S&P Global Inc. · NYSE:SPGI
S&P Global — Q3 2022 Earnings Presentation
48 slides from S&P Global's earnings presentation, Oct 27, 2022
Slide 1: 3Q 2022 Earnings Conference Call
3Q 2022 Earnings Conference Call Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Mark Grant Senior Vice President, Investor Relations October 27, 2022 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: Disciplined execution and continued resilience post-merger
Disciplined execution and continued resilience post-merger Financial highlights: • Adjusted revenue* decreased 8% year-over-year, or 6% ex-FX, as the business continues to benefit from more diverse revenue streams partially offsetting a continued decrease in Ratings • Recurring revenue increased 2%
Slide 7: Continued innovation drives enhanced customer value and commercial success
Continued innovation drives enhanced customer value and commercial success • Surpassed 2,300 cross-sell referrals with strong conversion rates • Built strong pipeline in September ahead of seasonally high customer renewals in Q4 • 3,000 customer engagements during Q3 on issuance needs, markets, and
Slide 8: EPS decline tempered by recurring revenue, expense discipline, and share buyback
EPS decline tempered by recurring revenue, expense discipline, and share buyback offsetting issuance impact Adjusted financials* 3Q 2022 3Q 2021 Change Revenue $2,862 $3,109 (8)% Operating profit $1,318 $1,491 (12)% Operating profit margin 46.0% 48.0% (200) bps Trailing twelve-month adjusted 45.5% -
Slide 9: Division financial performance
Division financial performance* Revenue: +4% y/y Revenue: (33)% y/y Revenue: +5% y/y TTM Margin: 30.9% TTM Margin: 57.9% TTM Margin: 43.8% Revenue: +8% y/y Revenue: +3% y/y Revenue: (8)% y/y TTM Margin: 40.0% TTM Margin: 68.8% TTM Margin: 19.1% *All financials presented on this slide refer to non-GA
Slide 10: Data and insights products benefiting from secular trends and heightened demand
Data and insights products benefiting from secular trends and heightened demand driven by market uncertainty +37% +66% +39% +12% Exchange Traded CDS Trucost Equities, Data & Derivatives Indices Analytics All growth rates are for adjusted non-GAAP pro forma revenue. Adjusted financials presented on t
Slide 11: S&P Global Commodity Insights: Platts Dimensions Pro Anniversary
S&P Global Commodity Insights: Platts Dimensions Pro Anniversary Highlights Platts Dimensions Pro offers a simplified and more personalized user experience, enabling customers to display, filter, and monitor relevant • Q3 2022 marks the one year anniversary pricing, data and insights for commodity m
Slide 12: Commodity Insights' benchmarks provide transparency in complex markets
Commodity Insights' benchmarks provide transparency in complex markets; Energy Transition assessments support the development of low-carbon markets Marine Fuel 0.5% Iron Ore Futures Energy Transition-Related Futures Volume Traded* Volume Traded* Assessments launched (BBL, millions) (MT, millions) (c
Slide 13: Third quarter global issuance was down 40%
Third quarter global issuance* was down 40% (down 36% excluding bank loans) United States Europe Asia 906 468 879 813 201 364 187 654 342 270 277 133 138 479 106 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21 1Q22 2Q22 3Q22 • Investment-grade decreased 25% y/y • Investment-grade decreas
