened focus on long-term growth
Acquisitions and strategic investments in 2022 highlight heightened focus on long- term growth Acquisitions Market Intelligence | PVR Source Mobility | Battery raw material forecast suite Organic Indices | S&P Global Core Battery Metals Index Ratings | Second Party Opinions on EU Taxonomy Innovation
Slide 9: 2022 Global Rated Issuance decreased by 28%
2022 Global Rated Issuance* decreased by 28%, or by 31% including the impact of leveraged loans Research ● Evaluations ● Data Analytics & Tools ● Benchmarks Global Rated Issuance: 2022 versus 2021 $3,000 (18%) $2,500 $2,000 (21%) (Billions) $1,500 (77%) (48%) $1,000 (20%) $500 $0 Investment Grade Hi
Slide 10: Diversified revenue, expense discipline, and prudent capital allocation preserved EPS
Diversified revenue, expense discipline, and prudent capital allocation preserved EPS despite debt issuance and geopolitical disruption Full-Year Adjusted financials* 2022 2021 Change Revenue $11,842 $12,382 (4)% Operating profit $5,319 $5,863 (9)% Operating profit margin 44.9% 47.4% (250) bps Avera
Slide 11: Divisional full-year non-GAAP financial performance
Divisional full-year non-GAAP financial performance* Revenue: +5% y/y Revenue: (26)% y/y Revenue: +6% y/y Margin: 31.8% Margin: 55.9% Margin: 44.3% Revenue: +8% y/y Revenue: +8% y/y Revenue: (1)% y/y Margin: 39.0% Margin: 68.4% Margin: 17.2% *All financials refer to non-GAAP pro forma adjusted metri
Slide 12: Strong revenue growth in our sustainability products in 2022
Strong revenue growth in our sustainability products in 2022 Research ● Evaluations ● Data ● Analytics & Tools ● Benchmarks • Full-year revenue from ESG & Climate products reached $209 million (+50% y/y) including $62 million • Participation in Sustainability Assessments in the fourth quarter (+43%
Slide 13: Commitment to sustainable operations recognized by third-party awards
The Company continues its commitment to sustainable operations, as recognized by multiple third-party awards Research ● Evaluations • Issued 11th annual sustainability impact report and 4th annual TCFD report • Launched $1.25 billion Sustainability-Linked Notes and adopted a Sustainability-Linked Bo
Slide 14: 2023 Outlook
2023 Outlook S&P Global
Slide 15: Global refinancing study shows increases in longer-term maturities
Latest global refinancing study shows increases in longer-term maturities — higher debt maturing in 8 of the next 9 years, when compared to previous study Global Corporate Bond Maturities (Financial and Nonfinancial) $2,500 $2,000 ($ in billions) $1,500 $1,000 $500 $— 2023 2024 2025 2026 2027 2028 2
Slide 16: Level of debt instruments outstanding continues to grow
Level of debt instruments outstanding continues to grow on a constant-currency basis, highlighting long-term resilience of debt issuance Total Debt Instruments Outstanding 2017-2023 $25,000 +5% CAGR $5,356 $20,000 $5,172 $5,650 $4,599 ($ in billions) $4,291 $4,183 $3,887 $15,000 $17,166 $17,842 $16,
Slide 17: Some issuance improvement is expected in 2023
Some issuance improvement is expected in 2023 Global Market Issuance History and 2023 Forecast* $10,000 • Market issuance forecast of +2.5% 7.3% 21.8% (+2.9% excluding IPF) based on S&P $8,000 2.5% Global Ratings Research -20.1% 18.1% • Financial guidance is based on a $6,000 Billed issuance assumpt
Slide 18: Macroeconomic assumptions underlying our financial outlook
Macroeconomic assumptions underlying our financial outlook % Change Y/Y, Assumptions as of February 2023 except Brent Crude Real Global GDP Growth1 2.2% United States (0.1)% Eurozone 0.0% China 4.8% United States CPI2 4.3% Brent Crude average $/bbl3 $84 2.5% Global Market Debt Issuance4 (Range: -6%
Slide 19: 2023 external factors facing the Company
2023 external factors facing the Company Macroeconomic Environment: Bond and Credit Markets: + Global supply chain pressures improve + Cash buffers built during COVID decreasing +/- High, but moderating inflation +/- Increasing rate of defaults - Slowdown to shallow recession - Slowdown and inflatio
Slide 20: Innovation and technology align with our strategy for long-term growth
