S&P Global Inc. · NYSE:SPGI
S&P Global — FY2021 Earnings Presentation
53 slides from S&P Global's earnings presentation, Feb 8, 2022
Slide 1: 4Q and Full-Year 2021 Earnings Conference Call
4Q and Full-Year 2021 Earnings Conference Call Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Chip Merritt Senior Vice President, Investor Relations February 8, 2022
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,” as defined in the Private Securities Litigation Reform Act of 1995. These statements, including statements about COVID-19 and the merger (the “Merger”) between
Slide 3: Disclaimer regarding announcement of S&P Global and IHS Markit merger agreement
Disclaimer regarding announcement of S&P Global and IHS Markit's definitive merger agreement S&P Global announced on March 11, 2021 that its shareholders overwhelmingly voted to approve the Company's proposed transaction with IHS Markit at a special meeting of the Company's shareholders. Approximate
Slide 4: Comparison of adjusted information to U.S. GAAP information
Comparison of EU regulation affecting adjusted information to investors in credit rating U.S. GAAP information agencies This presentation includes adjusted financial measures European Union Regulation 1060/2009 (as amended) that are derived from the Company’s continuing applies to credit rating agen
Slide 5: Doug Peterson
Doug Peterson President and Chief Executive Officer 5
Slide 6: Key 2021 achievements
Key 2021 achievements Delivered very strong 2021 financial results: • 12% organic revenue growth and 17% adjusted diluted EPS growth • Revenue growth and adjusted operating profit margin growth at all four businesses • $3.5 billion in free cash flow, excluding certain items Significant progress on k
Slide 7: Progress on 2021 key strategic initiatives
Progress on 2021 key strategic initiatives • Invested in additional products in China • Expanded Platts and Ratings capabilities in Asia Global • Delivered on the S&P Global Platform initiatives • Augmented Indices solutions to address evolving market needs • Expanded Platts offerings in Ag, shippin
Slide 8: Delivered strong financial results in 2021
Delivered strong financial results in 2021 2021 2020 Change Revenue $8,297 $7,442 +11% Organic revenue $8,289 $7,433 +12% Adjusted operating profit $4,581 $3,967 +15% Adjusted operating profit margin 55.2% 53.3% +190 bps Average diluted shares outstanding 241.8 242.1 (0.4) shares Adjusted diluted EP
Slide 9: Every division delivered revenue and adjusted operating profit growth in 2021
Every division delivered revenue and adjusted operating profit growth in 2021 Full-year 2021 vs. 2020 Market S&P Dow Ratings Intelligence Platts Jones Indices Reported revenue +14% +7% +8% +16% Organic revenue +13% +7% +8% +16% Adjusted operating +17% +13% +9% +17% profit 2021 adjusted 64.2% 34.3% 5
Slide 10: Solid revenue growth and exceptional adjusted operating profit margin expansion continues
Solid revenue growth and exceptional adjusted operating profit margin expansion continues Reported Revenue Adjusted Operating 8% CAGR Profit Margin $10,000 +870 Basis Points $8,297 60% 53.3% 55.2% $8,000 $7,442 48.8% 50.2% 50% 46.5% $6,699 $6,063 $6,258 $6,000 40% 30% $4,000 20% $2,000 10% $0 0% 201
Slide 11: Adjusted diluted EPS nearly doubled over last 4 years
Adjusted diluted EPS nearly doubled over last 4 years Adjusted Diluted Earnings Per Share 19% CAGR $13.70 $14.00 $12.00 $11.69 $10.00 $9.53 $8.50 $8.00 $6.89 $6.00 $4.00 $2.00 $0.00 2017 2018 2019 2020 2021 11
Slide 12: The Company continued to advance its own industry-leading practices in sustainability
The Company continued to advance its own industry-leading practices in sustainability • Issued 10th annual sustainability impact report and 3rd annual TCFD report • Expanded parental leave to 26 weeks and introduced flexible time-off policy with no prescribed maximum in all eligible jurisdictions •
Slide 13: 2021 ESG commercial progress and expanded capabilities
2021 ESG commercial progress and expanded capabilities Reached $98 million of ESG revenue in 2021 Commercial Progress Expanded Capabilities • 59 ESG evaluations • Increased CSA survey participation by 58% to 2,190 companies to date • 43 Green evaluations • Enhanced ESG offerings available • 103 SAM
Slide 14: Launched new ESG offerings and initiatives in 2021