Slide 14: Strong revenue growth in our sustainability products
Strong revenue growth in our sustainability products Research ● Evaluations ● Data ● Analytics & Tools ● Benchmarks • Third quarter revenue* from ESG products grew • YTD Participation in Sustainability Assessments 39% year-over-year to $49 million increased more than 25% year over year • Launched S&
Slide 15: 2022 Outlook
2022 Outlook S&P Global
Slide 16: Declines in debt issuance expected to continue
Declines in debt issuance expected to continue Global Issuance History and 2022 Forecast* 10,000 9,000 22% 18% 8,000 • Market Issuance forecast of -19% 7,000 7% based on S&P Global Ratings 6,000 Research ($ in billions) 5,000 • Financial guidance is based on a (6)% 4,000 Billed issuance assumption o
Slide 17: Macroeconomic assumptions underlying our financial outlook
Macroeconomic assumptions underlying our financial outlook % Change Y/Y, Initial assumptions Current assumptions (May 2022) (Aug 2022) except Brent Crude (Mar 2022) (Oct 2022) Real GDP1 United States +3.9% +3.2% +2.3% +1.6% Eurozone +4.4% +3.3% +2.7% +3.1% United States CPI1 +3.9% +5.8% +7.6% +8.3%
Slide 18: Ewout Steenbergen
Ewout Steenbergen Executive Vice President, Chief Financial Officer 18
Slide 19: 3Q 2022 financial results demonstrate resilience and disciplined execution
3Q 2022 financial results demonstrate resilience and disciplined execution Adjusted financials* 3Q 2022 3Q 2021 Change Revenue $2,862 $3,109 (8)% Corporate unallocated expense $24 $36 (35)% Total expense $1,545 $1,618 (5)% Operating profit $1,318 $1,491 (12)% Operating margin 46.0% 48.0% (200) bps I
Slide 20: Movements in foreign exchange rates had a $0.03 favorable impact on adjusted EPS
Movements in foreign exchange rates had a $0.03 favorable impact on adjusted EPS in 3Q 2022 Favorable (Unfavorable) Adjusted Revenue $(11.7) $(27.9) $(4.0) $(1.8) $(3.5) $(3.5) Adjusted Operating Profit $14.2 $(6.2) $4.2 $2.9 $(2.8) $0.1 Adjusted EPS $0.03 $(0.01) $0.01 $0.01 $(0.01) $— ($ in millio
Slide 21: Management actions expected to deliver more than $400 million in expense reductions
Management actions taken year-to-date expected to deliver more than $400 million in expense reductions for the full year Expense Levers Expected 2022 Full Year Savings 1. Cost Synergies Taking synergy actions earlier than originally anticipated >$240 million leading to 2022 savings 2. Incentives Red
Slide 22: Continued delivery of cost synergies; surpassed 50% run-rate
Continued delivery of cost synergies; already surpassed 50% run-rate of total cost synergies Targets Cumulative achievement1 ~$600M ~$311M Run-rate Cost Synergies ~80% achievement by 2023 ~$165M achieved YTD ~$350M ~$16M Run-rate3 Revenue Synergies ~50% achievement by 2024 ~$8M achieved YTD CTAs2 +
Slide 23: Market Intelligence: Demand for MI Solutions, tempered by slower Desktop
Market Intelligence: Demand for MI Solutions, tempered by slower Desktop and flat Enterprise Solutions Adjusted 3Q results* 3Q 2022 3Q 2021 Change Revenue $1,017 $974 +4% Recurring revenue as % of revenue 96.1% 96.2% (10) bps Segment operating profit $345 $305 +13% Segment operating margin 33.9% 31.
