Morningstar, Inc. · NASDAQ:MORN
Morningstar — Investor Presentation (March 2021)
22 slides from Morningstar's investor presentation, Mar 19, 2021
Slide 1: Investor Presentation Q4 and FY 2020
Investor Presentation Q4 and FY 2020
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations about future events or future financial performance. Forward looking statements by their nature address
Slide 3: Empowering Investor Success Since 1984
Empowering Investor Success Since 1984 We’ve continuously innovated and acquired capabilities to illuminate many aspects of an investor’s portfolio, starting with mutual funds and evolving to include stocks, bonds, private market investments, and ESG factors $1.4bil AAA A AA B CCC BB BBB 8485919297
Slide 4: Morningstar is a Mission-Driven Firm
Morningstar is a Mission-Driven Firm Our mission fuels our strategy, gives meaning to our work, resonates with clients, and strengthens our brand Our values Investors first Great products Great people Uncompromising ethics Entrepreneurial spirit Financial success Our work Proprietary data Forward-lo
Slide 5: Our Strategic Priorities
Our Strategic Priorities Shifting investor needs and expectations, innovative investment approaches and technologies, and a changing political and regulatory environment continue to drive the evolution of the financial services industry. We remain committed to ensuring that the modern investor is em
Slide 6: We Participate in Large, Growing Markets
We Participate in Large, Growing Markets We’ve identified these markets as particularly favorable for longer-term growth Financial Data / Analysis $32bil global spend 5.6% growth YoY Private Capital Markets Data $2.3bil total addressable market 27.8% growth YoY AUM in Managed Accounts $9.3tril total
Slide 7: Integrated ESG Data and Research for All Investors
Integrated ESG Data and Research for All Investors We are aligned across Morningstar to meet investor needs for ESG data, research, ratings, and solutions Professional & Individual Investor Solutions License-based Morningstar DataMorningstar.com PitchBook ResearchMorningstar Direct Sustainalytics As
Slide 8: Key Products / Solutions Drive Outsized Growth for the Firm
Key Products / Solutions Drive Outsized Growth for the Firm We expect these solutions to provide a greater contribution to growth over the long-run Morningstar Data Clients served Asset Managers, Wealth Managers, and Redistributors Morningstar Data Revenue ($mil) 215.1 185.21 Morningstar Direct Reve
Slide 9: Key Products / Solutions Drive Outsized Growth for the Firm (Cont.)
Key Products / Solutions Drive Outsized Growth for the Firm (Cont.) We expect these solutions to provide a greater contribution to growth over the long-run Clients served Investment Management Revenue ($mil) Investment Management Independent Financial Advisors 111.2 118.3 20182020 Morningstar Workpl
Slide 10: Five Year Historical Financial Performance
Five Year Historical Financial Performance We have a track record of delivering strong growth Revenue ($mil) 1 $798.6$911.7 $1,019.9 $1,179.0 $1,389.5 20162017201820192020 $316.7 $236.5 $233.3 $200.2 $193.4 $215.8 $215.2 $180.8 $189.6 $169.8 2016 2017 2018 2019 2020 Free Cash Flow ($mil)1,3 2016 201
Slide 11: 2020 Financial Performance
2020 Financial Performance Our business showed resilience in 2020 20192020 17.9% YoY $1,389.5 $1,179.0 20.9% YoY 13.5% YoY $316.7 $215.2 $233.3 $189.6 $254.4 Revenue Operating IncomeAdjusted Operating Income 1 FCF 1 Adjusted operating income is defined as operating income, excluding intangible amort
Slide 12: Morningstar Investment Highlights
Morningstar Investment Highlights Differentiated Global Brand and Mission Industry-leading Products and Services Focused and Consistent Long-term Growth Strategy Diversification Across Product Portfolio Sizable Recurring Revenue Base Operating Leverage Leads to Strong Cash Flow Balance Sheet Provide
Slide 13: The qualities that set us apart support brand awareness
1 The qualities that set us apart support brand awareness Largest Independent Analyst Research Staff High-Quality Data Goals-Based Investing Design that Simplifies Technology that Enables Workflows Investor Advocacy
Slide 14: Our innovation drives unique IP and capabilities
2 Our innovation drives unique IP and capabilities that differentiate our products and comprehensive solutions Product Differentiating Examples Morningstar Data Pitchbook Morningstar Direct DBRS Morningstar Investment Management Workplace Solutions
Slide 15: We prioritize organic growth initiatives and remain opportunistic with M&A
3 We prioritize organic growth initiatives and remain opportunistic with M&A Organic and total revenue growth Organic Revenue Growth 1Revenue Growth 17.9% 1.2% 15.6% 14.2% 11.9% 3 11.4% 7.6% 8.4% 8.2% 1.7% 2 2 1Organic revenue is considered a non-GAAP measure under SEC regulations and excludes the i
Slide 16: Rationales include mission-driven culture, unique capabilities, and expectations for strong returns
3 Rationales include mission-driven culture, unique capabilities, and expectations for strong returns on investment Morningstar sector thesis Long-term opportunity to improve transparency of the credit ratings industry ESG has become an essential part of long-term investing, which creates a need for
Slide 17: Revenue and geographic diversification provides many avenues for growth
4 Revenue and geographic diversification provides many avenues for growth and profitability FY 2020 Revenues by product areaFY 2020 Revenues by geography Asia 2%Other Workplace Solutions Australia1% Investment Management 8.5% Morningstar Direct 11.4% 6.1% Remainder 29.1% 3% Canada 7% Continental Eur
Slide 18: High license-based renewal rates support revenue predictability
5 High license-based renewal rates support revenue predictability; all categories important to growth and profitability FY 2020 revenues by type1 Transaction-based 17% Asset-based 16% High renewal rates in aggregate… FY 2020 revenue renewal rates for license-based products 96%99%100%100%99% 20162017
Slide 19: High operating leverage leads to strong cash flow conversion
6 Our business model exhibits high operating leverage and relatively stable capex needs which leads to strong cash flow conversion Strong cash flow generation ($mil) $238.7 $150.9 Operating Ca1sh Flow Free cash flow 1 $384.3 $334.4 $314.8 $307.6 $250.1 $254.4 $213.7 $183.5 400 350 300 250 200 150 10
Slide 20: Strong free cash flow and low leverage supports financial flexibility
6 Strong free cash flow and low leverage supports financial flexibility to pursue growth both organically and inorganically Leverage ($mil) $500.0 $450.0 $400.0 $350.0 $449.1 DebtCashNet Debt Cash and Credit Capacity as of Dec 31, 2020 U.S. Cash, $150.9 $300.0 $250.0 $200.0 Revolver Capacity, $350.0
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures
Slide 22: MnRNINGSTAff
MnRNINGSTAff