Moody's Corporation · NYSE:MCO
Moody's — Q4 2015 Earnings Presentation
44 slides from Moody's's earnings presentation, Feb 5, 2016
Slide 1: Fourth Quarter and Full Year 2015 Earnings Call
Fourth Quarter and Full Year 2015 Earnings Call February 5, 2016
Slide 2: Overview
Overview SALLI SCHWARTZ GLOBAL HEAD OF INVESTOR RELATIONS Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 2
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
Slide 4: Agenda
Agenda 1. Fourth Quarter and Full Year 2015 Results Ray McDaniel, President and Chief Executive Officer 2. Financial and Operating Highlights Linda Huber, Executive Vice President and Chief Financial Officer 3. 2016 Outlook Ray McDaniel, President and Chief Executive Officer 4. Q&A Ray McDaniel, Pre
Slide 5: 1. Fourth Quarter and Full Year 2015 Results
1. Fourth Quarter and Full Year 2015 Results RAY MCDANIEL PRESIDENT AND CHIEF EXECUTIVE OFFICER Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 5
Slide 6: Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 Moody’s Corporation » Revenue 1% to $866 million 2% on a constant currency basis » Operating Expense flat at $533 million » Operating Income 3% to $333 million » Adjusted Operating Income 3% to $362 million Fourth Quarter and
Slide 7: Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued)
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) Moody’s Corporation » Operating Margin • 38.5% » Adjusted Operating Margin • 41.8% » GAAP EPS 3% to $1.09 Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 7
Slide 8: Full Year 2015 Performance and Comparison to Full Year 2014
Full Year 2015 Performance and Comparison to Full Year 2014 Moody’s Corporation » Revenue 5% to $3.5 billion 9% on a constant currency basis – MIS 3% to $2.3 billion 8% on a constant currency basis – MA 8% to $1.2 billion 12% on a constant currency basis » Operating Expense 6% to $2.0
Slide 9: Full Year 2015 Performance and Comparison to Full Year 2014 (continued)
Full Year 2015 Performance and Comparison to Full Year 2014 (continued) Moody’s Corporation » Operating Margin • 42.3% » Adjusted Operating Margin • 45.5 % » On a constant currency basis and excluding our 2014 and 2015 acquisitions, operating margin and adjusted operating margin would have increased
Slide 10: 2. Financial and Operating Highlights
2. Financial and Operating Highlights LINDA HUBER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 10
Slide 11: Fourth Quarter 2015 Moody's Corporation Revenue
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 Moody’s Corporation Revenue » Total Global 1% to $866 million 2% on a constant currency basis » US 1% to $481 million » Non-US 4% to $385 million 4% on a constant currency basis • 44% of total revenue » Recurring Revenue • $
Slide 12: MIS Revenue by Geography
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) MIS Revenue by Geography » Total MIS 4% to $545 million flat on a constant currency basis » US 2% to $338 million » Non-US 7% to $206 million 2% on a constant currency basis • 38% of total MIS revenue Fourth Quarte
Slide 13: MIS Revenue by Line of Business
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) MIS Revenue by Line of Business » Corporate Finance: $246 million – Global 7% – Constant currency basis 4% – US 1% – Non-US 20% » Structured Finance: $114 million – Global 4% – Constant currency basis flat – US
Slide 14: MIS Revenue by Line of Business (continued)
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) MIS Revenue by Line of Business » Financial Institutions: $92 million – Global 8% – Constant currency basis 13% – US 7% – Non-US 8% » Public, Project & Infrastructure Finance: $85 million – Global 5% – Constant c
Slide 15: MA Revenue by Geography
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) MA Revenue by Geography » Total MA 3% to $321 million 6% on a constant currency basis » US 6% to $143 million » Non-US 1% to $178 million 6% on a constant currency basis • 56% of total MA revenue Fourth Quarter a
Slide 16: MA Revenue by Line of Business: RD&A
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) MA Revenue by Line of Business » RD&A: $161 million – Global 8% • 50% of total MA revenue – Constant currency basis 11% – US 10% – Non-US 5% 11% on a constant currency basis Fourth Quarter and Full Year 2015 Earn
Slide 17: MA Revenue by Line of Business: ERS
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) MA Revenue by Line of Business » ERS: $122 million – Global 1% – Constant currency basis 4% – US 1% – Non-US 1% – TTM* Revenue 14% – TTM* Sales 11% *Trailing twelve months Fourth Quarter and Full Year 2015 Earn
Slide 18: MA Revenue by Line of Business: Professional Services
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) MA Revenue by Line of Business » Professional Services: $38 million – Global 10% – Constant currency basis 6% – US 7% – Non-US 11% Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 18
Slide 19: Fourth Quarter 2015 Results: Expense, Margin and Tax Rate
Fourth Quarter 2015 Results and Comparison to Fourth Quarter 2014 (continued) Moody’s Corporation » Operating Expense flat at $533 million • Foreign currency translation favorably impacted expense by 3% » Operating Margin • 38.5% » Adjusted Operating Margin • 41.8% » On a constant currency basis and
