S&P Global Inc. · NYSE:SPGI
S&P Global — Q2 2022 Earnings Presentation
56 slides from S&P Global's earnings presentation, Aug 2, 2022
Slide 1: 2Q 2022 Earnings Conference Call
2Q 2022 Earnings Conference Call Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Mark Grant Senior Vice President, Investor Relations August 2, 2022 1
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 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 for
Slide 3: Comparison of adjusted information to U.S. GAAP information
Comparison of adjusted information to U.S. GAAP information This presentation includes Company financials on an as-reported basis, and on a pro forma The Company’s non-GAAP measures include adjustments that reflect how management basis as if the merger had closed on January 1, 2021, for periods incl
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: Disciplined execution and improved resilience post-merger
Disciplined execution and improved resilience post-merger Financial highlights: • Adjusted revenue* decreased 5% year-over-year, as resilience and strong commercial execution drove 7% growth in aggregate across 5 of the 6 divisions, partially offsetting the 26% decrease in Ratings revenue • Recurrin
Slide 7: Significant progress in the first 100 days post-merger
Significant progress in the first 100 days post-merger with key milestones accomplished across multiple areas Robust Commercial Year 1 Cost Synergy Divested businesses and Focus on Innovation Momentum Achievement rationalized real-estate • Launched an integrated • Realized ~$80m in cost • Completed
Slide 8: S&P Global Research Council Key Research Themes 2022
S&P Global Research Council Key Research Themes 2022 8
Slide 9: Accelerating innovation to drive future growth
Accelerating innovation to drive future growth Commodity Insights • Launched basin-level methane intensity and associated price premiums product, leveraging proprietary computer vision algorithms and third-party satellite imagery • Launched Carbon Intensity measures for all 6 crude grades in the glo
Slide 10: Resilient business and solid execution drive financial results
1558000000 Resilient business and solid execution drive financial results Adjusted financials* 2Q 2022 2Q 2021 Change Revenue $2,970 $3,113 (5)% Operating profit $1,402 $1,558 (10)% Operating profit margin 47.2% 50.0% (280 bps) Trailing twelve-month adjusted 46.1% - n/m segment operating margin Aver
Slide 11: Division financial performance
Division financial performance* Revenue: +7% y/y Revenue: (26)% y/y Revenue: +4% y/y TTM Margin: 30.2% TTM Margin: 59.8% TTM Margin: 43.3% Revenue: +7% y/y Revenue: +12% y/y Revenue: +3% y/y TTM Margin: 39.5% TTM Margin: 68.6% TTM Margin: 19.4% *Adjusted financials presented on this slide refer to N
Slide 12: Multiple revenue streams thrive in periods of elevated market uncertainty
Multiple revenue streams thrive in periods of elevated market uncertainty +64% +40% +25% Exchange Traded CDS Aftermarket Derivatives Indices Research Adjusted financials presented on this slide refer to Non-GAAP Adjusted metrics in the current period, and Non-GAAP Pro Forma Adjusted metrics in the y
Slide 13: Market Intelligence: S&P Global Marketplace marks two years
Market Intelligence: S&P Global Marketplace marks two years Highlights • Most popular categories: ◦ ESG data ◦ Fundamental data ◦ Machine-readable textual data (e.g., Global Filings) ◦ Workbench (analytical platform for data evaluation) • 178 tiles of content and solutions, including 30 from merger
Slide 14: Second quarter global issuance was down 37%
Second quarter global issuance* was down 37% (down 35% excluding bank loans) United States Europe Asia 984 484 923 898 470 802 194 201 364 187 645 343 266 133 133 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 • Investment-grade decreased 27% y/y • Investment-grade decrea
Slide 15: S&P Dow Jones Indices AUM as of 12/31/2021
S&P Dow Jones Indices AUM as of 12/31/2021 S&P 500 AUM $22.7 trillion in AUM is benchmarked or (in trillions) indexed to S&P Dow Jones Indices • Benchmarked AUM: $12.8 trillion vs. $9.3 trillion as of 12/31/2020 • Investment Products AUM: $9.9 trillion vs. $7.5 trillion as of 12/31/2020 $7.0 • S&P 5
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 • Second quarter ESG revenue* growth • Launched S&P Battery Metals index family accelerated to 66% year-over-year to $51.8M (Collaboration: Indices and Commodity Insights) • L
Slide 17: 2022 Outlook
