Slide 1: Investor Presentation 1Q 2017
Investor Presentation 1Q 2017 May 10, 2017
Slide 2: 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. The forward-looking statements in this presentation are made as
Slide 3: Table of Contents
Table of Contents 1. Financial Overview 2. Capital Markets Overview 3. Moody’s Investors Service (MIS) 4. Moody’s Analytics (MA) 5. Conclusion 6. Appendix May 10, 2017 3
Slide 4: Moody's Mission: To be the World's Most Respected Authority
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Mission: To be the World’s Most Respected Authority Serving Risk-Sensitive Financial Markets Risk Understanding Risk Understanding Risk Understanding Risk Risk
Slide 5: Financial Overview
1 Financial Overview May 10, 2017 5
Slide 6: Overview of Moody's Corporation
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Overview of Moody’s Corporation1 » Leading global provider of credit rating opinions, insight and tools for financial risk measurement and management » TTM 1Q17 revenu
Slide 7: Revenue is Diversified by Business, Geography and Type
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Revenue is Diversified by Business, Geography and Type TTM 1Q17 Revenue by Business TTM 1Q17 Revenue by Geography MIS MA U.S. Non-U.S. Public, Project & MIS Other Infr
Slide 8: Financial Performance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Financial Performance Revenue EPS2 $5.15 to Mid-single- $5.50 $5.303 $5.0 digit $5.00 % growth $4.0 $4.50 $ Billions $3.0 $4.00 $3.50 $4.81 $2.0 $4.60 $3.00 $4.21 $3.6
Slide 9: Long-Term Growth Opportunities
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Long-Term Growth Opportunities Three Levers to Achieve EPS Growth Note: Revenue and EPS long-term growth opportunities are on average over time. 1 Assumes no material
Slide 10: Actions to Actively Manage Expense Growth
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix All Areas of the Company Undertaking Actions to Actively Manage Expense Growth Moody’s Investors Service Moody’s Analytics Moody’s Shared Services » Revised organizati
Slide 11: Disciplined Approach to Capital Allocation
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s has a Disciplined Approach to Capital Allocation Investing in Growth Opportunities Return of Capital Reinvestment Acquisitions Dividends Share Repurchases » In
Slide 12: Full Year 2017 Guidance as of May 5, 2017
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Full Year 2017 Guidance as of May 5, 2017 » Revenue: Increase in the mid-single-digit % range » Operating Expense: Decrease in the 25% - 30% range » Adjusted Operating
Slide 13: Capital Markets Overview
2 Capital Markets Overview May 10, 2017 13
Slide 14: Rising Rates Have Not Had a Significant Impact on Revenue
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Historically, Rising Rates Have not had a Significant Impact on Moody’s Revenue MCO Revenue and Interest Rates MIS Revenue MA Revenue MCO Revenue 10-yr U.S. Treasury Y
Slide 15: Debt Leverage Up; Interest Coverage Remains Reasonable
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Debt Leverage up in North America and Europe; Interest Coverage Remains Reasonable Credit Metrics: North American Speculative Grade Companies 6.0x 5.1x 5.2x 4.8x 4.9x
Slide 16: Global Default Rates Remain Under Historic Average
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Global Default Rates Remain Under Historic Average Corporate Default Rate Forecast by Industry1 Default Rates for Corporate Rated Issuance3 Global U.S. Europe Industry
Slide 17: Over $3.3 Trillion of Refunding Needs
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix North America and EMEA Non-Financial Corporates Have Over $3.3 Trillion of Refunding Needs1 Debt Maturities: North America Moody’s-Rated Corporate Bonds and Loans $300
Slide 18: Debt Refinancing and M&A Most Frequent Uses of Proceeds
