S&P Global Inc. · NYSE:SPGI
S&P Global — Q1 2022 Earnings Presentation
48 slides from S&P Global's earnings presentation, May 3, 2022
Slide 1: 1Q 2022 Earnings Conference Call
1Q 2022 Earnings Conference Call Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Mark Grant Senior Vice President, Investor Relations May 3, 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- Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in forward-lo
Slide 3: Comparison of adjusted information to U.S. GAAP information
Comparison of adjusted information to U.S. GAAP information This presentation includes adjusted financial measures that are presented on a pro forma The Company’s earnings release dated May 3, 2022 contains exhibits that reconcile the basis as if the merger had closed on January 1, 2021, to include
Slide 4: EU regulation affecting investors in credit rating agencies
EU regulation affecting investors in credit rating agencies European Union Regulation 1060/2009 (as amended) Any person obtaining direct or indirect ownership or applies to credit rating agencies (CRAs) registered in the control of 5% or more or 10% or more of the shares in European Union (“EU”) and
Slide 5: Doug Peterson
Doug Peterson President and Chief Executive Officer 5
Slide 6: Strong execution in first quarter as a combined company
Strong execution in first quarter as a combined company Financial highlights: • Adjusted pro forma revenue increased 2% year-over-year, driven by strong growth across nearly all divisions, partially offset by declines in Ratings transaction revenue • Macroeconomic and geopolitical challenges led to
Slide 7: Completed historic merger with IHS Markit
Completed historic merger with IHS Markit Merger Milestones: • Received final regulatory approvals on February 25, 2022; merger closed on February 28, 2022 • Completed debt recapitalization on April 19, 2022: ~$3.5 billion in debt refinanced with $5.5 billion of new issuance • Aggregate expected net
Slide 8: Financial results demonstrate strong execution and resilience of the combined business
Financial results demonstrate strong execution and resilience of the combined business Adjusted pro forma financials 1Q 2022 1Q 2021 Change Revenue $3,072 $3,022 +1.7% Operating profit $1,388 $1,470 (6%) Operating profit margin 45.2% 48.6% (340 bps) Trailing twelve-month adjusted 47.0% 47.6% (60 bps
Slide 9: Division financial performance
Division financial performance Revenue: +7% y/y Revenue: (15%) y/y Revenue: +14% y/y TTM Margin: 30.1% TTM Margin: 62.1% TTM Margin: 43.4% Revenue: +10% y/y Revenue: +14% y/y Revenue: +7% y/y TTM Margin: 39.2% TTM Margin: 67.8% TTM Margin: 19.6% Financial figures presented pro forma, assuming merger
Slide 10: Global issuance decreased 12% year-over-year, driven by high-yield
Global issuance* decreased 12% year-over-year, driven by high-yield; down 9% ex-BLR United States* Europe* Asia* 1,046 1,015 947 920 776 741 724 687 687 785 575 557 492 398 414 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22 • Investment-grade declined 19% y/y • Investment
Slide 11: Global investment-grade issuance declined 5% year-over-year
Global investment-grade issuance declined 5% year-over-year Investment Grade Issuance $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 Industrials Financial Services (revenue, $ in millions) Sources: Refinitiv, Green St
Slide 12: Combined global high-yield issuance and leveraged loan volume declined 53%
Combined global* high-yield issuance and leveraged loan volume declined 53% against an exceptionally strong 1Q21 comparable High-Yield Issuance and Leveraged Loan Volume $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 High-Yield Is
Slide 13: Customers turn to S&P Global in times of uncertainty and volatility
Customers turn to S&P Global in times of uncertainty and volatility S&P Global is a thought leader and provider of insightful, credible, and actionable content, and the tools and platforms to access that content. 1Q21 1Q22 +36% +60% +14% +61% +15% +84% +600% Visits to ESG Active CIQ/Pro Podcast Visi