Innovation and technology align with our strategy to driving long-term growth Cloud-Driven Growth Kensho-Driven Growth Strategy-Driven Growth Consolidation of SPGI and IHS R&D on Large Language Models Connect global scale and deep contracts into new strategic agreement (LLMs) to drive AI innovation
Slide 21: Ewout Steenbergen
Ewout Steenbergen Executive Vice President, Chief Financial Officer 21
Slide 22: 4Q 2022 financial results reflect macroeconomic conditions
4Q 2022 financial results reflect macroeconomic conditions Adjusted financials* 4Q 2022 4Q 2021 Change Revenue $2,937 $3,138 (6)% Corporate unallocated expense $20 $58 (65)% Total expense $1,726 $1,794 (4)% Operating profit $1,211 $1,344 (10)% Operating margin 41.2% 42.8% (160) bps Interest expense,
Slide 23: More than $400 million in expense reductions for the full year
Management took decisive action and delivered more than $400 million in expense reductions for the full year Expense Levers 2022 Full Year Savings 1. Cost Synergies Taking synergy actions earlier than originally anticipated $276 million leading to 2022 savings 2. Incentives Reduced incentive accrual
Slide 24: Continued delivery of cost synergies
Continued delivery of cost synergies; already surpassed 70% run-rate of total cost synergies Cumulative 2022 2023 Expected Original Targets Achievement1 Achievement1 ~$600M ~$422M Run-rate ~$600M Run-rate Cost Synergies ~80% achievement in 2023 ~$276M in 2022 ~$510M achieved in-year (now expecting 8
Slide 25: Market Intelligence: Growth in Data & Advisory offset by lower Enterprise Solutions
Market Intelligence: Growth in Data & Advisory offset by lower volumes in Enterprise Solutions and non-recurring areas of Desktop Adjusted 4Q results* 4Q 2022 4Q 2021 Change Revenue $1,037 $1,009 +3% Recurring revenue as % of revenue 95.0% 95.5% (50) bps Segment operating profit $326 $280 +16% Segme
Slide 26: Market Intelligence adjusted revenue increased 3% year-over-year
Market Intelligence adjusted revenue increased 3% year-over-year driven by continued growth in Credit & Risk Solutions and Data & Advisory Solutions Adjusted Revenue* • Credit & Risk Solutions growth driven by strength in Credit Solutions, particularly the $1,009 $1,037 RatingsXpress offering, offse
Slide 27: Ratings: Challenging issuance environment weighed on revenue
Ratings: Challenging issuance environment continued to weigh on revenue; Non-transaction remains resilient ex-FX Adjusted 4Q results* 4Q 2022 4Q 2021 Change Revenue $705 $990 (29)% Transaction $249 $504 (51)% Non-transaction $456 $486 (6)% Segment operating profit $338 $565 (40)% Segment operating m
Slide 28: Ratings revenue continued to see macro headwinds
Ratings revenue continued to see macro headwinds despite modest sequential improvement Adjusted Revenue* Structured Adjusted Revenue* $990 $122 $124 $6 $13 $60 CRISIL, Other** $122 $705 Other $14 Governments RMBS $83 Structured Finance $136 $131 +6% CMBS $7 Financials $46 -23% SC $10 $83 -32% $57 $6
Slide 29: Commodity Insights: Continued growth partially offset by Russia
Commodity Insights: Continued growth driven by solid performance across businesses partially offset by Russia impact Adjusted 4Q results* 4Q 2022 4Q 2021 Change Revenue $451 $433 +4% Recurring revenue as % of revenue 89.6% 88.2% +140 bps Segment operating profit $201 $183 +10% Segment operating marg
Slide 30: Commodity Insights adjusted revenue increased 4%
Commodity Insights adjusted revenue increased 4% year-over-year, on broad strength across the division and as Upstream returns to positive growth Adjusted Revenue* • Advisory and Transactional Services increase driven by demand for Energy Transition $451 $433 advisory solutions; partially offset by
Slide 31: Mobility: Strong and broad-based revenue
Mobility: Delivered strong and broad-based revenue amid complex environment for automotive markets Adjusted 4Q results* 4Q 2022 4Q 2021 Change Revenue $345 $316 +9% Recurring revenue as % of revenue 78.3% 77.8% +50 bps Segment operating profit $117 $119 (2)% Segment operating margin 34.0% 37.8% (380
Slide 32: Mobility adjusted revenue growth driven by Dealer new business
Mobility adjusted revenue growth driven by increase in Dealer new business and continued high retention rates; Manufacturing and Financials also strong in 4Q Adjusted Revenue* $345 $316 • Financials growth driven by continued strength $58 +10% in insurance underwriting volumes and new $53 business F