Launched new ESG offerings and initiatives in 2021 • Social & Sustainability Framework Alignment Opinions and Second-Party Opinions for sustainability-linked financings • Climate Credit Analytics: A climate-scenario analysis and credit analytics model suite designed to evaluate the impact of differe
Slide 15: Kensho innovations improved productivity for the Company and our customers
Kensho innovations improved productivity for the Company and our customers • Codex: AI-powered document research platform for information and insight discovery, over 300,000 customer uses to-date • Platts MOC: Kensho AGAVE* price assessments now rolled out across 70% of targeted Platts markets • Ken
Slide 16: Shift into passive investing continues
Shift into passive investing continues Cumulative U.S. Equity Flows (January 2011 - December 2020) $2,000 $1.9 trillion in cumulative flows into passive strategies $1.9 trillion in cumulative flows out of active strategies $-2,000 Indexed Mutual Funds ETFs Active Mutual Funds ($ in billions) Source:
Slide 17: ETF AUM associated with our indices increased 173% over past five years
ETF AUM associated with our indices increased 173% over past five years to $2.8 trillion 22% CAGR Since Year-End 2016 $287 $2,796 $511 $219 $83 $1,998 $332 $58 $1,696 $137 $1,343 $97 $1,306 $183 $1,023 $(134) 2016 2017 2018 2019 2020 2021 ($ in billions) AUM Price Impact Flows Source: Morningstar an
Slide 18: 2021 global issuance increased 9%; 15% including leveraged loans
2021 global issuance* increased 9%; 15% including leveraged loans Global Issuance: 2021 versus 2020 $6,000 (2%) $5,000 2020 2021 $4,000 (Billions) $3,000 $2,000 +85% +18% +98% $1,000 (5%) $0 IG HY U.S. Public Structured LL * Excludes sovereign issuance. Structured finance issuance includes amounts w
Slide 19: 2021 leveraged loan volume soared with percentage rated by S&P Global reaching new heights
2021 leveraged loan volume soared with percentage rated by S&P Global reaching new heights United States Europe $1,000B 100% $200B 100% $800B $160B 75% 75% $600B $120B 50% 50% $400B $80B 25% 25% $200B $40B $0B 0% $0B 0% 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 21 15 16 17 18 15 16 17 18 19 20 21
Slide 20: 2022 Outlook
2022 Outlook S&P Global
Slide 21: Latest global refinancing study shows slight decline in global corporate debt maturities
Latest global refinancing study shows slight decline in global corporate debt* maturities 2021 study totaled $11.3 trillion 2022 study totaled $11.0 trillion Total Global Corporate Global Corporate High- Debt Maturities Yield Debt Maturities $3 $1000 $2.5 $750 $2 $1.5 $500 $1 $250 $0.5 $0 $0 2021 20
Slide 22: Growth in total global corporate debt outstanding
Growth in total global corporate debt outstanding Global Corporate Debt Outstanding $24,000 Average annual increase of ~$1 trillion $22,000 $20,000 $18,000 $16,000 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 ($ in billions) Debt Outstanding Note: Includes bonds, loans, and revolving credit
Slide 23: Global issuance forecast to decrease 2% in 2022
Global issuance forecast to decrease 2% in 2022 with or without International Public Finance $10,000 Forecast $8,000 $6,000 Nonfinancial Financial Services Structured Finance* U.S. Public Finance $4,000 International Public Finance $2,000 $0 2016 2017 2018 2019 2020 2021 2022 ($ in billions) *Exclud
Slide 24: Our economists forecast 2022 global GDP growth of 4.2%
Our economists forecast 2022 global GDP growth of 4.2% ▪ The global economy is in the midst of a robust but uneven rebound from the pandemic ▪ GDP growth in the U.S. and Europe reached multi-decade highs in 2021, with strong momentum to expected continue in 2022. ▪ Inflation has proved more persiste
Slide 25: 2022 economic factors facing the Company
2022 economic factors facing the Company Macro Economic Environment: Bond and Credit Markets: + Healthy economic growth expected + Borrowing costs remain low + Potential corporate capex cycle upturn + Continued strength in M&A activity - Geopolitical uncertainty - Central bank rate increases - Conti
Slide 26: Ewout Steenbergen
Ewout Steenbergen Executive Vice President, Chief Financial Officer 26
Slide 27: Strong revenue growth, margin improvement, and EPS growth in 4Q 2021
Strong revenue growth, adjusted operating profit margin improvement, and EPS growth in 4Q 2021 4Q 2021 4Q 2020 Change Revenue $2,088 $1,867 +12% Adjusted corp unallocated expense $49 $35 +38% Adjusted total expense $1,052 $964 +9% Adjusted operating profit $1,036 $903 +15% Adjusted operating profit
Slide 28: 4Q 2021 expense growth primarily related to strong financial performance
