Slide 1: Fourth Quarter and Full Year 2013 Earnings Presentation
Fourth Quarter and Full Year 2013 Earnings Presentation February 6, 2014 msci.com
Slide 2: Forward-Looking Statements and Other Information
Forward‐Looking Statements and Other Information Forward‐Looking Statements – Safe Harbor Statements This presentation may contain forward‐looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on forward‐looking statements
Slide 3: Milestone Year – 2013 Financial Highlights
Milestone Year – 2013 Financial Highlights: Run Rate 9% to $1.05 billion Revenues 9% to $1.04 billion Net income 21% to $223 million Diluted EPS 24% to $1.83 Adj. EBITDA1 4% to $453 million Adj. EPS2 11% to $2.16 MSCI Indexes Broadened and deepened relationships with ETF providers Drove significant
Slide 4: Capitalizing on Opportunities and Investing for the Future
Capitalizing on Opportunities and Investing for the Future Key Investment Industry Trends Investors Seeking Thematic and Customized Strategies Accelerating Shift Towards Passive Investments Increasing Demand for Integrated View of Risk & Return Through Fewer Providers Regulation Driving Increased Re
Slide 5: Fourth Quarter 2013 Highlights
Fourth Quarter 2013 Highlights Summary Financial Results Operating revenues increased 8% to $268 million Net income declined 13% to $47 million, and diluted EPS fell 11% to $0.39 Adjusted EBITDA1 fell 2% to $114 million, and adjusted EPS2 fell 4 cents to $0.48 Strong Operating Results Run Rate growt
Slide 6: Breakdown of Q4'12 vs Q4'13 Revenue Growth
Breakdown of Q4’12 vs Q4’13 Revenue Growth (Dollars in millions) Year‐over‐Year Change in Revenues by Type $247.1 $19.7 $1.1 ($0.2 ) $267.6 $220 $230 $240 $250 $260 $270 $280 Q4'12 revenue Subscription revenue Asset‐based fees Non‐recurring revenue Q4'13 revenue Year‐over‐Year Change in Revenues by
Slide 7: Summary of Fourth Quarter 2013 Operating Metrics
Summary of Fourth Quarter 2013 Operating Metrics (Dollars in millions) MSCI Total Run Rate Subscription ABF $840 $127 $967 $892 $158 $1,050 Subscription Growth: +6 % ABF Growth: +25 % $500 $600 $700 $800 $900 $1,000 $1,100 Q4'12 Q4'13 Total Sales and Retention Q4'12 Q4'13 Diff. FY'12 FY'13 Diff. Rec
Slide 8: Index and ESG Products
Index and ESG Products (Dollars in millions) Fourth Quarter Highlights: Revenues grew 13% to $133 million, or 8% organically Subscription revenue grew by 18%, or by 11% organically Run Rate grew by 14% YoY to $530 million Subscription Run Rate grew by 10% Asset‐based fee Run Rate rose 25% ESG growth
Slide 9: Asset-Based Fees
Asset‐Based Fees Fourth Quarter Highlights: Revenues grew 3% to $39 million Strong inflows into ETFs and increases in non‐ETF passive funds more than offset the loss of Vanguard Asset‐based fee Run Rate rose 25% to $158 million, and rose 8% from Q3’13 3.6 average basis point fee at quarter‐end Total
Slide 10: Risk Management Analytics
Risk Management Analytics (Dollars in millions) Fourth Quarter Highlights: Revenues grew by 13% to $75 million, or 9% organically Run Rate grew by 11% YoY to $291 million, or 7% organically Growth strongest at asset owners and asset managers Total sales of $11 million in Q4’13 Stronger sales to bank
Slide 11: Portfolio Management Analytics
Portfolio Management Analytics (Dollars in millions) Fourth Quarter Highlights: Revenues declined 11% to $26 million Run Rate declined by 6% YoY to $103 million F/X remained a drag: $2 million YoY and $1 million compared to Q3’13 Foreign exchange, product swaps and fixed income cancels accounted for
Slide 12: Governance
Governance (Dollars in millions) Fourth Quarter Highlights: Revenues rose 7% organically to $31 million – down 1% due to sale of CFRA Run Rate increased 7% organically to $115 million ‐ declined by 2% as reported Organic growth driven by advisory compensation data and analytics and higher retention
Slide 13: Compensation and Non-Compensation EBITDA Expense
Compensation1 and Non‐Compensation2 EBITDA Expense (Dollars in millions) Comp and Non‐comp expenses increased 18% to $154 million Compensation expense rose 16% Approximately half the growth due to acquisitions, remainder driven by headcount additions in 2013 Total headcount growth of 18% YoY to 3,26
Slide 14: Non-Compensation EBITDA Expense
Non‐Compensation1 EBITDA Expense (Dollars in millions) Non‐Compensation expenses rose to accommodate future growth Increase in occupancy costs and IT linked to investment program Occupancy costs rose to support additional headcount IT costs increased to support additional functionality and storage c
Slide 15: Summary of Profitability Metrics: Net Income, EPS and Adjusted EBITDA
Summary of Profitability Metrics: Net Income, EPS and Adjusted EBITDA1 Q4’13 tax rate of 44% reflects upward revision to full year 2013 tax rate Net Income declined 13% Diluted EPS fell 11% to $0.39 Adjusted EBITDA1 was $114 million, down 2% Adjusted EPS2 fell 8% to $0.48 3% decrease in diluted weig
Slide 16: Select Balance Sheet, Cash Flow and Other Items
Select Balance Sheet, Cash Flow and Other Items (Dollars in millions) As of December 31, 2012 December 31, 2013 Cash and cash equivalents $183 $358 Short‐term investments 71 ‐ Total $254 $358 Current maturities of long‐term debt $43 $20 Long‐term debt, net of current maturities 812 788 Total $855 $8
Slide 17: Use of Non-GAAP Financial Measures and Operating Metrics
Use of Non‐GAAP Financial Measures and Operating Metrics MSCI has presented supplemental non‐GAAP financial measures as part of this presentation. A reconciliation is provided that reconciles each non‐GAAP financial measure with the most comparable GAAP measure. The presentation of non‐GAAP financia
Slide 18: Reconciliation of Adjusted Net Income and Adjusted EPS
Reconciliation of Adjusted Net Income and Adjusted EPS Three Months Ended Year Ended December 31, December 31, September 30, December 31, December 31, In thousands, except per share data 2013 2012 2013 2013 2012 Net Income $ 47,257 $ 54,452 $ 55,310 $ 222,557 $ 184,238 Plus: Non-recurring stock-base
Slide 19: Reconciliation of Adjusted EBITDA to Net Income
Reconciliation of Adjusted EBITDA to Net Income Three Months Ended December 31, 2013 Three Months Ended December 31, 2012 In thousands Performance and Risk Governance Total Performance and Risk Governance Total Net Income $ 47,257 $ 54,452 Plus: Provision for income taxes 37,307 33,863 Plus: Other e
Slide 20: Reconciliation of Operating Expenses
Reconciliation of Operating Expenses Three Months Ended % Change from December 31, December 31, September 30, December 31, September 30, In thousands 2013 2012 2013 2012 2013 Cost of services Compensation $ 62,057 $ 55,982 $ 58,751 10.9% 5.6% Non-recurring stock based compensation - 255 - n/m n/m To