S&p Global Inc. · NYSE:SPGI
S&p Global — The McGraw-Hill Companies — Goldman Sachs Communacopia XIX Conference 2010
30 slides from S&p Global's conference presentation, Sep 22, 2010
Slide 1: Goldman Sachs Communacopia XIX Conference
Goldman Sachs Communacopia XIX Conference September 22, 2010 1 Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies Presented at the Communacopia XIX Conference September 22, 2010 2
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 includes certain forward-looking statements about our businesses and our prospects, new products, sales, expenses, tax rates, cash flows, prepublication investments and operating and capital requirem
Slide 3: Why we like MHP's prospects
Why we like MHP’s prospects • Growing globally – Year-over-year revenue growth from abroad has outpaced domestic for some time – 8.8% 5-year CAGR for foreign source revenue – By end of 2010, foreign source sales could represent more than 30% of MHP’s total revenue 5 Why we like MHP’s prospects • Gro
Slide 4: Why we like MHP's prospects: balance sheet and liquidity
Why we like MHP’s prospects • Balance sheet remains strong – Net debt at end of first half of 2010 was $53 million 7 Why we like MHP’s prospects • Liquidity is not an issue – Debt is almost entirely long-term – No major debt repayment due until 2012 • Majority not due until 2017 – Recently renewed a
Slide 5: Why we like MHP's prospects
Why we like MHP’s prospects • Free cash flow after dividends is improving – Expect free cash flow after dividends in range of $600 million to $650 million 9 Why we like MHP’s prospects • S&P Credit Market Services has strengthened its credit ratings and its organization, processes and systems • Our
Slide 6: Why we like MHP's prospects
Why we like MHP’s prospects • We still believe our legal risk remains low – 14 motions to dismiss complaints have been granted – 5 more cases have been withdrawn 11 Why we like MHP’s prospects • We are buying back shares in the third quarter – In 2Q 2010, repurchased 6.5 million shares at a cost of
Slide 7: 2010 EPS guidance; Financial Services
Why we like MHP’s prospects • We are reaffirming 2010 EPS guidance – Expect to finish at the low end of $2.55 to $2.65 range 13 Financial Services 14
Slide 8: Next several years in global financial markets look very promising
Next several years in global financial markets look very promising • Banks’ capacity is limited in some of the high-growth markets • Banks are deleveraging • Some nations are encouraging development of local bond markets – Shift in financing will make accessing the public debt markets more important
Slide 9: Global financial markets outlook; Capital IQ expansion
Next several years in global financial markets look very promising • India will continue to be a key driver for S&P • CRISIL revenue has more than quadrupled since we gained majority control in 2005 • We expect Europe to grow • Continue to search for right position in the still nascent Chinese marke
Slide 10: Capital IQ expanding in global markets
Capital IQ is continuing its expansion in global markets • Capital IQ now offers core data for the buy side’s workflow – Earnings models – Estimates – Fixed income research 19 Capital IQ is continuing its expansion in global markets Content Sell Side Sell Side Fixed Research Analyst Income Models Re
Slide 11: Global client base for TheMarkets.com
Global client base for The Markets.com • 75% of the 50 largest U.S. asset managers • 80% of the 50 largest European asset managers • 75% of the top 100 global hedge funds • Renewal rates have consistently topped 90% 21 S&P indices is increasing its global focus • Through August, S&P has introduced 5
Slide 12: S&P indices increasing its global focus
S&P indices is increasing its global focus • S&P licensed the National Stock Exchange of India to create and list Indian Rupee-denominated futures contracts based on the S&P 500 • S&P licensed seven major European ETF sponsors to create and list S&P 500 ETFs on major European exchanges for real-time
Slide 13: Another first for S&P indices
Another first for S&P indices • S&P recognized opportunity created by Dodd-Frank Act’s requirement for transparency and reduced counterparty risk • In landmark agreement, S&P licensed the Options Clearing Corporation to handle trades of over-the-counter S&P index- based options contracts and to rece
Slide 14: 3Q issuance: 2010 vs. 2009
3Q issuance: 2010 vs. 2009 U.S. RMBS U.S. CMBS 25 5 (in billions of US$) (in billions of US$) 20 4 15 3 9.1 10 2 1.4 1.4 1.4 4.3 0.9 5 2.5 1 2.1 1.0 0.2 0 0 July Aug Sept July Aug Sept U.S. CDOs U.S. ABS 6 60 50 (in billions of US$) (in billions of US$) 4 40 30 21.3 2 20 17.8 1.1 12.3 9.0 9.8 0.4 10
Slide 15: S&P is improving the value of ratings to investors
S&P is improving the value of ratings to investors • Taken important steps to: – Improve ratings stability – Add value to ratings through more analysis and features, including “what if” scenarios – Increase comparability and consistency of ratings across all markets and asset classes – Make ratings
