Moody's Corporation · NYSE:MCO

Moody's — Q1 2016 Earnings Presentation

43 slides from Moody's's earnings presentation, Apr 29, 2016

  1. Slide 1: First Quarter 2016 Earnings Call

    First Quarter 2016 Earnings Call April 29, 2016

  2. Slide 2: Overview

    Overview SALLI SCHWARTZ GLOBAL HEAD OF INVESTOR RELATIONS AND COMMUNICATIONS First Quarter 2016 Earnings Call, April 29, 2016 2

  3. Slide 3: Disclaimer

    Disclaimer Certain statements contained in this presentation are forward-looking statements and are based on future expectations, plans and prospects for Moody’s business and operations that involve a number of risks and uncertainties. Moody’s outlook for 2016 and other forward-looking statements in

  4. Slide 4: Agenda

    Agenda 1. First Quarter 2016 Results Ray McDaniel, President and Chief Executive Officer 2. Financial and Operating Highlights Linda Huber, Executive Vice President and Chief Financial Officer 3. Updated 2016 Outlook Ray McDaniel, President and Chief Executive Officer 4. Q&A Ray McDaniel, President

  5. Slide 5: 1. First Quarter 2016 Results

    1. First Quarter 2016 Results RAY MCDANIEL PRESIDENT AND CHIEF EXECUTIVE OFFICER First Quarter 2016 Earnings Call, April 29, 2016 5

  6. Slide 6: First Quarter 2016 Results and Comparison to First Quarter 2015

    First Quarter 2016 Results and Comparison to First Quarter 2015 Moody’s Corporation » Revenue  6% to $816 million » Operating Expense  4% to $512 million » Operating Income  18% to $304 million • Foreign currency translation negligible » Adjusted Operating Income  16% to $334 million First Quart

  7. Slide 7: First Quarter 2016 Results and Comparison to First Quarter 2015 (continued)

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) Moody’s Corporation » Operating Margin • 37.3% » Adjusted Operating Margin • 40.9% » EPS  16% to $0.93 First Quarter 2016 Earnings Call, April 29, 2016 7

  8. Slide 8: First Quarter 2016 Investments

    First Quarter 2016 Investments » GGY • Acquired in March • Leading provider of actuarial software for life insurance industry • Part of MA’s Enterprise Risk Solutions line of business » Finagraph • Minority investment • Provider of cloud-enabled, automated financial data collection and business inte

  9. Slide 9: 2. Financial and Operating Highlights

    2. Financial and Operating Highlights LINDA HUBER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER First Quarter 2016 Earnings Call, April 29, 2016 9

  10. Slide 10: First Quarter 2016 Results and Comparison to First Quarter 2015: Revenue

    First Quarter 2016 Results and Comparison to First Quarter 2015 Moody’s Corporation Revenue » Total Global  6% to $816 million • Foreign currency translation unfavorably impacted revenue by 2% » US  4% to $480 million » Non-US  8% to $336 million • 41% of total revenue » Recurring Revenue  7% to

  11. Slide 11: MIS Revenue by Geography

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) MIS Revenue by Geography » Total MIS  13% to $525 million • Foreign currency translation unfavorably impacted MIS revenue by 1% » US  10% to $336 million » Non-US  18% to $189 million • 36% of total MIS revenue » Recurrin

  12. Slide 12: MIS Revenue by Line of Business

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) MIS Revenue by Line of Business » Corporate Finance: $240 million – Global  20% – US  10% – Non-US  36% » Structured Finance: $91 million – Global  11% – US  15% – Non-US flat First Quarter 2016 Earnings Call, April 29,

  13. Slide 13: MIS Revenue by Line of Business

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) MIS Revenue by Line of Business » Financial Institutions: $95 million – Global  1% – US  3% – Non-US  4% » Public, Project & Infrastructure Finance: $92 million – Global  9% – US  6% – Non-US  14% » MIS Other: $8 milli

  14. Slide 14: MA Revenue by Geography

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) MA Revenue by Geography » Total MA  11% to $291 million • Foreign currency translation unfavorably impacted MA revenue by 2% » Excluding revenue from March 2016 GGY acquisition, MA revenue grew 10% » US  12% to $144 millio

