S&p Global Inc. · NYSE:SPGI
S&p Global — The McGraw-Hill Companies — Investor Presentation (September 2011)
47 slides from S&p Global's investor presentation, Sep 12, 2011
Slide 1: Growth and Value Plan
Growth and Value Plan Investor Presentation September 12, 2011
Slide 2: Donald S. Rubin, Senior Vice President, Investor Relations
Donald S. Rubin Senior Vice President, Investor Relations The McGraw-Hill Companies
Slide 3: Agenda
Agenda I. Overview of Growth and Value Plan II. McGraw-Hill Markets III. McGraw-Hill Education IV. Conclusions
Slide 4: Comparison of Adjusted Information to U.S. GAAP Information
Comparison of Adjusted Information to U.S. GAAP Information This presentation includes adjusted operating income (loss) information. This information is provided to enable investors to make meaningful comparisons of the Company’s operating performance between periods and to view the Company’s busine
Slide 5: Forward-Looking Statements
Forward-Looking Statements The forward-looking statements in this Growth and Value Plan (identified by the future tense and words like “expects,” “targeted” and “projected”) involve risks and uncertainties, are subject to change, and actual results may differ materially from the Company’s expectatio
Slide 6: Harold McGraw III, Chairman, President and CEO
Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies
Slide 7: Presenters
Presenters Harold McGraw III Chairman, President and CEO Jack Callahan Executive Vice President and CFO Lou Eccleston President, McGraw-Hill Financial Glenn Goldberg President, Information & Media Donald S. Rubin Senior Vice President, Investor Relations 6
Slide 8: Summary of the Growth and Value Plan
Summary of the Growth and Value Plan • As part of a comprehensive strategic portfolio review focused on shareholder value, McGraw-Hill’s Board of Directors has previously announced acquisitions, intended divestitures, an increased share repurchase authorization and a review of G&A costs • Today, The
Slide 9: Two Focused Global Leaders
Two Focused Global Leaders McGraw-Hill Markets A leading provider of content and analytics to the capital and commodities markets, delivering integrated solutions across all asset classes through iconic brands with overlapping customer bases and interconnected markets McGraw-Hill Education The secon
Slide 10: Benefits of the Growth and Value Plan
Benefits of the Growth and Value Plan • Creates two focused and nimble operating companies with: Deeper engagement with customers Right-sized and aligned cost structures Focused management accountability Competitive infrastructure and capabilities • Enhances strategic and financial flexibili
Slide 11: McGraw-Hill Markets: ~$4 Billion in Revenue
McGraw-Hill Markets: ~$4 Billion in Revenue Iconic Brands • Industry-leading global player Provides high-value benchmarks, information, data and solutions Catalyst for markets • Serves interconnected markets Capital markets Commodities markets Attractive commercial markets • Capitalizes on
Slide 12: McGraw-Hill Education: ~$2.4 Billion in Revenue
McGraw-Hill Education: ~$2.4 Billion in Revenue Iconic Brands • Global education player • Iconic brands: Trusted, high-quality content and services • Multiple drivers of growth Digital content uptake Innovation in educational services and solutions Burgeoning middle classes Employer needs fo
Slide 13: Jack Callahan, Executive Vice President and CFO
Jack Callahan Executive Vice President and CFO The McGraw-Hill Companies
Slide 14: Next Steps
Next Steps • We are in the midst of an extensive cost reduction program Initial scope is corporate expense, administrative and technology costs across the organization Represents over $1 billion in current costs Need to disaggregate shared services and establish two appropriately sized corpora
Slide 15: Agenda
Agenda I. Overview of Growth and Value Plan II. McGraw-Hill Markets III. McGraw-Hill Education IV. Conclusions
Slide 16: Harold McGraw III, Chairman, President and CEO
Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies
Slide 17: McGraw-Hill Markets: Investment Highlights
McGraw-Hill Markets: Investment Highlights Enables capital, commodities and commercial markets Double-digit growth Powerful brands and with attractive returns high-value content A pure-play focused on growth Positioned to capture Leading scale and global growth market positioning Powerful range of I
Slide 18: McGraw-Hill Markets: A Leader in Content and Analytics
McGraw-Hill Markets: A Leader in Content and Analytics Content and Analytics-led Platform-led McGraw- Hill Markets LTM Revenue $3,880 $2,260 $1,188 $866 $679 $604 $834 $7,646 NA ($ in millions) Ratings Indices Pricing Data Risk Analysis Proprietary Researc
Slide 19: Global Mega Trends Drive Growth Opportunities
Global Mega Trends Drive Growth Opportunities Capital Markets • Growing refinancing requirements ($8 trillion Growth Opportunities through 2015) • Increased cross-border capital flows Growing need for complex information • Ongoing growth in equity / debt markets in increasingly interconnected capi
Slide 20: The McGraw-Hill Markets Business Model
The McGraw-Hill Markets Business Model High-Value Content Sophisticated Customers • Capital markets (asset managers, banks, exchanges, issuers) • Commodities markets (producers, traders, intermediaries) • Commercial markets (auto, aviation, retail financial services, construction) Enabling Markets S
Slide 21: Enabling Markets
Enabling Markets The Ubiquitous Benchmarks We Create… … Bring Transparency to Catalyze Markets • S&P rates ~96% of U.S. corporate issuance • Establishes common credit benchmark in the − ~91% of European corporate issuance ~$100 trillion fixed income market − ~85% of Asian corporate issuance • $1.1 t
Slide 22: Enabling Customers in their Markets – Case Studies
Enabling Customers in their Markets – Case Studies Global Bank Investor Oil Major Large Industrial Customer Needs: • Manage risk • Manage risk • Buy and sell oil • Obtain customer feedback • Support consulting / • Research companies / • Finance large capital • Stay abreast of industry advisory busin
Slide 23: Powerful Array of Distribution Channels
Powerful Array of Distribution Channels High-Value Content Proprietary Channel Partners Direct Data Feeds Networks Specialized proprietary Global exchange-based Immediate access to Internet-based and platforms like Capital IQ, platforms for trading of information and data third-party proprietary Pla
Slide 24: Standard & Poor's: The World's Foremost Provider of Credit Ratings
Standard & Poor’s: The World’s Foremost Provider of Credit Ratings Credit Markets are Attractive S&P Ratings is Well Positioned for Growth Refinancing Requirements are Enormous Tremendous Global Breadth and Depth of Coverage • Estimated $8 trillion of debt maturing through 2015 in • Coverage of more
Slide 25: Lou Eccleston, President, McGraw-Hill Financial
Lou Eccleston President, McGraw-Hill Financial The McGraw-Hill Companies
Slide 26: S&P Ratings' International Footprint Provides a Platform to Expand
S&P Ratings’ International Footprint Provides a Platform for McGraw-Hill Markets to Continue to Expand Global Presence: Leading Credit Research Team International Growth Acceleration • India Third largest international source of revenue
Slide 27: The Operating Model Evolution: The McGraw-Hill Financial Segment Points the Way
The Operating Model Evolution: The McGraw-Hill Financial Segment Points the Way Reasons for 2010 Realignment Actions Taken • Customer opportunity • Focused management and organization Complexity and growth of multi-asset President Lou Eccleston portfolios Reorganized sales force to focus on ke
Slide 28: Glenn Goldberg, President, Information & Media
Glenn Goldberg President, Information & Media The McGraw-Hill Companies
Slide 29: McGraw-Hill Markets Delivers Products and Solutions Via Scalable Capabilities
McGraw-Hill Markets Delivers Products and Solutions Via Scalable Capabilities Capital Commodities Commercial Markets Markets Markets Markets Customized Content / Solutions Increasing Commonality Research / Analytics of Offerings Benchmark Data Product Technology, Sales Systems, Technical Architectur