2022 Outlook S&P Global
Slide 18: Latest global refinancing study shows increases in longer-term maturities
Latest global refinancing study shows increases in longer-term maturities — higher debt maturing in 7 of the next 10 years Global Corporate Bond Maturities (Financial and Nonfinancial) $2,500 $2,000 ($ in billions) $1,500 $1,000 $500 $— 2022.2H 2023 2024 2025 2026 2027 2028 2029 2030 2031 As of 7/1/
Slide 19: Level of debt instruments outstanding continues to grow
Level of debt instruments outstanding continues to grow on a constant currency basis, highlighting long-term resilience of debt issuance Total Debt Instruments Outstanding 2016-2022 $25,000 +5% CAGR $5,479 $20,000 $5,580 $4,863 $4,575 $4,324 ($ in billions) $4,125 $15,000 $4,065 $17,251 $17,722 $15,
Slide 20: S&P Global Ratings now forecasts a 16% decrease in bond issuance in 2022
S&P Global Ratings now forecasts a 16% decrease in bond issuance in 2022 against a very strong 2021 Global Issuance History and 2022 Forecast 10,000 9,000 21.7% 8,000 18.2% 7,000 12.5% 6,000 7.4% ($ in billions) 5,000 1.4% 4,000 3,000 (6.6)% 2,000 (15.6)% 1,000 — 2016 2017 2018 2019 2020 2021 2022F
Slide 21: Bridging Global Debt Issuance to S&P Billed Issuance
Bridging Global Debt Issuance to S&P Billed Issuance -24% to -9% -45% to -30% Examples of unrated debt include medium term notes and most domestic China debt Total Market Leveraged Loans Unrated Debt International Public Total S&P Billed Issuance Forecast Finance Issuance Assumption 21
Slide 22: Brent oil price expected to remain above recent trend; vehicle supply to normalize
Brent oil price expected to remain above recent trend; vehicle supply to normalize in the medium-term Commodity Insights' Brent Oil Price Forecast Light Vehicle Sales: TIV Outlook + Potential TIV 140 100 120 95 100 90 ($ in bilions) 80 Brent crude 85 forecast $/bbl 60 80 40 75 20 70 65 0 2017 2018 2
Slide 23: Macroeconomic assumptions underlying our financial outlook
Macroeconomic assumptions underlying our financial outlook % Change Y/Y, Initial assumptions Previous assumptions Current assumptions except Brent Crude (Mar 2022) (May 2022) (Aug 2022) Real GDP1 United States +3.9% +3.2% +2.3% Eurozone +4.4% +3.3% +2.7% Global +4.2% +3.6% +2.7% CPI1 +3.9% +5.8% +7.
Slide 24: Ewout Steenbergen
Ewout Steenbergen Executive Vice President, Chief Financial Officer 24
Slide 25: 2Q 2022 financial results
2Q 2022 financial results Adjusted financials* 2Q22 2Q21 Change Revenue $2,970 $3,113 (5)% Corporate unallocated expense $22 $36 (40)% Total expense $1,568 $1,556 +1% Operating profit $1,402 $1,557 (10)% Operating margin 47.2% 50.0% (280 bps) Interest expense, net $90 $87 +3% Adjusted Effective tax
Slide 26: Foreign exchange had a $0.01 unfavorable impact on adjusted EPS in 2Q22
Movements in foreign exchange rates had a $0.01 unfavorable impact on adjusted EPS in 2Q22 Favorable (Unfavorable) Revenue ($9.4) ($21.8) ($3.5) ($1.2) ($2.4) ($2.3) Adjusted Operating Profit $5.4 ($5.9) ($1.0) ($1.0) ($2.0) ($1.0) Adjusted EPS $0.01 ($0.01) ($0.0) ($0.0) ($0.0) ($0.0) ($ in million
Slide 27: Multiple levers to reduce cost while remaining committed to strategic investments
Multiple levers to reduce cost while remaining committed to strategic investments Management Actions Investments 1. Pull-forward Synergies 1. People Investments Taking synergy actions earlier than originally anticipated Creating capacity to invest in our top talent through various leading to 2022 sa
Slide 28: Continued investments in innovation and people, offset by synergies and incentives
Continued investments in innovation and people, offset by synergies and incentives leading to modest year over year growth in expenses ($ in millions, Total Adjusted Expenses) 24 -56 38 54 -45 -40 37 $1,556 $1,568 2Q 2021 Compensation Cloud + T&E Growth Initiatives Synergies Incentives FX All Other
Slide 29: We are accelerating synergy execution
We are accelerating synergy execution; significant total target cost synergies already actioned Targets Cumulative achievement1 ~$600M ~$260M Run-rate Cost Synergies ~80% achievement by 2023 ~$80M achieved YTD Revenue Synergies ~$350M ~$15M Run-rate ~50% achievement by 2024 ~$2M achieved YTD CTAs2 +
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 2Q results* 2Q 2022 2Q 2021 Change Revenue $1,020 $957 +7% Recurring revenue as % of revenue 95.8% 95.6% +20 bps Segment operating profit $336 $312 8% Segment operating margin 33.0% 32.