4Q 2021 expense growth primarily related to strong financial performance 4Q 2020 adjusted total expense $964 Elevated incentives from strong 2021 financial performance $33 Sales performance (royalties and commissions) $20 Severance $5 Investments in growth initiatives $15 Professional fees and other
Slide 29: 4Q 2021: Non-GAAP adjustments to pre-tax income
4Q 2021: Non-GAAP adjustments to pre-tax income Pre-tax expense excluded to arrive at adjusted results 4Q 2021 IHS Markit merger-related costs: - Transaction costs (to complete the transaction) ($21) - Integration costs (to operationalize the integration) ($42) - Costs-to-achieve (to enable expense
Slide 30: Strong 4Q revenue growth and adjusted operating profit improvement
Strong 4Q revenue growth and adjusted operating profit improvement 4Q 2021 vs. 4Q 2020 Market S&P Dow Ratings Intelligence Platts Jones Indices Reported revenue +12% +8% +12% +18% Adj operating profit +18% +15% +8% +13% 4Q adj operating profit 57.6% 32.7% 50.1% 65.7% margin 4Q adj operating profit +
Slide 31: 2021 headcount decreased ~1% from operational efficiencies and pre-realized merger synergies
2021 headcount decreased ~1% from operational efficiencies and pre-realized merger synergies Enterprise Ratings* MI Platts SPDJI Corp S1** Total Tech 2018 7,099 11,033 1,323 498 930 276 NA 21,159 2019 7,464 11,383 1,532 626 1,010 524 NA 22,539 2020 7,673 11,348 1,616 642 1,175 541 NA 22,995 2021 7,4
Slide 32: 2021 investment spending in growth initiatives
2021 investment spending in growth initiatives 2021 Investments $80 Global • Domestic ratings in China $25 • Market Intelligence China initiative Innovation and technology • Marketplace commercialization* • Continued Kensho collaboration $55 • Platts benchmark acceleration* • Platts energy transitio
Slide 33: Achieved majority of 2020 multiyear productivity program in 18 months
Achieved majority of 2020 multiyear productivity program in 18 months Target Achieved Real Estate ~$50 ~$50 – Optimization of real estate footprint – Strengthened approach to contract negotiations Procurement ~$30 ~$26 – Improved governance of contract consolidations T&E ~$20 ~$24 – Reduced T&E in p
Slide 34: Cash position temporarily elevated and leverage consistent with current target
Cash position temporarily elevated and leverage consistent with current target 4Q 2021 4Q 2020 Cash and cash equivalents (A) $6,505 $4,122 Long-term debt $4,114 $4,110 Adjusted gross debt to adjusted EBITDA(B) 1.8x 1.9x Gross debt to EBITDA(C) 0.9x 1.0x ($ in millions) (A) Cash and cash equivalents
Slide 35: Free cash flow, excluding certain items, increased $217 million in 2021
Free cash flow, excluding certain items, increased $217 million in 2021 2021 2020 Cash provided by operating activities $3,598 $3,567 Capital expenditures (35) (76) Net distributions to noncontrolling interest holders (227) (194) Free cash flow $3,336 $3,297 IHS Markit merger costs 178 — Free cash f
Slide 36: S&P Dow Jones Indices: Strong growth in revenue and adjusted operating profit
S&P Dow Jones Indices: Strong growth in revenue and adjusted operating profit 4Q 2021 4Q 2020 Change Revenue $303 $257 +18% Adjusted segment operating profit $199 $176 +13% SPGI share of Adj. Seg. Op. Profit* $145 $131 +11% Adjusted segment operating profit 65.7% 68.5% (280) bps margin Trailing four
Slide 37: S&P Dow Jones Indices: Exceptional revenue growth in Asset-Linked Fees and ETDs
S&P Dow Jones Indices: Exceptional revenue growth in Asset-Linked Fees and ETDs Revenue $303 $257 $51 +10% $46 $42 +30% $32 Data & Custom Subscriptions Exchange-Traded Derivatives Asset-Linked Fees $210 +18% $179 4Q 2020 4Q 2021 ($ in millions) 37
Slide 38: S&P Dow Jones Indices: Strong gains in ETD volume at both CBOE and CME
S&P Dow Jones Indices: Strong gains in ETD volume at both CBOE and CME Key Contracts Key Contracts (Average Daily Volume in Thousands) (Average Daily Volume in Thousands) 8,000 1,500 6,000 1,000 4,000 500 2,000 0 0 4Q 2020 4Q 2021 4Q 2020 4Q 2021 S&P 500 Index Options CME Equity Complex VIX Futures
Slide 39: Ratings: Strong revenue growth and margin expansion
Ratings: Strong revenue growth and margin expansion 4Q 2021 4Q 2020 Change Revenue $989 $881 +12% Adjusted segment operating profit $570 $481 +18% Adjusted segment operating profit 57.6% 54.6% +300 bps margin Trailing four-quarters adjusted 64.2% 62.4% +180 bps segment operating profit margin* ($ in
