Msci Inc. · NYSE:MSCI
Msci — Q4 2018 Earnings Presentation
30 slides from Msci's earnings presentation, Jan 31, 2019
Slide 1: MSCI Fourth Quarter and Full-Year 2018 Earnings Presentation
MSCI FOURTH QUARTER AND FULL-YEAR 2018 Earnings Presentation January 31, 2019 © 2019 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.
Slide 2: Forward-Looking Statements
FORWARD – LOOKING STATEMENTS • This earnings presentation contains forward-looking • Other factors that could materially affect actual results, statements within the meaning of the Private Securities levels of activity, performance or achievements can be Litigation Reform Act of 1995, including with
Slide 3: Other Information
OTHER INFORMATION • Percentage changes and totals in this earnings presentation may not sum due to rounding. • Percentage changes refer to the comparable period in 2017, unless otherwise noted. • Gross sales include both recurring subscription and non- recurring sales as reported in Table 6: Sales a
Slide 4: Q4'18 – Financial Results
Q4’18 – FINANCIAL RESULTS1 Exceptional Revenue Growth Outstanding Revenue Growth Subscription Run Rate Growth EPS Growth (Recurring & Asset-Based Fees) Reported / Organic +8% +7% / +10% (9% & 4%) Adjusted EPS Continued Operational Efficiency +14% Adj. EBITDA Margin (Change in bps) / Adj. EBITDA Grow
Slide 5: High Subscription Run Rate Growth
HIGH SUBSCRIPTION RUN RATE GROWTH (US$ in millions) Index Analytics All Other Factor & ESG Other Real Estate Custom & Specialized Equity ESG Market Cap Weighted Multi-Asset Class +11.4% +6.5% +18.6% Organic +0.5% Organic Organic +11.4% $489.5 $491.9 $502.7 +15.2% $40.0 (37.6%) $124.9 $451.0 $40.5 +2
Slide 6: Q4'18 Financial Summary
Q4’18 FINANCIAL SUMMARY (US$ in millions) Operating Revenue Operating Expenses Operating Income Earnings Per Share Cash Generation +8.0% Operating Expenses Adj. EBITDA +8.2% ex FX Adj. EPS Cash from Operations +6.2% +9.2% +10.3% ex FX +13.9% +21.0% +8.1% ex FX +7.6% ex FX ex divestitures1 $361.7 $17
Slide 7: Adjusted EPS Growth
ADJUSTED EPS GROWTH % of Business Growth Capital Activities Tax Benefits FX / Other Total: 68.8% 12.5% 6.2% 12.5% +$0.24 ($0.13) +$0.02 +$0.03 +13.9% $0.03 ($0.13) ($0.02) $0.02 $0.21 $0.04 $0.01 $1.31 $1.15 Q4'17 Adj. EPS Higher Revenue (Investment) / Lower Share Count Net Interest Effective Tax Ra
Slide 8: Segment Results
SEGMENT RESULTS
Slide 9: Q4'18 Segment Results
Q4’18 SEGMENT RESULTS (US$ in millions) Index Analytics Revenue Adjusted EBITDA Revenue Adjusted EBITDA 71.2% +9.7% 30.1% +8.6% Margin ex FX, ex Margin ex FX (240) bps divestitures +358 bps +8.6% YoY YoY $210.4 +3.8% $193.8 3.8% $117.5 $121.9 +5.1% ex FX $81.4 $2.2 $2.2 +17.8% $78.5 $142.7 $149.9 $3
Slide 10: Q4 Operating Metrics