  15. Slide 15: MA Revenue by Line of Business

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) MA Revenue by Line of Business » Research, Data and Analytics: $165 million – Global  10% • 57% of total MA revenue – US  14% – Non-US  5% First Quarter 2016 Earnings Call, April 29, 2016 15

  16. Slide 16: MA Revenue by Line of Business

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) MA Revenue by Line of Business » Enterprise Risk Solutions: $90 million – Global  16% – US  14% – Non-US  17% » Excluding revenue from GGY, ERS revenue grew 13% » ERS TTM* Sales  1% *Trailing twelve months First Quarter

  17. Slide 17: MA Revenue by Line of Business

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) MA Revenue by Line of Business » Professional Services: $37 million – Global flat – US  6% – Non-US  3% First Quarter 2016 Earnings Call, April 29, 2016 17

  18. Slide 18: First Quarter 2016 Results: Operating Expense and Margin

    First Quarter 2016 Results and Comparison to First Quarter 2015 (continued) Moody’s Corporation » Operating Expense  4% to $512 million • Foreign currency translation favorably impacted expense by 2% » Operating Margin • 37.3% » Adjusted Operating Margin • 40.9% » Effective Tax Rate • 32.3% First Q

  19. Slide 19: Capital Allocation

    Capital Allocation » During 1Q16, Moody’s returned $334 million to shareholders via share repurchases and dividends » During 1Q16, Moody’s repurchased 2.9 million shares at a total cost of $262 million, or an average cost of $89.83 per share, and issued 1.6 million shares under its annual employee s

  20. Slide 20: Balance Sheet and Free Cash Flow

    Balance Sheet and Free Cash Flow » As of March 31, 2016, Moody’s had: – $3.4 billion of outstanding debt – $1.0 billion of additional debt capacity available under its revolving credit facility – Total cash, cash equivalents and short-term investments of $2.1 billion » Approximately 73% of cash hold

  21. Slide 21: 3. Updated 2016 Outlook

    3. Updated 2016 Outlook RAY MCDANIEL PRESIDENT AND CHIEF EXECUTIVE OFFICER First Quarter 2016 Earnings Call, April 29, 2016 21

  22. Slide 22: Updated 2016 Full Year Outlook

    Updated 2016 Full Year Outlook* Moody’s Corporation » EPS • $4.55 to $4.65 • Inclusive of $0.02 dilution from GGY acquisition » Revenue  low-single-digit % range » Operating Expense  mid-single-digit % range » Operating Margin • Approximately 41% » Adjusted Operating Margin • Approximately 45% » F

  23. Slide 23: Updated 2016 Full Year Outlook: MIS

    Updated 2016 Full Year Outlook* MIS » Revenue Approximately flat » US  low-single-digit % range » Non-US  low-single-digit % range » Corporate Finance  low-single-digit % range » Structured Finance  mid-single-digit % range » Public, Project & Infrastructure Finance  mid-single-digit % range *R

  24. Slide 24: Updated 2016 Full Year Outlook: MA

    Updated 2016 Full Year Outlook* MA » Revenue  high-single-digit % range » US  low-double-digit % range » Non-US  mid-single-digit % range » Research, Data and Analytics  high-single-digit % range » Enterprise Risk Solutions  high-single-digit % range *Refer to “Moody’s Corporation Reports Resul

  25. Slide 25: MIS Management Change

    MIS Management Change » Effective June 1, 2016, Michel Madelain will retire as President and COO of MIS and will assume the role of Vice Chairman of MIS • Michel will remain on the MIS Board of Directors and MIS European boards » Rob Fauber, who has been with Moody’s for 11 years, will succeed Miche

  26. Slide 26: 4. Q&A Session

    4. Q&A Session » Ray McDaniel President and Chief Executive Officer, Moody’s Corporation » Linda Huber Executive Vice President and Chief Financial Officer, Moody’s Corporation » Michel Madelain President and Chief Operating Officer, Moody’s Investors Service » Mark Almeida President, Moody’s Analyt

  27. Slide 27: USD Market: Issuance Views From Investment Banks

    USD Market: Issuance Views From Investment Banks Views on this page are from three global “bulge bracket” investment banks as of April 25, 2016. Issuance views are for both financial and non-financial US dollar issuance. 1Q 2016 MTD Apr 16 FY 2016E Investment Grade Bonds ~$340 billion ~$65 billion ~