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Debt Refinancing and M&A are Most Frequently Stated Uses of Proceeds Uses of Funds from USD High Yield Bonds and Bank Loans1 Debt Refinancing M&A Capital Spending Shar
Slide 19: Disintermediation of Credit is an Ongoing Trend
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Disintermediation of Credit is an Ongoing Trend in the Global Capital Markets European Non-Financial Corporate U.S. Non-Financial Corporate Bonds vs. Bank Loans Outsta
Slide 20: Rising Rates Supporting Leveraged Loan Activity
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Rising Rates are Supporting Leveraged Loan Activity Moody’s Rated U.S. Corporate Speculative-Grade Bank Loans1 $600 $ Billions $400 $200 $0 2009 2010 2011 2012 2013 20
Slide 21: Disintermediation Drives Global New Rating Mandates
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Disintermediation is a Key Driver of Moody’s Global New Rating Mandates Global New Rating Mandates1 EMEA United States Rest of World 1,200 1,026 990 854 # of New Manda
Slide 22: Moody's Investors Service
3 Moody’s Investors Service May 10, 2017 22
Slide 23: A Leading Provider of Credit Ratings, Research and Risk Analysis
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Investors Service: A Leading Provider of Credit Ratings, Research and Risk Analysis Proven rating accuracy Focus on research and deeply experienced leadership
Slide 24: Illustrative Value of a Moody's Rating
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Illustrative Value of a Moody’s Rating Example: 10 year $500 million corporate bond Unrated Rated by Moody’s $500,000,000 Bond $500,000,000 x 4.3% Interest rate x 4.0%
Slide 25: Moody's Continues to Invest in Key International Markets
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Continues to Invest in Key International Markets Emerging Markets Rated Corporate Bond Issuance1 Americas $350 $300 » 2015: Acquired 100% of Equilibrium $250 $
Slide 26: Moody's Investors Service Financial Profile
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Investors Service Financial Profile TTM 1Q 2017 Revenue: $2.5 billion » 29% recurring revenue Recurring Transaction U.S. Non-U.S. MIS Other 1% Public, 37% Corp
Slide 27: Moody's Analytics
4 Moody’s Analytics May 10, 2017 27
Slide 28: Moody's Analytics Provides Essential Insight
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics Provides Essential Insight Serving Global Financial Markets Research Data & Analytics Enterprise Risk Solutions Professional Services » MIS research
Slide 29: Moody's Analytics Financial Profile
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics Financial Profile TTM 1Q 2017 Revenue: $1.2 billion Recurring Transaction U.S. Non-U.S. » > 95% recurring revenue » 95% retention rate 25% Research,
Slide 30: Moody's Analytics has Multiple Platforms for Growth
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics has Multiple Platforms for Growth Added ~$700 Million in Revenue in 9 Years $1,400 2016 Revenue and 2008 – 2016 CAGR ~65% organic $1,200 Professional
Slide 31: RD&A: Subscription Growth Drivers
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix RD&A: Subscription Growth Driven by Retention, Upgrades and Pricing & New Sales Subscription Sales Growth Reported Total (constant currency) Revenue Growth Full Year 2
Slide 32: ERS Focus on Product Sales
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix ERS Continues to Focus on Product Sales and is De-emphasizing Lower Margin Services Sales ERS: TTM Revenue Services Products 1 $350 $300 $250 $200 $150 $100 $50 $0 ERS
Slide 33: Professional Services: Extending the Brand Into New Markets
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Professional Services: Extending the Brand Into New Markets and Deepening Customer Relationships Knowledge process Certificates, designations Financial services outsou
Slide 34: Conclusion
5 Conclusion Moopy’s May 10,2017 34
Slide 35: Why Invest in Moody's?