Slide 24: Market Intelligence adjusted revenue increased 4% year-over-year
Market Intelligence adjusted revenue increased 4% year-over-year driven by growth in Credit & Risk Solutions and Data & Advisory Solutions Revenue • Credit and Risk Solutions benefited from strong new sales and pricing and demand for Credit $1,017 $974 Analytics products, offset by declines in $185
Slide 25: Ratings: Issuance volume leads to continued declines in revenue
Ratings: Issuance volume leads to continued declines in revenue; CRISIL and Annual Fees remain resilient Adjusted 3Q results* 3Q 2022 3Q 2021 Change Revenue $681 $1,017 (33)% Transaction $244 $551 (56)% Non-transaction $437 $466 (6)% Segment operating profit $381 $644 (41)% Segment operating margin
Slide 26: Ratings revenue impacted by continued unfavorable macro conditions
Ratings revenue impacted by continued unfavorable macro conditions across all businesses; partially offset by CRISIL Revenue Structured Revenue $114 $7 $1,017 $11 $106 $10 $72 $78 $114 CRISIL, Other** Other $6 $681 Governments $144 RMBS $11 Structured Finance $116 +9% CMBS $51 $4 Financials $48 -33%
Slide 27: Commodity Insights: Strong performance of subscription products
Commodity Insights: Strong performance of subscription products partially offset by Russia impact and Upstream Adjusted 3Q results* 3Q 2022 3Q 2021 Change Revenue $432 $413 +5% Recurring revenue as % of revenue 91.2% 90.6% +60 bps Segment operating profit $198 $181 +9% Segment operating margin 45.8%
Slide 28: Commodity Insights revenue growth of 5% driven by Price Assessments
Commodity Insights revenue growth of 5% driven by Price Assessments and Energy & Resources Data & Insights; partially offset by softness in Upstream Revenue • Advisory and Transactional Services revenue decrease driven by GTS declines due to high $432 comparison; partially offset by return of in- $4
Slide 29: Mobility: Delivered strong and broad-based revenue growth
Mobility: Delivered strong and broad-based revenue growth despite complexities of current automotive markets Adjusted 3Q results* 3Q 2022 3Q 2021 Change Revenue $346 $319 +8% Recurring revenue as % of revenue 77.7% 75.9% +160 bps Segment operating profit $146 $129 +14% Segment operating margin 42.4%
Slide 30: Mobility revenue growth accomplished through double-digit increase in Dealer business
Mobility revenue growth accomplished through double-digit increase in Dealer business as retention rates continue to remain high Revenue $346 $319 • Financials growth driven by strength in $61 +9% insurance underwriting volumes and new $56 business Financials and • Manufacturing growth driven by str
Slide 31: S&P Dow Jones Indices: ETD and Data & Custom Subscription deliver growth
S&P Dow Jones Indices: ETD and Data & Custom Subscription deliver growth and margin expansion despite lower AUM Adjusted 3Q results* 3Q 2022 3Q 2021 Change Revenue $334 $323 +3% Recurring revenue as % of revenue 83.5% 87.6% (410) bps Segment operating profit $234 $224 +5% Segment operating margin 70
Slide 32: S&P Dow Jones Indices: 3% revenue growth driven by strong volume growth in ETD
S&P Dow Jones Indices: 3% revenue growth driven by strong volume growth in ETD products and data Revenue $334 $323 $69 +10% • Data & Custom Subscriptions growth driven by $63 Data & Custom new business activities increasing end of day Subscriptions $40 $55 +37% (EOD) and real time data ACV Exchange-
Slide 33: S&P Dow Jones Indices: Positive net inflows offset by price depreciation for ETF AUM
S&P Dow Jones Indices: Positive net inflows were offset by price depreciation for ETF AUM ETF AUM at Quarter End y/y Asset-Linked Fees: (in billions) • Quarter-ending ETF AUM associated with our indices was $2,348 billion, down 11% $2,626 compared to 3Q 2021 $194 $2,348 • 3Q average ETF AUM associat
Slide 34: Engineering Solutions: Revenue and operating profit decline from timing of BPVC
Engineering Solutions: Revenue and operating profit decline from timing of BPVC impact Adjusted 3Q results* 3Q 2022 3Q 2021 Change Revenue $95 $104 (8)% Recurring revenue as % of revenue 93.7% 84.6% +910 bps Segment operating profit $17 $20 (12)% Segment operating margin 17.9% 18.7% (80) bps Trailin