Slide 20: Capital Allocation
Capital Allocation » On December 15, 2015, Moody’s increased its quarterly dividend by 9% from 34 cents to 37 cents per share of common stock » During 2015, Moody’s returned $272 million to shareholders via dividend payments » During 4Q15, Moody’s repurchased 2.0 million shares at a total cost of $1
Slide 21: Balance Sheet and Free Cash Flow
Balance Sheet and Free Cash Flow » In November 2015, Moody’s issued $300 million of 5.25% senior unsecured notes due 2044 » As of December 31, 2015, Moody’s had: – $3.4 billion of outstanding debt – $1 billion of additional debt capacity available under its revolving credit facility – Cash, cash equ
Slide 22: 3. 2016 Outlook
3. 2016 Outlook RAY MCDANIEL PRESIDENT AND CHIEF EXECUTIVE OFFICER Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 22
Slide 23: MCO Full Year 2016 Financial Outlook
MCO Full Year 2016 Financial Outlook » Moody’s guidance assumes foreign currency translation for British pound of $1.42 to £1 pound and for the euro of $1.09 to €1 euro. For all other currencies, Moody’s assumes end-of-2015 exchange rates. » Revenue mid-single-digit % range » EPS • $4.75 to $4.85
Slide 24: MCO Full Year 2016 Financial Outlook (continued)
MCO Full Year 2016 Financial Outlook (continued) » Free Cash Flow • Approximately $1.1 billion » Share Repurchase • Approximately $1 billion (subject to available cash, market conditions and other ongoing capital allocation decisions) » Capital Expenditures • Approximately $125-$135 million » Deprec
Slide 25: MIS Full Year 2016 Financial Outlook
MIS Full Year 2016 Financial Outlook » Global mid-single-digit % range » U.S. mid-single-digit % range » Non-U.S. mid-single-digit % range » Corporate Finance flat » Structured Finance high-single-digit % range » Public, Project & Infrastructure high-single-digit % range » Financial Instit
Slide 26: MA Full Year 2016 Financial Outlook
MA Full Year 2016 Financial Outlook » Global mid-single-digit % range » U.S. high-single-digit % range » Non-U.S. flat » Research, Data & Analytics mid-single-digit % range » Enterprise Risk Solutions low-single-digit % range » Professional Services low-single-digit % range Fourth Quarter
Slide 27: 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
Slide 28: USD Market: Issuance Views From Investment Banks
USD Market: Issuance Views From Investment Banks Views on this page are from four global “bulge bracket” investment banks as of February 3, 2016. Issuance views represent US dollar issuance for both financial and non-financial bonds and leveraged loans. January 2015 FY 2016E Investment Grade ~$125 b
Slide 29: Replay Details
Replay Details » Available from 3:30pm (Eastern Time) February 5, 2016 until 3:30pm (Eastern Time) March 5, 2016 » Telephone Details: – US +1-888-203-1112 – Non-US +1-719-457-0820 – Passcode 6337202 » Webcast Details: – Go to http://ir.moodys.com – Click on “Events & Presentations” featured on the l
Slide 30: Appendix
Appendix Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 30
Slide 31: Consolidated Statements of Operations (Unaudited)
Consolidated Statements of Operations (Unaudited) Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 31
Slide 32: Supplemental Revenue Information (Unaudited)
Supplemental Revenue Information (Unaudited) Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 32
Slide 33: Non-operating (Expense) Income, Net (Unaudited)
Non-operating (Expense) Income, Net (Unaudited) Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 33
Slide 34: Selected Consolidated Balance Sheet Data (Unaudited)
Selected Consolidated Balance Sheet Data (Unaudited) Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 34
Slide 35: Financial Information by Segment
Financial Information by Segment Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 35
Slide 36: Transaction and Relationship Revenue
Transaction and Relationship Revenue Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 36
Slide 37: Transaction and Relationship Revenue (continued)
Transaction and Relationship Revenue (continued) Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 37
Slide 38: Non-GAAP Diluted Earnings Per Share Attributable to Moody's Common Shareholders
Non-GAAP Diluted Earnings Per Share Attributable to Moody's Common Shareholders Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 38
Slide 39: Adjusted Operating Income and Adjusted Operating Margin
Adjusted Operating Income and Adjusted Operating Margin Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 39
Slide 40: Free Cash Flow
Free Cash Flow Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 40
Slide 41: Constant Currency Measures
Constant Currency Measures Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 41
Slide 42: 2016 Outlook
2016 Outlook Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 42
Slide 43: moodys.com
43 moodys.com Website: http://ir.moodys.com Email: ir@moodys.com Fourth Quarter and Full Year 2015 Earnings Call, February 5, 2016 43
Slide 44: Fourth Quarter and Full Year 2015 Earnings Call, February 5, 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