Slide 33: S&P Dow Jones Indices: ETD growth offset declines in Asset-Linked Fees
S&P Dow Jones Indices: Adjusted revenue growth in ETDs more than offset declines in Asset-Linked Fees Adjusted 4Q results* 4Q 2022 4Q 2021 Change Revenue $344 $330 +4% Recurring revenue as % of revenue 83.7% 87.3% (360) bps Segment operating profit $214 $210 +2% Segment operating margin 62.2% 63.6%
Slide 34: S&P Dow Jones Indices: 4% adjusted revenue growth
S&P Dow Jones Indices: 4% adjusted revenue growth driven by continued strength in ETD volumes and demand for data Adjusted Revenue* $344 $330 $64 $68 +6% • Data & Custom Subscriptions growth continued to be driven by new business activities Data & Custom Subscriptions $42 $56 +34% increasing end of
Slide 35: S&P Dow Jones Indices: Asset price depreciation partially offset by net inflows
S&P Dow Jones Indices: Asset price depreciation partially offset by continued positive net inflows ETF AUM at Quarter End y/y Asset-Linked Fees: (in billions) • Quarter-ending ETF AUM associated with our indices was $2,601 billion, down 12% $2,950 compared to 4Q 2021 $157 $2,601 • 4Q average ETF AUM
Slide 36: Engineering Solutions: Revenue and operating profit decline from BPVC timing
Engineering Solutions: Adjusted Revenue and operating profit decline from timing of BPVC impact Adjusted 4Q results* 4Q 2022 4Q 2021 Change Revenue $99 $103 (4)% Recurring revenue as % of revenue 91.9% 86.4% +550 bps Segment operating profit $15 $23 (34)% Segment operating margin 15.2% 22.2% (700) b
Slide 37: Investments and disclosures highlight commitment to enterprise growth
Investments and disclosures highlight our commitment to enterprise growth Key Investments • People Investments >$200 million: Incentive reset and higher-than-historical merit increases given inflationary environment • Transformational Adjacencies > $150 million: Focused investments that drive growth
Slide 38: New Metric Disclosures
New Metric Disclosures Disclosure New Metrics Definition Cadence Exchange-traded Derivative Volumes Monthly Trading volumes of derivatives contracts listed on global exchanges and Y/Y % Growth Rate Total Global Billed Issuance Y/Y % Monthly Growth Rate Billed issuance includes the impact of levered
Slide 39: 2023 GAAP guidance
2023 GAAP guidance We are not providing 2023 GAAP guidance because, given the inherent uncertainty around the timing of divestiture of Engineering Solutions, management cannot reliably predict all of the necessary components of GAAP measures. 39
Slide 40: 2023 adjusted guidance
2023 adjusted guidance Assumed Contribution from Initial Adjusted1 Engineering Solutions2 Revenue Growth 4% - 6% $190 - $210 million Revenue Growth, excluding Engineering Solutions in all periods 6% - 8% 3 Corporate Unallocated expense $140 - $150 million $10 - $20 million Deal-related amortization
Slide 41: 2023 division outlook
2023 division outlook 2023 Initial Adjusted 2023 Initial Adjusted Division Revenue Growth* Operating Profit Margin Outlook Market Intelligence 6.5% - 8.5% 34% - 35% Ratings 4.0% - 6.0% 56% - 57% Commodity Insights 6.5% - 8.5% 46% - 47% Mobility 6.5% - 8.5% 39% - 40% Indices 0.0% - 2.0% 66% - 67% *Ad
Slide 42: Earnings Call Q&A 4Q and Full-Year 2022
Earnings Call Q&A 4Q and Full-Year 2022 Doug Peterson Adam Kansler President and CEO President, S&P Global Market Intelligence Ewout Steenbergen Martina Cheung Executive Vice President and CFO President, S&P Global Ratings and Executive Lead, Sustainable1 Mark Grant Senior Vice President, Investor R
Slide 43: Earnings Call 4Q and Full-Year 2022
Earnings Call 4Q and Full-Year 2022 Doug Peterson REPLAY OPTIONS President and CEO Ewout Steenbergen Internet: Replay available for one year Executive Vice President and CFO Go to http://investor.spglobal.com Mark Grant Senior Vice President, Investor Relations Telephone: Replay available through Ma
Slide 44: Appendix
Appendix S&P Global 44
Slide 45: 4Q 2022: Non-GAAP adjustments
4Q 2022: Non-GAAP adjustments Pre-tax items excluded to arrive at adjusted results 4Q 2022 IHS Markit merger-related costs: - Transaction costs (to complete the transaction) $10 - Integration costs (to operationalize the transaction) $9 - Costs-to-achieve (to enable cost and revenue synergies) $156