  28. Slide 28: Euro Market: Issuance Views From Investment Banks

    Euro Market: Issuance Views From Investment Banks Views on this page are from three global “bulge bracket” investment banks as of April 25, 2016. Issuance views are for both financial and non-financial Euro issuance. Investment Grade • Robust pipeline and expected to pick-up further as a result of t

  29. Slide 29: Replay Details

    Replay Details » Available from 3:30pm (Eastern Time) April 29, 2016 until 3:30pm (Eastern Time) May 28, 2016 » Telephone Details: – US +1-888-203-1112 – Non-US +1-719-457-0820 – Passcode 2495047 » Webcast Details: – Go to http://ir.moodys.com – Click on “Events & Presentations” – Click on the link

  30. Slide 30: Appendix

    Appendix First Quarter 2016 Earnings Call, April 29, 2016 30

  31. Slide 31: Consolidated Statements of Operations (Unaudited)

    Consolidated Statements of Operations (Unaudited) First Quarter 2016 Earnings Call, April 29, 2016 31

  32. Slide 32: Supplemental Revenue Information (Unaudited)

    Supplemental Revenue Information (Unaudited) First Quarter 2016 Earnings Call, April 29, 2016 32

  33. Slide 33: Selected Consolidated Balance Sheet Data (Unaudited)

    Selected Consolidated Balance Sheet Data (Unaudited) First Quarter 2016 Earnings Call, April 29, 2016 33

  34. Slide 34: Selected Consolidated Balance Sheet Data (continued) (Unaudited)

    Selected Consolidated Balance Sheet Data (continued) (Unaudited) First Quarter 2016 Earnings Call, April 29, 2016 34

  35. Slide 35: Non-operating (Expense) Income, Net

    Non-operating (Expense) Income, Net First Quarter 2016 Earnings Call, April 29, 2016 35

  36. Slide 36: Financial Information by Segment

    Financial Information by Segment The table below presents revenue, adjusted operating income and operating income by reportable segment. The Company defines adjusted operating income as operating income excluding depreciation and amortization. First Quarter 2016 Earnings Call, April 29, 2016 36

  37. Slide 37: Transaction and Relationship Revenue

    Transaction and Relationship Revenue The tables below summarize the split between transaction and relationship revenue. In the MIS segment, excluding MIS Other, transaction revenue represents the initial rating of a new debt issuance as well as other one-time fees while relationship revenue represen

  38. Slide 38: Moody's Analytics and Enterprise Risk Solutions Revenue Excluding GGY

    Moody’s Analytics and Enterprise Risk Solutions Revenue Excluding GGY ERS MA Revenue Revenue % % Reported revenue growth 16% 11% Less: Impact of GGY 3% 1% Revenue growth excluding GGY 13% 10% First Quarter 2016 Earnings Call, April 29, 2016 38

  39. Slide 39: Non-GAAP Adjusted Operating Income and Adjusted Operating Margin

    Non-GAAP Adjusted Operating Income and Adjusted Operating Margin The table below as well as the Free Cash Flow table on the following page reflect certain adjusted results that the SEC defines as "non-GAAP financial measures" as well as a reconciliation of each non-GAAP measure to its most directly

  40. Slide 40: Free Cash Flow

    Free Cash Flow The table below reflects a reconciliation of the Company’s net cash flows from operating activities to free cash flow. The Company defines free cash flow as net cash provided by operating activities minus payments for capital expenditures. Management believes that free cash flow is a

  41. Slide 41: 2016 Outlook

    2016 Outlook Moody’s outlook for 2016 is based on assumptions about many macroeconomic and capital market factors, including interest rates, foreign currency exchange rates, corporate profitability and business investment spending, merger and acquisition activity, consumer borrowing and securitizati

  42. Slide 42: moodys.com

    42 moodys.com Website: http://ir.moodys.com Email: ir@moodys.com First Quarter 2016 Earnings Call, April 29, 2016 42

  43. Slide 43: First Quarter 2016 Earnings Call, April 29, 2016

    © 2016 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, and affiliates (collectively, “MOODY’S”). All rights reserved. licensors and suppliers

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