S&p Global Inc. · NYSE:SPGI

S&p Global — The McGraw-Hill Companies — Q3 2012 Earnings Presentation

24 slides from S&p Global's earnings presentation, Nov 2, 2012

1. Slide 1: 3Q 2012 Earnings Call

   3Q 2012 Earnings Call November 2, 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 inf

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 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

3. Slide 3: Q3 2012: Strong EPS Growth

   McGraw-Hill Q3 2012: Strong EPS Growth Growth and Value Plan: Finalizing Sale vs. Spin-off Decision McGraw-Hill Financial: Excellent Quarter McGraw-Hill Education: Challenging Market 4 Strong EPS Growth The McGraw-Hill Companies ($ in millions) 3Q 2012 3Q 2011 Change Revenue – MHF $1,117 $971 +15% R

4. Slide 4: Growth and Value Plan: Closing in on Separation

   McGraw-Hill Q3 2012: Strong EPS Growth Growth and Value Plan: Finalizing Sale vs. Spin-off Decision McGraw-Hill Financial: Excellent Quarter McGraw-Hill Education: Challenging Market 6 Growth and Value Plan: Closing in on Separation  Progress continues toward creating two new companies that will be

5. Slide 5: Growth and Value Plan – Achieving Commitments

   Growth and Value Plan – Achieving Commitments • Cost reductions:  Remain on track for more than $100 million in run-rate cost savings by year-end • Share repurchases:  During the 3rd quarter, 5.9 million shares were repurchased for a total of $295 million at an average price of $50.35 per share •

6. Slide 6: Pro forma McGraw-Hill Financial: Strong Quarterly Results

   Pro forma McGraw-Hill Financial: Strong Quarterly Results McGraw-Hill Financial (pro forma) ($ in millions) 3Q 2012 3Q 2011 Change Revenue $1,117 $971 +15% Adj. Operating Profit $402 $333 +21% Adj. Operating Margin* 36.0% 34.3% +170 bps NOTE: The pro forma results are informational and are not inten

7. Slide 7: Standard & Poor's Ratings Services: Strongest Quarter Since 3Q 2007

   Standard & Poor’s Ratings Services: Strongest Quarter in Since 3Q 2007 Standard & Poor’s Ratings Services ($ in millions) 3Q 2012 3Q 2011 Change Revenue $502 $410 +22%* Adj. Segment Op. Profit $217 $169 +28% Adj. Segment Op. Margin 43.2% 41.3% +190 bps * Excluding revenue from Coalition, which was a

8. Slide 8: Standard & Poor's Ratings Services: Transaction Revenue Soars

   Standard & Poor’s Ratings Services: Transaction Revenue Soars Standard & Poor’s Ratings Services Revenue ($ in millions) 3Q 2012 3Q 2011 Change Non-transaction $287 $279 +3% Transaction $215 $131 +64% ($ in millions) 3Q 2012 3Q 2011 Change International $227 $203 +12% Domestic $275 $207 +33% • Lappi

9. Slide 9: Standard & Poor's Ratings: Continued Progress on Litigation Front

   Standard & Poor’s Ratings: Continued Progress on Litigation Front • Update:  30 cases now dismissed outright  9 dismissals by lower courts have been affirmed by higher courts  10 cases have been voluntarily withdrawn  Several dozen cases remain outstanding  We expect to go to trial in May 2013

10. Slide 10: S&P Capital IQ / S&P Indices: Double-Digit Revenue Growth

    S&P Capital IQ: Key Products Grow Double Digit S&P Capital IQ ($ in millions) 3Q 2012 3Q 2011 Change Revenue $284 $261 +9%* * Excluding CMA, R2 Financial, and QuantHouse, revenue increased 5% 3Q highlights:  Two key products, S&P Capital IQ (within Desktop Solutions) and Global Data Solutions (with

11. Slide 11: S&P Dow Jones Indices Joint Venture

    S&P Dow Jones Indices Joint Venture The joint venture is in effect • Business processes are being and operating streamlined and integrated • CME relationship creating new opportunities CME’s relationship with BM&F BOVESPA yields new opportunity A U.S. dollar denominated S&P 500® Index future settled

12. Slide 12: Derivative Trading Volume Down from Unusually Strong 3Q 2011

    Derivative Trading Volume Down from Unusually Strong 3Q 2011 E-mini futures / VIX level correlation 3.3M E-mini Average Daily Volume (millions) VIX Level • E-mini futures ADV correlated to VIX level 22 • VIX intra-quarter declines resulted in lower volumes for Q3 2012 Commodities & Commercial Market

