S&p Global Inc. · NYSE:SPGI
S&p Global — The McGraw-Hill Companies — Q2 2012 Earnings Presentation
22 slides from S&p Global's earnings presentation, Jul 26, 2012
Slide 1: 2Q 2012 Earnings Call
2Q 2012 Earnings Call July 26, 2012 PRESENTERS Harold McGraw III Chairman, President and CEO Jack Callahan Executive Vice President and CFO Chip Merritt Vice President, Investor Relations Comparison of Adjusted Information to U.S. GAAP Information This presentation includes adjusted financial inform
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 statements, including without limitation statements relating to our businesses and our prospects, new products, sales, expenses, tax rates, cash flows, prepublication investm
Slide 3: Q2 2012: Record Adjusted EPS
McGraw-Hill Q2 2012: Record Adjusted EPS Growth and Value Plan: On Track for Separation by Year-End McGraw-Hill Financial: Delivering Continued Growth McGraw-Hill Education: Cost Savings Drive YOY Improvement 4 Record 2nd Quarter Adjusted EPS The McGraw-Hill Companies ($ in millions) 2Q 2012 2Q 2011
Slide 4: Growth and Value Plan: Significant Actions to Facilitate Separation
McGraw-Hill Q2 2012: Record Adjusted EPS Growth and Value Plan: On Track for Separation by Year-End McGraw-Hill Financial: Delivering Continued Growth McGraw-Hill Education: Cost Savings Drive YOY Improvement 6 Growth and Value Plan: Significant Actions to Facilitate Separation Key management in p
Slide 5: Growth and Value Plan: Investing for Growth
Growth and Value Plan: Investing for Growth • Launched S&P Dow Jones Indices Combination of two iconic brands will drive innovative, index-based solutions for global investors Joint venture should deliver annual revenue in 2013 of approximately $500 million with highly attractive margins • Acqui
Slide 6: Pro forma McGraw-Hill Financial
Pro forma McGraw-Hill Financial McGraw-Hill Financial (pro forma) ($ in millions) 2Q 2012 2Q 2011 Change Revenue $1,073 $1,020 +5% Adj. Operating Profit $394 $360 +9% Adj. Operating Margin* 36.7% 35.3% 140 bps NOTE: The pro forma results are informational and are not intended to represent what the r
Slide 7: Standard & Poor’s Ratings
Standard & Poor’s Ratings Standard & Poor’s Ratings ($ in millions) 2Q 2012 2Q 2011 Change Revenue $483 $480 +1% Segment Operating Profit $208 $213 (2%) Segment Operating Margin 43.0% 44.3% (130) bps • 2Q highlights: Transaction revenue grew 4% to $203 million U.S. debt issuance increased while
Slide 8: Global Debt Issuance: Diverging Global Markets
Global Debt Issuance: Diverging Global Markets United States Europe 11% increase year-over-year in 2Q 45% decrease year-over-year in 2Q (issuance, $ in billions) (issuance, $ in billions) $552 $469 Public $404 $398 $356 $329 Finance $311 $290 $292 Structured $255 Finance Corporates 2Q11 3Q11 4Q11 1Q
Slide 9: Standard & Poor’s Ratings: Continued Progress on Litigation Front
Standard & Poor’s Ratings: Continued Progress on Litigation Front • Update: 29 cases now dismissed outright (two in 2Q 2012) 7 dismissals by lower courts have been affirmed by higher courts The highest court in New York affirmed the dismissal of the Oddo litigation 10 cases have been volunta
Slide 10: S&P Capital IQ / S&P Indices
S&P Capital IQ / S&P Indices S&P Capital IQ / S&P Indices (formerly McGraw-Hill Financial segment) ($ in millions) 2Q 2012 2Q 2011 Change Revenue $366 $333 +10% Adj. Segment Op Profit $115 $98 +17% Adj. Segment Op Margin 31.4% 29.3% 210 bps • 2Q highlights: – Both S&P Capital IQ and S&P Indices cont
Slide 11: S&P Indices
S&P Indices S&P Indices ($ in millions) 2Q 2012 2Q 2011 Change Revenue $89 $80 +12% • 2Q highlights: Realized growth in trading volume of exchange-traded derivatives as well as in assets under management for both mutual funds and ETFs Assets under management in exchange-traded funds linked to S&