Slide 14: Multiple revenue streams thrive in periods of elevated market volatility
Multiple revenue streams thrive in periods of elevated market volatility Revenue from Exchange-Traded Derivatives increased Revenue from Global Trading Services (GTS) increased 22% year-over-year in the first quarter, driven by volume 17% year-over-year, driven by strong volumes in Fuel Oil (SPDJI*)
Slide 15: S&P Global returns to in-person global conferences
S&P Global returns to in-person global conferences, reinforcing our role as the destination of choice for thought leaders in a dynamic macro environment • World’s leading conference for energy markets, geopolitics, and related technology • Attended by more than 5,200 delegates, more than in any prio
Slide 16: Innovation in ESG continues as we mark the 1st anniversary
Innovation in ESG continues as we mark the 1st anniversary of Research ● Evaluations ● Data ● Analytics & Tools ● Benchmarks • ESG revenue growth accelerated to 57% year-over- • Completed 17 ESG Evaluations and year to $46.5M 46 Sustainable Financing Opinions, including 7 Green Transaction evaluatio
Slide 17: 2022 Outlook
2022 Outlook S&P Global
Slide 18: S&P Global Ratings now forecasts a 5% decrease in bond issuance in 2022
S&P Global Ratings now forecasts a 5% decrease in bond issuance in 2022 against a very strong 2021 Global Issuance History and 2022 Forecast 9,000 +25.0% +21.4% 8,000 +18.5% +20.0% 7,000 +15.0% 6,000 +12.1% +10.0% 5,000 +6.7% 4,000 +5.0% +1.4% 3,000 - 2,000 (4.9%) (5.8%) (5.0%) 1,000 0 (10.0%) 2016
Slide 19: Macroeconomic assumptions underlying our financial outlook
Macroeconomic assumptions underlying our financial outlook % Change Y/Y, Initial assumptions (Mar 2022) Current assumptions (May 2022) except Brent Crude Real GDP1 United States +3.9% +3.2% Eurozone +4.4% +3.3% Global +4.2% +3.6% CPI1 +3.9% +5.8% Brent Crude average $/bbl2 $75 $110 Global Debt Issua
Slide 20: Continued commitment to 2022 Strategic Initiatives Programs
Continued commitment to 2022 Strategic Initiatives Programs Strategic Organic Investment Select Areas of Investment >$130M Sustainable1 Energy Transition 2022; Recurring Thematic and Factor Indices R&D Capabilities Strategic investments that solidify the foundational China capabilities and drive tra
Slide 21: Ewout Steenbergen
Ewout Steenbergen Executive Vice President, Chief Financial Officer 21
Slide 22: Resilient business and execution drive revenue growth; expense growth temporarily elevated
Resilient business and execution drive revenue growth; expense growth temporarily elevated Adjusted pro forma financials 1Q22 1Q21 Change Revenue $3,072 $3,022 +1.7% Corporate unallocated expense $21 $43 (51%) Total expense $1,684 $1,552 +8% Operating profit $1,388 $1,470 (6%) Operating margin 45.2%
Slide 23: 1Q 2022: Non-GAAP adjustments
1Q 2022: Non-GAAP adjustments Pre-tax items excluded to arrive at adjusted pro forma results 1Q 2022 IHS Markit merger-related costs: - Transaction costs (to complete the transaction) $281 - Integration costs (to operationalize the transaction) $58 - Costs-to-achieve (to enable cost and revenue syne
Slide 24: Step-up impact and growth initiatives driving year-over-year growth in expenses
Step-up impact and growth initiatives driving the majority of year-over- year growth in adjusted pro forma expenses 1,684 ($ in millions) 29 15 42 28 1,552 10 8 2021 T&E Advertising Growth Initiatives Step-up Cloud Other 2022 Impact • T&E increase due to limited resumption of travel • Advertising pr
Slide 25: Adjusted pro forma free cash flow, excluding certain items, approximately $700M
Adjusted pro forma free cash flow, excluding certain items is approximately $700M for 1Q 2022 Adjusted pro forma financials ($ in millions) 1Q 2022 Cash provided by operating activities1 $207 Capital expenditures (16) Net distributions to non-controlling interest holders (55) Free cash flow $136 Con
Slide 26: Cash position and leverage temporarily elevated as of 1Q 2022