13. Slide 13: Commodities: Double-Digit Growth

    Commodities: Double-Digit Growth Commodities ($ in millions) 3Q 2012 3Q 2011 Change Revenue $121 $107 +13% 3Q highlights: – Growth in petroleum product subscriptions continued to be the primary growth driver – Bentek Energy® delivered double-digit growth – Revenue from derivatives trading also deliv

14. Slide 14: Commercial: J.D. Power's Growth Offset

    Commercial: J.D. Power’s Growth Offset Commercial ($ in millions) 3Q 2012 3Q 2011 Change Revenue $118 $121 (2%) 3Q highlights:  J.D. Power’s revenue growth was offset by modest declines in remainder of portfolio  J.D. Power’s Power Information Network® (PIN), proprietary research, and automotive c

15. Slide 15: McGraw-Hill Education Challenging Market Environment

    McGraw-Hill Education Challenging Market Environment McGraw-Hill Education ($ in millions) 3Q 2012 3Q 2011 Change Revenue $836 $937 (11%) Adj. Segment Op. Profit $268 $315 (15%) Adj. Segment Op. Margin 32.1% 33.6% (150 bps) 3Q highlights: – As business becomes more subscription based, deferred reven

16. Slide 16: McGraw-Hill Education: School Education Group

    McGraw-Hill Education: School Education Group ($ in millions) 3Q 2012 3Q 2011 Change SEG Revenue $352 $420 (16%) 3Q highlights:  K–12 revenue was down due to weak state funding; 2012 expected to be the lowest funding year in a decade  Revenue decline offset somewhat by tight expense controls  Acc

17. Slide 17: Summary

    McGraw-Hill Education Employees 32 Summary  McGraw-Hill Financial continues to deliver solid top- and bottom-line growth  Separation of McGraw-Hill Education is approaching and the business is becoming a stand-alone company with an appropriate cost structure  McGraw-Hill is delivering on its Grow

18. Slide 18: Excellent MHF Growth in Contrast to Weak Quarter at MHE

    Jack Callahan Executive Vice President and Chief Financial Officer The McGraw-Hill Companies 34 Excellent MHF Growth in Contrast to Weak Quarter at MHE McGraw-Hill Financial (pro forma) ($ in millions) 3Q 2012 3Q 2011 Change Revenue $1,117 $971 +15% Pro forma Op. Profit* $402 $333 +21% Pro forma Op.

19. Slide 19: Limited Growth Overall

    Limited Growth Overall McGraw-Hill (consolidated) ($ in millions) 3Q 2012 3Q 2011 Change Total Revenue $1,953 $1,908 2% Adjusted Expenses* $1,326 $1,301 2% Adjusted Operating Profit $627 $607 +3% Adjusted Operating Margin 32.1% 31.8% 30 bps * Includes corporate expenses 36 Double-Digit EPS Growth as

20. Slide 20: Significant Business Development Impact on S&P Capital IQ

    Significant Business Development Impact on S&P Capital IQ • Accretive to revenue growth • Dilutive to profits due to:  Ongoing investments to develop and integrate technology  Additional real-time exchange information is being sourced and included  Acquisition-related amortization 38 S&P Dow Jone

21. Slide 21: Significant Top-line Growth Driven by Business Development

    Significant Top-line Growth Driven by Business Development Revenue: S&P Dow Jones Joint Venture and S&P Capital IQ ($ in millions) $393 +13% $349 $358 +3% +24% (7%) +6% +9% Note: Joint venture reflects impact of Dow Jones Indices and new licensing agreement with 40 CME Group. S&P Capital IQ acquisit

22. Slide 22: Cash Position of $1.2 Billion and Strong Free Cash Flow

    Cash Position of $1.2 Billion and Strong Free Cash Flow 3Q 2012 3Q 2011 ($ in millions) YTD YTD Cash provided by operating activities $847 $1,038 Investment in prepublication costs (119) (105) Capital expenditures (79) (70) Dividends paid to shareholders (216) (225) Dividends paid to noncontrolling

23. Slide 23: 2012: A Remarkable Year

    2012: A Remarkable Year  Exceeding EPS expectations and increased adjusted diluted EPS guidance to a range of $3.35 to $3.40  Continuing to expand the McGraw-Hill Financial portfolio with “tuck-in” acquisitions and selective partnerships like CME  Positioned to make a decision on sale versus spin

24. Slide 24: Replay Options

    3Q 2012 Earnings Call November 2, 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 December 2, 2012 Domestic: 888-562-3879 Internat

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