Slide 46: Adjusted free cash flow, excluding certain items, approximately $1,365M for 4Q 2022
Adjusted free cash flow, excluding certain items is approximately $1,365M for 4Q 2022 Adjusted financials ($ in millions) 4Q 2022 Cash provided by operating activities $1,113 Capital expenditures (28) Net distributions to non-controlling interest holders (73) Free cash flow 1,012 IHS Markit merger c
Slide 47: Adjusted gross leverage is near our current target range
Adjusted gross leverage is near our current target range as of 4Q 2022 4Q 2022 Cash and cash equivalents 1 $1,287 Short- and long-term debt $10,956 Adjusted gross debt to adjusted EBITDA 2 2.7x Gross debt to EBITDA 3 2.0x ($ in millions) 1. Cash and cash equivalents includes restricted cash 2. Adjus
Slide 48: Foreign exchange had a $0.01 unfavorable impact on adjusted EPS
Movements in foreign exchange rates had a $0.01 unfavorable impact on adjusted EPS in 4Q 2022 Favorable (Unfavorable) Adjusted Revenue $(12.8) $(22.6) $(4.7) $(1.9) $(3.2) $(3.0) Adjusted Operating Profit $7.5 $(6.9) $(4.2) $1.8 $(1.0) $(1.8) Adjusted EPS $0.02 $(0.02) $(0.01) $0.00 $(0.00) $(0.00)
Slide 49: Accelerated Share Repurchase program progression and impact on diluted shares
Accelerated Share Repurchase program progression and impact to diluted weighted average shares outstanding Launched $7B ASR, and received • Received remaining shares for $7B plus $1.5B 15.2M shares (estimated 85%), true up • Launched $2.5B ASR, received 5.8M shares upon completion for remaining shar
Slide 50: Engineering Solutions adjusted revenue growth impacted by BPVC release cycle
Engineering Solutions adjusted revenue growth impacted by BPVC release cycle; partially offset by modest subscription growth Adjusted Revenue* $103 $99 • Non-subscription revenue decreased 43% -43% year-over-year primarily due to a drop in BPVC demand. BPVC is typically published once every two year
Slide 51: Bridge: ESG & Climate revenue to Sustainability & Energy Transition revenue
Bridge: Revenue from ESG & Climate products to revenue from Sustainability & Energy Transition products ($ in millions) $17.4 $246.8 $(0.5) $6.8 $14.5 $208.7 2022 Energy Transition Thematic Indices Electric Vehicle ESG 2022 ESG & Climate Products Coverage News Allocation Sustainability & Energy Tran
Slide 52: Fourth quarter global issuance was down 46%
Fourth quarter global issuance* was down 46% (down 44% excluding bank loans) United States Europe Asia 473 860 810 369 185 656 274 282 275 133 136 495 110 374 80 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 • Investment-grade decreased 31% y/y • Investment-grade decreas
Slide 53: Global investment-grade rated issuance declined 25% year-over-year
Global investment-grade rated issuance declined 25% year-over-year Investment-Grade Rated Issuance $1,200 $1,000 $800 ($ in billions) $600 $400 $200 $— 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Industrials Financial Services Sources: Refinitiv, Green Street Advisors, and LCD 5
Slide 54: Global high-yield issuance and leveraged loan rated volume declined 69%
Global* high-yield issuance and leveraged loan rated volume declined 69% High-Yield Issuance and Leveraged Loan Rated Volume $600 $500 $400 ($ in billions) $300 $200 $100 $— 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 High-Yield Issuance Leveraged Loan Volume *Leveraged Loan dat
Slide 55: Global Leveraged Loans and High-Yield Use of Proceeds
Global Leveraged Loans and High-Yield Use of Proceeds 2020 2021 2022 Note: Data only available for U.S. and Europe Source: LCD 55
Slide 56: Shift into passive investing continues
Shift into passive investing continues Research ● ● EvaluationsCumulative U.S. ● Flows DataEquity Analytics & Tools ● Benchmarks (January 2012 - December 2021) $2,500 $2.2 trillion in cumulative flows into passive strategies $2.1 trillion in cumulative flows out of active strategies -$2,500 Indexed
Slide 57: S&P Global headcount as of December 31, 2022
S&P Global headcount as of December 31, 2022 2022 2021 Market Intelligence 18,502 10,630 Ratings 7,996 7,452 Commodity Insights 4,198 1,786 Mobility 2,980 — Indices 952 663 Engineering Solutions 933 — Corporate & Other 4,387 2,314 Total 39,948 22,845 57