Slide 16: How S&P will meet new regulatory requirements
How S&P will meet new regulatory requirements • S&P has continually strengthened its QCCR framework within the four areas that operate independently of the ratings practice: – Quality, Criteria, Compliance, Risk • Investment in QCCR has created a foundation to implement control and compliance functi
Slide 17: How S&P is responding to new SEC rules
How S&P is responding to new SEC rules • SEC to eliminate rating agencies’ exemption from Regulation Fair Disclosure (Reg FD) – After exemption is removed, S&P believes issuers will be able to share confidential information as part of the ratings process – Confidentiality provisions are part of S&P’
Slide 18: Latest from the litigation front
Latest from the litigation front • Our assessment of low legal risk facing the Corporation has not changed: – Many cases we are facing have been engaged in “motion practice” regarding potential dismissal of claims or a change of venue—typical in early stages of such cases – Abu Dhabi case will proba
Slide 19: McGraw-Hill Education: digital transformation in education
McGraw-Hill Education 37 Our vision of the digital transformation in education • The digital transformation of education is not about textbooks or e-books • What is transforming: – Creating more effective solutions – Linking technology, content and distribution to transform quality and utility of co
Slide 20: Digital business model expands the addressable market
Digital business model expands the addressable market • Enables us to offer new products and services that meet the needs of customers more effectively • Improves the workflow of students, instructors, and administrators 39 Technology: An opportunity, not a threat • Expanding the addressable market
Slide 21: Expanding addressable market by helping college students master coursework
Expanding addressable market by helping college students master their coursework 41 Growing digital opportunities in higher education • McGraw-Hill Connect™ [audio only during webcast; video not supported] 42
Slide 22: Our growing digital initiatives
Our growing digital initiatives • McGraw-Hill Connect™ is an important reason why our digital business in higher education continues to grow at a double- digit rate • Digital products and services now account for approximately 15% of our revenue in our higher education and professional markets 43 Pa
Slide 23: Partnering to link technology, content and distribution
Partnering to link technology, content and distribution to expand our reach • We will be among the first publishers to offer interactive e-textbooks on the iPad – Students will have the choice of buying the full text or individual chapters – Titles take advantage of iPad’s color, video, and touch sc
Slide 24: More digital content for the el-hi market
More digital content for the el-hi market • As bandwidth increases in K–12 market, we will have more opportunities to provide real-time assessment and individualized instruction • Digital components are integrated into virtually every program we produce – We offer multimedia packages – Mix of compon
Slide 25: Outlook for elementary-high school market
Outlook for elementary-high school market • U.S. el-hi market forecast unchanged – Expect market growth of 4% to 6% – Some indications that growth could be higher • El-hi industry sales up 13.5% through July, according to latest AAP reports – Nearly 70% increase in new state adoption sales is key to
Slide 26: Framework for growth at Information & Media
Information & Media 51 Framework for growth at Information & Media • Strengthening segment’s technology infrastructure with common capabilities to reshape its business • Delivering premium services that transform data into valuable insights • Digital products and services account for more than 60% o
Slide 27: Framework for growth at Information & Media
Framework for growth at Information & Media • Digital communities – Cementing relationships with customers and extending our brands by using Twitter, Facebook, LinkedIn and YouTube • Modular content – McGraw-Hill Construction now provides project data in a variety of pay-as-you-go options • User-cen
Slide 28: Creating valuable industry benchmarks
Creating valuable industry benchmarks • In 2010, Platts has launched 10 new price assessments – Ranging from thermal coal prices for India… – to liquid natural gas price points for Australia, India, and the Middle East 55 Outlook for Information & Media • Segment’s progress has been masked by deteri
Slide 29: Outlook for Information & Media
Outlook for Information & Media • Transforming the business through technology • Digital products and services produce more than 60% of Business-to-Business Group’s revenue • Digital growth and sale of BusinessWeek will benefit the operating margin 57 The McGraw-Hill Companies • Growing globally • G
Slide 30: Goldman Sachs Communacopia XIX Conference
Goldman Sachs Communacopia XIX Conference September 22, 2010 59
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