Q4 OPERATING METRICS (US$ in millions) YoY Run Rate Growth YoY Recurring Sales Growth Total RR1 (6.9%) +16.9% (22.9%) (9.5%) (Reported) +4.8% +6.1% +0.5% +15.2% $51.6 $48.0 Sub. RR1 (organic) +10.0% +11.4% +6.5% +18.6% $1,431.3 $25.2 $1,365.7 $21.0 $18.0 $19.4 $8.4 $7.6 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17
Slide 11: Integrated Factor and ESG Run Rate Trends
INTEGRATED FACTOR AND ESG RUN RATE TRENDS (US$ in millions) Factor Index and Analytics Run Rate Growth1 ESG Content and ESG Index Run Rate Growth2 3 Year 3 Year CAGR % CAGR % $226 13% $107 30% $208 $179 $56 40% $83 $27 50% $47 $156 $33 $19 $20 $61 $48 $12 $170 $8 $161 8% $79 25% $135 $147 $65 $49 $4
Slide 12: Index Segment – Asset-Based Fees Detail
INDEX SEGMENT – ASSET-BASED FEES DETAIL (US$ in millions, except AUM in billions and Average BPS) Quarter-End AUM by Market Quarterly Avg. AUM and Avg. BPS1 of ETFs ABF Revenue Exposure2 of ETFs Linked to Linked to MSCI Indexes MSCI Indexes Futures and Options Average AUM US Non-ETF Average BPS EM E
Slide 13: Q4 & FY'18 AUM Drivers: MSCI-Linked Equity ETFs
Q4 & FY’18 AUM DRIVERS: MSCI-LINKED EQUITY ETFS (US$ in billions) Q4’18 Sequential Change in AUM $21.4 $765.5 $3.6 ($22.4) U.S. ($0.3) ($52.8) DM ex. U.S. Cash inflows / (outflows) ($19.5) EM $695.6 ($94.8) Total Q3’18 Ending AUM US Developed Emerging Markets Market Change Q4’18 Ending AUM Markets e
Slide 14: Capital, Liquidity and Guidance
CAPITAL, LIQUIDITY AND GUIDANCE
Slide 15: Capital and Liquidity
CAPITAL AND LIQUIDITY Capital Position (As of 12/31/18) Continued Capital Discipline (US$ in millions) Total Cash $904 • Repurchased $925.0 million of shares at average price of $148.34 as of December 31, 2018, year-to-date. Return of Capital Total Debt1 $2,600 • $0.8 billion remains under board aut
Slide 16: Full Year 2019 Guidance
FULL YEAR 2019 GUIDANCE (US$ in millions) 2018 Actual 2019 Guidance YoY Variance Operating Expenses $747 $772 to $800 3% to 7% Adjusted EBITDA Expenses1 $662 $685 to $705 3% to 6% Interest Expense $133 $144 $11 Effective Tax Rate2 19.4% 11.5% - 14.5% (7.9%) to (4.9%) Net Cash Provided by $613 $600 t
Slide 17: Appendix
APPENDIX
Slide 18: FY'18 – Financial Results
FY’18 – FINANCIAL RESULTS1 Exceptional Revenue Growth Outstanding Revenue Growth Subscription Run Rate Growth EPS Growth (Recurring & Asset-Based Fees) Reported / Organic +13% +7% / +10% (10% & 22%) Adjusted EPS Continued Operational Efficiency +34% Adj. EBITDA Margin (Change in bps) / Adj. EBITDA G
Slide 19: FY'18 Financial Summary
FY’18 FINANCIAL SUMMARY (US$ in millions) Operating Revenue Operating Expenses Operating Income Earnings Per Share Cash Generation +12.5% Operating Expenses Adj. EBITDA +12.4% ex FX Adj. EPS Cash from Operations +7.6% +17.1% +13.3% ex FX +34.4% +51.6% +7.3% ex FX +17.0% ex FX ex divestitures $1,434.