Slide 31: Market Intelligence adjusted revenue increased 7% year-over-year
Market Intelligence adjusted revenue* increased 7% year-over-year, with positive growth in all categories, and 10% growth in C&R Solutions Revenue • Credit and Risk Solutions benefited from solid commercial execution and strong performance $1,020 of Financial Risk Analytics and Credit Analytics $957
Slide 32: Ratings: Continued issuance declines pressure transaction revenue
Ratings: Continued issuance declines pressure transaction revenue Adjusted 2Q results* 2Q 2022 2Q 2021 Change Revenue $796 $1,073 (26)% Segment operating profit $473 $729 (35)% Segment operating margin 59.5% 68.0% (850 bps) Trailing twelve-month segment operating margin 59.8% — n/m ($ in millions) 2
Slide 33: Ratings: Transaction revenue decreased from significant issuance decline
Ratings: Transaction revenue decreased from significant issuance decline Adjusted 2Q results* 2Q 2022 2Q 2021 Change Transaction $344 $615 (44)% Non-transaction $452 $458 (1)% ($ in millions) 2Q 2022 Highlights: • Transaction revenue declined 44% year-over-year with decreases in most categories • No
Slide 34: Ratings revenue impacted by continued unfavorable macro conditions
Ratings revenue* impacted by continued unfavorable macro conditions, especially in Corporates and Structured Finance; partially offset by CRISIL Revenue Structured Revenue $1,073 $102 $121 $77 $6 $11 $121 $796 $97 $9 CRISIL, Other** $116 +14% Other $9 Governments $152 RMBS $65 -15% $13 Structured Fi
Slide 35: Commodity Insights: Revenue acceleration driven by strong subscription growth
Commodity Insights: Revenue acceleration driven by strong subscription growth, partially offset by Russia impact Adjusted 2Q results* 2Q 2022 2Q 2021 Change Revenue $427 $413 +4% Recurring revenue as % of revenue 90.4% 89.7% +70 bps Segment operating profit $188 $184 +3% Segment operating margin 44.
Slide 36: Commodity Insights revenue increased 4% over 2Q21
Commodity Insights revenue* increased 4% over 2Q21, or ~7% excluding the Russia/Ukraine impact Revenue • Advisory and Transactional increased 4%, driven by Commodity Insights Conferences and $427 strength in Consulting revenue, partially offset $413 by volume-driven GTS declines $36 +4% $35 Advisory
Slide 37: Mobility: Used car demand drove subscription growth
Mobility: Used car demand drove subscription growth and high retention rates Adjusted 2Q results* 2Q 2022 2Q 2021 Change Revenue $337 $315 +7% Recurring revenue as % of revenue 78.3% 76.0% +230 bps Segment operating profit $141 $129 +9% Segment operating margin 41.9% 41.0% +90 bps Trailing twelve-mo
Slide 38: Mobility driven by double-digit growth in Dealer revenue
Mobility driven by double-digit growth in Dealer revenue* as CARFAX continues to drive new business Revenue • Financials driven by strength in insurance $337 underwriting and claims, tempered by slowing $315 consumer activity $58 +3% $57 • Manufacturing growth driven by demand for Financials and sup
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 2Q results* 2Q 2022 2Q 2021 Change Revenue $338 $303 +12% Recurring revenue as % of revenue 83.1% 88.5% (540 bps) Segment operating profit $243 $209 +16% Segment operating margin 71.9% 69.0% +290 bps Trail
Slide 40: S&P Dow Jones Indices: 12% revenue growth driven by ETD
S&P Dow Jones Indices: 12% revenue* growth driven by strong volume growth in ETD products Revenue $338 $303 $67 +6% • Data & Custom Subscriptions growth driven by Data & Custom $64 new business activities increasing end of day Subscriptions $57 +64% (EOD) ACV and custom hybrid reporting $35 Exchange
Slide 41: S&P Dow Jones Indices: Net inflows offset by price depreciation for ETF AUM
S&P Dow Jones Indices: Positive net inflows were partially offset by price depreciation for ETF AUM ETF AUM: 2Q21-2Q22 Asset-Linked Fees: (in billions) • Quarter-ending ETF AUM associated with our indices was $2,459 billion, down 5% compared $2,579 $231 $2,459 to 2Q2021 • 2Q average ETF AUM associat
Slide 42: Engineering Solutions: Growth in subscription and non-subscription revenue
Engineering Solutions: Growth in subscription and non- subscription revenue Adjusted 2Q results* 2Q 2022 2Q 2021 Change Revenue $96 $93 +3% Recurring revenue as % of revenue 92.8% 93.3% (50 bps) Segment operating profit $17 $18 (7)% Segment operating margin 17.5% 19.4% (190 bps) Trailing twelve-mont