Cash position and leverage temporarily elevated as of 1Q 2022 1Q 2022 Cash and cash equivalents (a) $4,407 Short- and long-term debt1 $11,392 Adjusted gross debt to adjusted EBITDA (b) 2.57x Gross debt to EBITDA (c) 1.88x ($ in millions) (a) Cash and cash equivalents includes restricted cash (b) Adj
Slide 27: Cash activity and balances from 4Q 2021 through 1Q 2022
Cash activity and balances from 4Q 2021 through 1Q 2022 ($ in billions) 2.3 2.6 7.0 6.8 0.7 0.2 0.3 0.5 4.4 4Q 2021 Free Cash Net M&A Cash Net Debt Share Contribution Integration Other 1Q 2022 Cash & Cash Flow Received1 Proceeds2 Repurchases to Foundation Related Cash & Cash Equivalents Generation E
Slide 28: Pro forma gross debt activity and balances
Pro forma gross debt activity and balances from 4Q 2021 through 1Q 2022 and April 2022 ($ in millions) 3.0 5.5 11.4 0.6 10.8 8.8 4Q 2021 Gross Debt Debt Issuance Early Tender 1Q 2022 Gross Debt Final Redemption April 2022 Debt Payment Debt Payment Gross Debt Weighted Average Weighted Average Weighte
Slide 29: On track to achieve merger-related revenue and cost synergy targets
We remain on track to achieve our merger-related revenue and cost synergy targets, with significant progress in 1Q 2022 Previous guidance and outlook 1Q 2022 cumulative progress1 (March 1, 2022) ~$600M ~$135M Run-rate Cost Synergies ~80% achievement by 2023 ~$23M achieved in 1Q ~$350M <$1M Revenue S
Slide 30: Market Intelligence: Continued growth driven by strong market demand
Market Intelligence: Continued growth driven by strong market demand for differentiated data and products Adjusted pro forma 1Q results* 1Q 2022 1Q 2021 Change Revenue $1,019 $951 +7% Segment operating profit $295 $282 +5% Segment operating margin 29.0% 29.6% (60 bps) Trailing twelve-month segment o
Slide 31: Market Intelligence adjusted pro forma revenue increased 7%
Market Intelligence adjusted pro forma revenue increased 7% year-over-year, with positive growth in all categories, and 12% growth in D&A Solutions Revenue • Credit and Risk Solutions benefited from solid $1,019 $951 commercial execution and strong performance $179 +8% of Financial Risk Analytics $1
Slide 32: Ratings: Challenging economic and geopolitical climate pressures transaction revenue
Ratings: Challenging economic and geopolitical climate pressures transaction revenue against a high comp Adjusted 1Q results 1Q 2022 1Q 2021 Change Revenue $868 $1,017 (15%) Segment operating profit $513 $685 (25%) Segment operating margin 59.1% 67.3% (820 bps) Trailing twelve-month segment operatin
Slide 33: Ratings: Transaction revenue decreased from significant issuance decline
Ratings: Transaction revenue decreased from significant issuance decline, partially offset by non-transaction growth Adjusted 1Q results 1Q 2022 1Q 2021 Change Transaction $404 $582 (31%) Non-transaction $464 $435 +7% ($ in millions) 1Q 2022 Highlights: • Transaction revenue declined 31% year-over-y
Slide 34: Ratings negatively impacted by unfavorable macro conditions
Ratings negatively impacted by unfavorable macro conditions, especially in Corporates and Structured Finance; partially offset by CRISIL Revenue Structured Revenue $1,017 $101 $100 $7 $97 $89 $868 $7 $72 $6 $101 $109 +12% $80 $12 $8 $64 -11% Other $13 CRISIL, Other* $141 $89 -12% CMBS $60 Government
Slide 35: Commodity Insights: Revenue acceleration driven by subscription growth and conferences
Commodity Insights: Revenue acceleration driven by strong subscription growth and record conference attendance Adjusted pro forma 1Q results* 1Q 2022 1Q 2021 Change Revenue $466 $410 +14% Segment operating profit $200 $185 +8% Segment operating margin 43.0% 45.1% (210 bps) Trailing twelve-month segm
Slide 36: Commodity Insights pro forma revenue increased 14% over 1Q21
Commodity Insights pro forma revenue increased 14% over 1Q21; ~8% ex- CERAWeek Revenue • Advisory and Transactional, which includes the Conferences business, increased 70%, driven $466 by CERAWeek and World Petrochemical Advisory and Transactional $410 $75 +70% Conferences and continued strength in
Slide 37: Mobility: Continued growth driven by increased product penetration