Slide 35: Engineering Solutions revenue growth impacted by BPVC release cycle
Engineering Solutions revenue growth impacted by BPVC release cycle; partially offset by modest subscription growth Revenue $104 $95 • Non-subscription revenue decreased 63% -63% year-over-year primarily due to a drop in BPVC demand. BPVC is typically published once every two years, which creates No
Slide 36: Updated 2022 GAAP guidance
Updated 2022 GAAP guidance Most Recent GAAP New GAAP (As of August '22) Revenue Over 30% increase Over 30% increase Corporate Unallocated expense $835 – $845 million $885 – $895 million Operating profit margin 46.7% – 47.7% 45.7% – 46.7% Interest expense, net $430 – $440 million $415 – $425 million
Slide 37: 2022 adjusted pro forma guidance
2022 adjusted pro forma guidance Most Recent Adjusted1 New Adjusted1 (as of August '22) Low to mid-single-digit Revenue Mid-single-digit decrease decrease Corporate Unallocated expense $70 – $80 million $70 – $80 million Deal-related amortization $1.01 – $1.02 billion $1.01 – $1.02 billion Operating
Slide 38: 2022 division outlook
2022 division outlook 2022 Previous Adjusted 2022 Previous Adjusted 2022 Adjusted 2022 Adjusted Division Pro Forma Revenue Growth Pro Forma Margin Pro Forma Revenue Growth Pro Forma Margin (August '22) (August '22) Market Intelligence Mid-single-digit Mid-single-digit Low 30s Low 30s Ratings Low to
Slide 39: 3Q 2022 Earnings Call | Q&A
3Q 2022 Earnings Call | Q&A Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Mark Grant Senior Vice President, Investor Relations October 27, 2022 39
Slide 40: Earnings Call 3Q 2022
Earnings Call 3Q 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 November 27, 202
Slide 41: Appendix
Appendix S&P Global 41
Slide 42: 3Q 2022: Non-GAAP adjustments
3Q 2022: Non-GAAP adjustments Pre-tax items excluded to arrive at adjusted results 3Q 2022 IHS Markit merger-related costs: - Transaction costs (to complete the transaction) $14 - Integration costs (to operationalize the transaction) $21 - Costs-to-achieve (to enable cost and revenue synergies) $73
Slide 43: Adjusted free cash flow, excluding certain items is approximately $965M for 3Q 2022
Adjusted free cash flow, excluding certain items is approximately $965M for 3Q 2022 Adjusted pro forma financials ($ in millions) 3Q 2022 Cash provided by operating activities1 $814 Capital expenditures (21) Net distributions to non-controlling interest holders (71) Free cash flow 722 IHS Markit mer
Slide 44: Accelerated Share Repurchase programs progression and impact to diluted shares
Accelerated Share Repurchase programs progression and impact to diluted weighted average shares outstanding Launched $7B ASR, and received 1. Received remaining shares for $7B plus 15.2M shares (estimated 85%), true up $1.5B upon completion for remaining shares1 2. Launched $2.5B ASR, received 5.8M
Slide 45: Adjusted gross leverage is near our current target range as of 3Q 2022
Adjusted gross leverage is near our current target range as of 3Q 2022 3Q 2022 Cash and cash equivalents 1 $1,389 Short- and long-term debt $10,786 Adjusted gross debt to adjusted EBITDA 2 2.6x Gross debt to EBITDA 3 1.9x ($ in millions) 1. Cash and cash equivalents includes restricted cash 2. Adjus
Slide 46: 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 $— 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Industrials Financial Services Sources: Refinitiv, Green Street Advisors, and LCD 4
Slide 47: Global high-yield issuance and leveraged loan rated volume declined 73%
Global* high-yield issuance and leveraged loan rated volume declined 73% High-Yield Issuance and Leveraged Loan Rated Volume $600 $550 $500 $450 $400 ($ in billions) $350 $300 $250 $200 $150 $100 $50 $— 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 High-Yield Issuance Leveraged Lo
Slide 48: Trailing Twelve-Month Non-GAAP Pro forma Adjusted Operating Profit Margin
Trailing Twelve-Month Non-GAAP Pro forma Adjusted Operating Profit Margin Trailing Q4 2021 Q1 2022 Q2 2022 Q3 2022 twelve-month Market Intelligence Non-GAAP pro forma adjusted revenue/adjusted revenue $1,009 $1,019 $1,020 $1,017 $4,065 Non-GAAP pro forma adjusted operating profit/adjusted operating