Slide 40: Ratings: Revenue grew in both transaction and non-transaction products
Ratings: Revenue grew in both transaction and non-transaction products 4Q 2021 4Q 2020 Change Non-transaction $485 $453 +7% Transaction $504 $428 +18% ($ in millions) 4Q 2021 HIGHLIGHTS: • Non-transaction revenue increased primarily due to fees associated with CRISIL, new-entity credit ratings, and
Slide 41: Ratings: Corporates and Structured led revenue growth
Ratings: Corporates and Structured led revenue growth Revenue Structured $989 Revenue $881 +14% $124 $122 $109 $60 (11%) $2 $17 $68 $122 +32% $93 $93 $2 $14 $136 +5% $15 CRISIL, Other* Governments $130 Structured $8 Financial Services $57 Corporates $40 $547 +14% $482 $28 $32 ($ in millions) 4Q 2020
Slide 42: Platts: Strong growth during the quarter driven by robust subscription growth
Platts: Strong growth during the quarter driven by robust subscription growth 4Q 2021 4Q 2020 Change Revenue $249 $223 +12% Adjusted segment operating profit $125 $115 +8% Adjusted segment operating profit 50.1% 51.7% (160 bps) margin Trailing four-quarters adjusted 55.1% 54.7% +40 bps segment opera
Slide 43: Platts: Excellent revenue growth in every category
Platts: Excellent revenue growth in every category Revenue $249 $4 +10% $223 $11 $14 +16% $10 $12 $18 $16 +12% $51 +15% $45 Other Shipping Petrochemicals Metals & Agriculture Natural Gas, Power & Renewables Petroleum $151 +8% $140 4Q 2020 4Q 2021 ($ in millions) Details may not sum to total due to r
Slide 44: Market Intelligence: Continued strong revenue growth and margin expansion
Market Intelligence: Continued strong revenue growth and margin expansion 4Q 2021 4Q 2020 Change Revenue $584 $542 +8% Adjusted segment operating profit $191 $166 +15% Adjusted segment operating profit 32.7% 30.7% +200 bps margin Trailing four-quarters adjusted 34.3% 32.4% +190 bps segment operating
Slide 45: Market Intelligence: Solid growth across all categories
Market Intelligence: Solid growth across all categories Revenue $584 $542 $174 +8% $161 $122 +11% Credit Risk Solutions $109 Data Management Solutions Desktop +6% $271 $288 4Q 2020 4Q 2021 ($ in millions) 45
Slide 46: 2022 guidance
2022 guidance The Company will provide 2022 guidance for the combined company after the merger is completed. We continue to expect the merger to close this quarter. 46
Slide 47: Appendix
Appendix S&P Global
Slide 48: Global bond issuance increased 24% from 4Q 2020
Global bond issuance* increased 24% from 4Q 2020 United States* Europe* Asia* 719 746 675 692 818 813 517 504 599 741 717 368 383 548 305 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 31% increase YOY in 4Q 26% increase YOY in 4Q 16% increase YOY in 4Q • Investment-grade
Slide 49: Strong fourth quarter caps unprecedented year for bank loan rating activity
Strong fourth quarter caps unprecedented year for bank loan rating activity Bank Loan Ratings Revenue $577 $600 $550 $500 4Q 4Q $450 4Q $400 3Q $350 $286 $300 3Q $250 3Q 4Q 2Q $200 2Q 3Q 2Q $150 $100 2Q 1Q 1Q 1Q 1Q $50 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (revenue, $ in millions
Slide 50: S&P Dow Jones Indices: Net inflows and price appreciation drove gain in quarter-ending AUM
S&P Dow Jones Indices: Net inflows and price appreciation drove gain in quarter-ending AUM Asset-Linked Fees: • Quarter-ending ETF AUM associated with our indices was $2,796 billion, a 40% increase from 4Q 2020 Quarter Ending ETF AUM $511 $2,796 • 4Q average ETF AUM associated with ---- our indices
Slide 51: Changes in foreign exchange rates had minimal impact on 4Q 2021 adjusted EPS
Changes in foreign exchange rates had minimal impact on 4Q 2021 adjusted EPS S&P Dow Favorable Market Ratings Platts Jones (Unfavorable) Intelligence Indices Revenue ($6) ($1) – – Adj. operating profit $5 $1 – – Adj. EPS $0.02 – – – ($ in millions) Key factors mitigating impact of currency changes –
Slide 52: 4Q and Full-Year 2021 Earnings Conference Call Q&A
4Q and Full-Year 2021 Earnings Conference Call Q&A Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Chip Merritt Senior Vice President, Investor Relations February 8, 2022
Slide 53: 4Q and Full-Year 2021 Earnings Conference Call Replay Options
4Q and Full-Year 2021 Earnings Conference Call REPLAY OPTIONS Doug Peterson President and CEO Internet: Replay available for one year Ewout Steenbergen Go to http://investor.spglobal.com Executive Vice President and CFO Telephone: Replay available through March 8, 2022 Chip Merritt Domestic: 800-839