Mobility: Continued growth driven by increased product penetration despite challenging market conditions Adjusted pro forma 1Q results* 1Q 2022 1Q 2021 Change Revenue $324 $295 +10% Segment operating profit $122 $114 +8% Segment operating margin 37.8% 38.6% (80 bps) Trailing twelve-month segment ope
Slide 38: Mobility driven by double-digit growth in Dealer and Financial revenue
Mobility driven by double-digit growth in Dealer and Financial revenue as supply chain impacts continue to drive demand for automotive data Revenue $324 • Financials driven by strength in insurance Financials and $295 underwriting and claims $56 +12% Other $50 • Manufacturing growth driven by contin
Slide 39: S&P Dow Jones Indices: Strong growth in revenue and segment operating profit
S&P Dow Jones Indices: Strong growth in revenue and adjusted segment operating profit Adjusted pro forma 1Q results* 1Q 2022 1Q 2021 Change Revenue $339 $297 +14% Segment operating profit $235 $202 +16% Segment operating margin 69.3% 68.0% +130 bps Trailing twelve-month segment operating margin 67.8
Slide 40: S&P Dow Jones Indices: 14% revenue growth driven by higher ETF AUM
S&P Dow Jones Indices: 14% revenue growth driven by higher ETF and Mutual Fund AUM, and strong volumes for ETD products Revenue $339 • Data & Custom Subscriptions growth driven by $297 Data & Custom $66 +4% new business activities increasing end of day Subscriptions $63 (EOD) ACV $50 +22% • Exchange
Slide 41: S&P Dow Jones Indices: Net inflows and price movements drove revenue growth
S&P Dow Jones Indices: Net inflows and price movements drove strong revenue growth ETF AUM: 1Q21 - 1Q22 Asset-Linked Fees: • Quarter-ending ETF AUM associated with our $244 $2,892 indices was $2,892 billion, up 22% compared to $286 1Q2021 $2,363 • 1Q average ETF AUM associated with our indices incre
Slide 42: Engineering Solutions: Growth in subscription and non-subscription revenue
Engineering Solutions: Growth in subscription and non- subscription revenue Adjusted pro forma 1Q results* 1Q 2022 1Q 2021 Change Revenue $98 $92 +7% Segment operating profit $18 $15 +17% Segment operating margin 18.3% 16.7% +160 bps Trailing twelve-month segment operating margin 19.6% 20.8% (115 bp
Slide 43: Engineering Solutions: Positive revenue growth in both product types
Engineering Solutions: Positive revenue growth in both subscription and non- subscription products Revenue $98 $92 +60% • Non-subscription revenue increased 60% year-over-year primarily on continued revenue from the BPVC (released in Aug 2021) • Subscription revenue increased 3% Non-Subscription Sub
Slide 44: Updated 2022 GAAP guidance
S&P Global - Internal Use Only Updated 2022 GAAP guidance Previous GAAP New GAAP Revenue Over 40% increase Over 40% increase Corporate Unallocated expense $675 – $685 million $835 – $845 million Operating profit margin 53.5% – 54.5% 50.0% – 51.0% Interest expense, net $465 – $475 million $430 – $440
Slide 45: Updated 2022 adjusted pro forma guidance
S&P Global - Internal Use Only Updated 2022 adjusted pro forma guidance Prior 1 Current 1 Revenue Mid-single-digit increase Low single-digit increase Corporate Unallocated expense $115 – $125 million $85 – $95 million Deal-related amortization $1.01 – $1.02 billion $1.01 – $1.02 billion Approximatel
Slide 46: 2022 division outlook
2022 division outlook 2022 Adjusted Pro Forma 2022 Adjusted Pro Forma Division Revenue Growth Margin Outlook Market Intelligence Mid- to high single-digit Low to mid-30s Low to mid-single-digit Ratings Low to Mid-60s decrease Commodity Insights Mid-single-digit Mid- to high 40s Mobility High single-
Slide 47: 1Q 2022 Earnings Call | Q&A
1Q 2022 Earnings Call | Q&A Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Mark Grant Senior Vice President, Investor Relations May 3, 2022 47
Slide 48: Earnings Call 1Q 2022
Earnings Call 1Q 2022 Doug Peterson REPLAY OPTIONS President and CEO Ewout Steenbergen Internet: Replay available for one year Executive Vice President and CFO Go to http://investor.spglobal.com Mark Grant Senior Vice President, Investor Relations Telephone: Replay available through June 2, 2022 Dom