Slide 20: Strong 2018 Operating Metrics
STRONG 2018 OPERATING METRICS (US$ in millions) YoY Run Rate Growth YoY Recurring Sales Growth Total RR1 +10.7% +18.5% +1.3% +16.2% (Reported) +4.8% +6.1% +0.5% +15.2% $163.8 Sub. RR1 $148.0 (organic) +10.0% +11.4% +6.5% +18.6% $1,431.3 $1,365.7 $72.7 $61.3 $64.2 $65.0 $22.5 $26.2 FY'17 FY'18 FY'17
Slide 21: Q1'13 – Q4'18 YoY Run Rate Growth Trend
Q1’13 – Q4’18 YOY RUN RATE GROWTH TREND YoY Run Rate Growth as Reported 46% 38% 37% 38% 34% 28% 25% 21% 21% 21% 21% 18% 15% 17% 16% 14% 13% 13% 14% 10% 11% 14% 10% 10% 12% 10% 10% 9% 8% 9% 12% 13% 8% 8% 6% 8% 7% 8% 10% 7% 9% 8% 7% 8% 12% 6% 8% 5% 7% 9% 11% 11% 9% 9% 5% 2% 7% 8% 8% 8% 7% 6% 6% 6% 7%
Slide 22: Q1'13 – Q4'18 YoY Segment Run Rate Growth Trend
Q1’13 – Q4’18 YOY SEGMENT RUN RATE GROWTH TREND Index 46% 34% 38% 37% 38% 28% 25% 21% 21% 18% 14% 21% 21% 10% 11% 15% 10% 13% 10% 10% 11% 11% 11% 13% 9% 8% 8% 9% 10% 11% 10% 10% 11% 10% 10% 10% 10% 10% 12% 11% 2% 10% 6% 5% 8% (2%) (3%) -2% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15
Slide 23: Reconciliation of Adjusted EBITDA to Net Income
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME Three Months Ended Year Ended Dec. 31, Dec. 31, Sep. 30, Dec. 31, Dec. 31, In thousands 2018 2017 (1) 2018 2018 2017 (1) Index adjusted EBITDA $ 149,930 $ 142,702 $ 154,477 $ 607,853 $ 522,241 Analytics adjusted EBITDA 36,679 31,141 37,046 143,645 125,
Slide 24: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS
RECONCILIATION OF NET INCOME AND DILUTED EPS TO ADJUSTED NET INCOME AND ADJUSTED EPS Three Months Ended Year Ended Dec. 31, Dec. 31, Sep. 30, Dec. 31, Dec. 31, In thousands, except per share data 2018 2017 2018 2018 2017 Net income $ 152,132 $ 64,602 $ 123,832 $ 507,885 $ 303,972 Plus: Amortization
Slide 25: Reconciliation of Adjusted EBITDA Expenses to Operating Expenses
RECONCILIATION OF ADJUSTED EBITDA EXPENSES TO OPERATING EXPENSES Three Months Ended Year Ended Full-Year Dec. 31, Dec. 31, Sep. 30, Dec. 31, Dec. 31, 2019 In thousands 2018 2017 (1) 2018 2018 2017 (1) Outlook(2) Index adjusted EBITDA expenses $ 60,503 $ 51,072 $ 55,717 $ 227,622 $ 196,718 Analytics
Slide 26: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW Three Months Ended Year Ended Full-Year Dec. 31, Dec. 31, Sep. 30, Dec. 31, Dec. 31, 2019 In thousands 2018 2017 2018 2018 2017 Outlook(1) Net cash provided by operating activities $ 173,175 $ 143,153 $ 143,825 $ 612,762 $
Slide 27: Reconciliation of Effective Tax Rate to Adjusted Tax Rate
RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED TAX RATE Three Months Ended Year Ended Dec. 31, Dec. 31, Sep. 30, Dec. 31, Dec. 31, 2018 2017 2018 2018 2017 Effective tax rate 18.77% 49.12% 15.67% 19.37% 34.90% Tax Reform impact on effective tax rate 3.56% (27.18%) —% 1.31% (7.39%) Adjusted tax rat
Slide 28: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES • MSCI has presented supplemental non-GAAP financial measures as part of • We believe operating revenues ex-FX and ex-divestitures are meaningful this earnings presentation. Reconciliations are provided in slides 23-27 measures of the operating performance of MSCI
Slide 29: Use of Operating Metrics
USE OF OPERATING METRICS • MSCI has presented supplemental key operating metrics as part of this 31, 2018, June 30, 2018, and September 30, 2018, and accordingly, we do earnings presentation, including Run Rate, subscription sales and not believe changes to those previously reported cancellation rat
Slide 30: MSCI
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