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Why Invest in Moody’s? » We strive to be the world’s most respected authority serving risk-sensitive financial markets » We have had strong revenue and earnings growth
Slide 36: Moody's Awards
Moody's Awards Moody’s is the proud recipient of over 20 awards from publications around the world. Spanning both Moody's Investors Service and Moody's Analytics, this recognition helps expand Moody's position as a leader in the global capital markets and reflects the hard work and contributions of
Slide 37: Appendix
Appendix Moopy’s May 10, 2017 37
Slide 38: Corporate Finance: Revenue and Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Corporate Finance: Revenue and Issuance Historical Revenue1 Mix: By Quarter Global Rated Non-Financial Bonds and $350 Speculative Grade Bank Loans (Quarterly)3 $800 Is
Slide 39: Corporate Finance: Revenue Diversification
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Corporate Finance: Revenue Diversification Revenue1 Distribution: Geography Revenue1 Distribution: Recurring vs. Transaction 100% 100% 26% 27% 30% 31% 29% 30% 32% 32%
Slide 40: Structured Finance: Revenue and Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Structured Finance: Revenue and Issuance Historical Revenue1 Mix: By Quarter Global Rated Structured Finance $140 (Quarterly)2 $1 $120 $1 $250 $0 $0 $1 $42 Revenue $ M
Slide 41: Structured Finance: Revenue Diversification
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Structured Finance: Revenue Diversification Revenue1 Distribution: Geography Revenue1 Distribution: Recurring vs. Transaction 100% 100% 38% 36% 32% 38% 80% 80% 42% 40%
Slide 42: Financial Institutions: Revenue and Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Financial Institutions: Revenue and Issuance Global Rated Financial Bonds Historical Revenue1 Mix: By Quarter (Quarterly)2 $120 $3 $500 Issuance $ Billions $3 $5 $44 $
Slide 43: Financial Institutions: Revenue Diversification
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Financial Institutions: Revenue Diversification Revenue1 Distribution: Geography Revenue1 Distribution: Recurring vs. Transaction 100% 100% 80% 41% 42% 40% 43% 42% 45%
Slide 44: Public, Project and Infrastructure: Revenue and Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Public, Project and Infrastructure: Revenue and Issuance Historical Revenue1 Mix: By Quarter Long-Term Rated U.S. Municipal Bond and Global Rated $120 $250 $0 Project
Slide 45: Public, Project and Infrastructure: Revenue Diversification
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Public, Project and Infrastructure: Revenue Diversification Revenue1 Distribution: Geography Revenue1 Distribution: Recurring vs. Transaction 100% 100% 80% 80% 39% 40%
Slide 46: Moody's Analytics: Financial Overview
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Analytics: Financial Overview $400 Historical Revenue1 Mix: By Quarter Historical Revenue1 Mix: By Year $1,400 $350 $1,200 $37 $147 Revenue $ Millions $300 $38
Slide 47: Corporate Speculative Grade Credit Cycle Gauge
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Corporate Speculative Grade Credit Cycle Gauge North America Europe Latest 1-Year Long-Term Record Latest 1-Year Long-Term Record 1 2 Metric Ago Average Worst
Slide 48: Revenue Growth by Quarter: MCO, MIS and MA
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Revenue Growth by Quarter: MCO, MIS and MA Year-over-Year % Change MIS MA MCO 50% U.S. debt ceiling standoff Fears Euro debt crisis may Oil prices crash Euro / Greece
Slide 49: MIS Revenue vs. Rated Issuance
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix MIS Revenue vs. Rated Issuance1 Year-over-Year 2012-2016 2012 2013 2014 2015 2016 1Q 2017 Percent Change CAGR Issuance 16% 0% 6% -6% 2% 3% 26% Revenue 20% 9% 9% 3% 2%
Slide 50: Moody's is a Seasoned Capital Markets Issuer
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s is a Seasoned Capital Markets Issuer Public Bond Offerings » 2010: $500m 10yr bond » 2015: €500m 12yr bond » 2012: $500m 10yr bond $300m 30yr bond3 » 2013: $50
Slide 51: Moody's Global Presence
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Moody’s Global Presence 2017 3,411 7,247 10,658 U.S. employees non-U.S. employees total employees1 2016 3,441 7,311 10,752 U.S. employees non-U.S. employees total empl
Slide 52: Reconciliation of Adjusted Financial Measures to GAAP
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Reconciliation of Adjusted Financial Measures to GAAP Adjusted Operating Income and Adjusted Operating Margin Reconciliation TTM 1Q (in $ millions) 2012 2013 2014 2015
Slide 53: Reconciliation of Adjusted Financial Measures to GAAP (cont.)
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Reconciliation of Adjusted Financial Measures to GAAP (cont.) Moody's Corporation Adjusted Operating Expense Reconciliation 2017F1 Operating Expense Guidance Decreased
Slide 54: Reconciliation of Adjusted Financial Measures to GAAP (cont.)
Introduction | Financial Overview | Capital Markets Overview | Moody’s Investors Service | Moody’s Analytics | Conclusion | Appendix Reconciliation of Adjusted Financial Measures to GAAP (cont.) Moody's Corporation EBITDA Reconciliation TTM ($ Millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 55: Investor Relations Contact
Website: http://ir.moodys.com Email: ir@moodys.com May 10, 2017 55
Slide 56: May 10, 2017 56
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