Slide 43: Engineering Solutions saw positive revenue growth across all product offerings
Engineering Solutions saw positive revenue* growth across all product offerings Revenue $96 $93 • Non-subscription revenue increased 10% +10% year-over-year primarily due to retail transaction, Goldfire, and Parts services Non-Subscription • Subscription revenue increased 2% Subscription ($ in milli
Slide 44: Updated 2022 GAAP guidance
Updated 2022 GAAP guidance Most Recent GAAP New GAAP (suspended 6/1/22) Revenue Over 40% increase Over 30% increase Corporate Unallocated expense $835 – $845 million $835 – $845 million Operating profit margin 50.0% – 51.0% 46.7% – 47.7% Interest expense, net $430 – $440 million $430 – $440 million
Slide 45: 2022 adjusted pro forma guidance
2022 adjusted pro forma guidance Most Recent Adjusted1 New Adjusted1 (suspended 6/1/22) Low to mid-single-digit Revenue Low single-digit increase decrease Corporate Unallocated expense $85 – $95 million $70 – $80 million Deal-related amortization $1.01 – $1.02 billion $1.01 – $1.02 billion Approxima
Slide 46: 2022 division outlook
2022 division outlook 2022 Most Recent Adjusted 2022 Most Recent Adjusted 2022 Adjusted 2022 Adjusted Division Pro Forma Revenue Growth Pro Forma Margin Outlook Pro Forma Revenue Growth Pro Forma Margin Outlook (suspended 6/1/22) (suspended 6/1/22) Market Intelligence Mid- to high single-digit Mid-s
Slide 47: 2Q 2022 Earnings Call | Q&A
2Q 2022 Earnings Call | Q&A Doug Peterson President and CEO Ewout Steenbergen Executive Vice President and CFO Mark Grant Senior Vice President, Investor Relations August 2, 2022 47
Slide 48: Earnings Call 2Q 2022
Earnings Call 2Q 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 September 2, 202
Slide 49: Appendix
Appendix S&P Global 49
Slide 50: 2Q 2022: Non-GAAP adjustments
2Q 2022: Non-GAAP adjustments Pre-tax items excluded to arrive at adjusted results 2Q 2022 IHS Markit merger-related costs: - Transaction costs (to complete the transaction) $38 - Integration costs (to operationalize the transaction) $33 - Costs-to-achieve (to enable cost and revenue synergies) $149
Slide 51: Adjusted free cash flow, excluding certain items, approximately $924M for 2Q 2022
Adjusted free cash flow, excluding certain items is approximately $924M for 2Q 2022 Adjusted pro forma financials ($ in millions) 2Q 2022 Cash provided by operating activities1 $454 Capital expenditures (24) Net distributions to non-controlling interest holders (71) Free cash flow 359 IHS Markit mer
Slide 52: Accelerated Share Repurchase programs progression and impact to diluted shares
Accelerated Share Repurchase programs progression and impact to diluted weighted average shares outstanding Launched $7B ASR, and received Launched $1.5B ASR, and received 3.8M 15.2M shares (estimated 85%), true up shares (estimated 85%), true up upon upon completion for remaining shares1 completion
Slide 53: Adjusted gross leverage is within our current target range as of 2Q 2022
Adjusted gross leverage is within our current target range as of 2Q 2022 2Q 2022 Cash and cash equivalents 1 $3,573 Short- and long-term debt $10,790 Adjusted gross debt to adjusted EBITDA 2 2.5x Gross debt to EBITDA 3 1.8x ($ in millions) 1. Cash and cash equivalents includes restricted cash 2. Adj
Slide 54: Global investment-grade issuance declined 30% year-over-year
Global investment-grade issuance declined 30% year-over-year Investment Grade Issuance $1,200 $1,000 $800 ($ in billions) $600 $400 $200 $— 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 Industrials Financial Services Note: Previous versions of this chart reflected total Investment
Slide 55: Global high-yield issuance and leveraged loan volume declined 64%
Global* high-yield issuance and leveraged loan volume declined 64% High-Yield Issuance and Leveraged Loan Volume $600 $550 $500 $450 $400 ($ in billions) $350 $300 $250 $200 $150 $100 $50 $— 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 High-Yield Issuance Leveraged Loan Volume *L
Slide 56: Foreign exchange had a $0.02 unfavorable impact on adjusted EPS in 1Q22
Movements in foreign exchange rates had a $0.02 unfavorable impact on adjusted EPS in 1Q22 Favorable (Unfavorable) Revenue ($2.6) ($13.5) ($0.3) ($0.0) ($0.1) ($0.4) Adjusted Operating Profit $3.0 ($12.5) $0.1 ($0.5) ($0.9) (0.0) Adjusted EPS $0.01 ($0.03) $0.0 ($0.0) ($0.0) ($0.0) $ in millions, ex