Slide 12: S&P Dow Jones Indices
S&P Dow Jones Indices Over 400 financial institutions Approximately $1.5 trillion use our indices to build or directly linked to our indices price funds, swaps, notes, options, forwards, and futures YTD through April 2012, more Over 1,600 subscribers than 650 million options and utilize our data, 43
Slide 13: Commodities & Commercial
Commodities Commodities ($ in millions) 2Q 2012 2Q 2011 Change Revenue $121 $101 +19% • 2Q Highlights: – Growth in petroleum product subscriptions continued to drive revenue growth – Acquisitions of Steel Business Briefing Group and BENTEK adding meaningful cross-selling opportunities. – Increased t
Slide 14: McGraw-Hill Education
McGraw-Hill Q2 2012: Record Adjusted EPS Growth and Value Plan: On Track for Separation by Year-End McGraw-Hill Financial: Delivering Continued Growth McGraw-Hill Education: Cost Savings Drive YOY Improvement 26 McGraw-Hill Education McGraw-Hill Education ($ in millions) 2Q 2012 2Q 2011 Change Reven
Slide 15: McGraw-Hill Education: Higher Education, Professional and International Group
McGraw-Hill Education: Higher Education, Professional and International Group ($ in millions) 2Q 2012 2Q 2011 Change HPI Revenue $241 $245 (2%) • 2Q highlights: Revenue growth at Higher Education was offset by declines at International Higher Education now has 1.4 million digital users, an incre
Slide 16: Summary
Summary • Off to a strong start • McGraw-Hill Financial should continue to deliver solid top- and bottom-line growth • McGraw-Hill Education will focus on becoming a stand-alone company with appropriate cost structure • Primary focus will remain delivering on the Growth and Value Plan • 2012 will be
Slide 17: Cost Reduction Drives Margin Expansion
Cost Reduction Drives Margin Expansion McGraw-Hill Consolidated (dollars in millions) 2Q 2012 2Q 2011 Change Total revenue $1,547 $1,557 (1%) Adjusted expenses* $1,140 $1,199 (5%) Adjusted operating profit $407 $358 +14% Adjusted operating margin 26.3% 23.0% 330 bps * Includes corporate expenses 32
Slide 18: EPS Growth Amplified by Reduction in Shares Outstanding
EPS Growth Amplified by Reduction in Shares Outstanding (dollars in millions) 2Q 2012 2Q 2011 Change Adjusted operating income $407 $358 +14% Interest expense $20 $20 +2% Tax rate 36.3% 36.3% NC Less: Noncontrolling interests ($4) ($5) (10%) Adjusted net income $243 $211 +15% Adjusted diluted EPS $0
Slide 19: Progress on $100 Million Cost Savings Target
Progress on $100 Million Cost Savings Target Cost reductions accelerated in 2Q Total adjusted expenses declined 5% Pension plan realignment contributed to reduced expense run rate Additional restructuring actions expected in 2nd half of year as the two new operating companies are established
Slide 20: Form Highlights for McGraw-Hill Education
Form 10 Highlights for McGraw-Hill Education – Issue up to $600 million new debt – Pay one-time dividend of up to $500 million to McGraw-Hill Financial – Ensure adequate liquidity to meet business needs – Revolver to be established for cyclical cash requirements 38 Second-Half 2012 Actions • Plan to
Slide 21: Outlook for Balance of Year
Outlook for Balance of Year Record first-half results bolster confidence; now expect to be near the high end of adjusted diluted EPS guidance of $3.25 to $3.35 Cost reductions clearly impacted YTD earnings and will continue throughout the year On track to deliver at least $100 million in cost
Slide 22: Replay Options
2Q 2012 Earnings Call July 26, 2012 REPLAY OPTIONS Internet: Replay available for one year Go to www.mcgraw-hill.com/investor_relations Click on the Earnings Announcement link under Investor Presentation Webcasts Telephone: Replay available through August 26, 2012 Domestic: 866-465-2120 Internationa
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