Slide 30: How McGraw-Hill Markets' Benchmarks Enable Markets: The Platts Example
How McGraw-Hill Markets’ Benchmarks Enable Markets: The Platts Example Growth in Oil-Related Financial Products Platts’ Rapid Growth • Platts operates in a growing commodities 350 information market, which is driven by: The growth of underlying commodities market 29% 300 Physical trading market
Slide 31: Jack Callahan, Executive Vice President and CFO
Jack Callahan Executive Vice President and CFO The McGraw-Hill Companies
Slide 32: McGraw-Hill Markets' Strong Momentum
McGraw-Hill Markets’ Strong Momentum ($ in millions) Annual Revenue YTD Revenue 8% Growth $3,639 14% YoY Growth $1,979 $3,384 $1,738 2009 2010 1H 2010 1H 2011 Annual Segment Adjusted Operating Income YTD Segment Adjusted Operating Income 11% Growth $1,241 14% YoY Growth $685 $600 $1,114 2009 2010 1H
Slide 33: McGraw-Hill Markets' Highly Attractive Economics
McGraw-Hill Markets’ Highly Attractive Economics High Revenue • Double-digit growth profile Growth • Strong fundamental global macro drivers • New market entry to drive growth and marketing of full product suite to key customers Attractive • Predominantly subscription-based / recurring revenue, abou
Slide 34: Strong Competitive Positioning and Basis for Valuation
Strong Competitive Positioning and Basis for Valuation McGraw-Hill Markets Offers a Compelling Combination of Growth, Profitability & Scale 30% 25% Moody’s 20% Morningstar Revenue Growth 15% McGraw-Hill MH Markets Verisk (%, 1H ’10 - 1H ’11) Gartner Markets 10% MSCI Factset IHS TR Markets Equifax 5%
Slide 35: Agenda
Agenda I. Overview of Growth and Value Plan II. McGraw-Hill Markets III. McGraw-Hill Education IV. Conclusions
Slide 36: Harold McGraw III, Chairman, President and CEO
Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies
Slide 37: McGraw-Hill Education: Investment Highlights
McGraw-Hill Education: Investment Highlights Powerful brands and high-quality content Leading scale and Deep and broad market positioning sales coverage A pure-play focused on growth and value Poised to lead digital Financial flexibility education and highly cash transformation generative Well-posit
Slide 38: McGraw-Hill Education Today
McGraw-Hill Education Today Leading Education Companies 2010 Revenue ($ in billions) • Leading content, software and services- $6.6 based education company McGraw-Hill $2.4 Education • More than 100-year track record of $2.0 <$1.8 solutions that improve learning outcomes around the world Pearson MH
Slide 39: McGraw-Hill Education Today
McGraw-Hill Education Today MH Education 2010 Revenue ($ in millions) International Latin • Offers learning solutions in more $415m America 17% than 65 languages to students in 13% over 110 countries EMEA Global Canada 17% 36% • Global product teams to develop and leverage content tools and Domestic
Slide 40: Key Growth Opportunities
Key Growth Opportunities Online Courses Taken 8 1+ Online course • Existing content library and capabilities Taking at Least One Course Online (m) CAGR +20% 6 5.6m increasingly critical component of the 3.9m 4.6m 4 3.2m 3.5m value chain 1.6m 2.0m 2.3m Digital 2 0 • Direct to consumer / personalized
Slide 41: McGraw-Hill Education Strategy: Summary
McGraw-Hill Education Strategy: Summary Accelerate growth by • Capitalize on digital transformation, maintain and grow leadership aligning McGraw-Hill position in individualized learning Education’s key strengths with market forces • Expand international presence to meet rising demand for education
Slide 42: Agenda
Agenda I. Overview of Growth and Value Plan II. McGraw-Hill Markets III. McGraw-Hill Education IV. Conclusions
Slide 43: Summary of the Growth and Value Plan
Summary of the Growth and Value Plan Results of the Portfolio Review Growth and Value Plan 1• Create two powerful public companies: • Organizational structure: the creation of the McGraw-Hill Markets: primarily focused on MH Financial segment, to accelerate focus the global capital and commodities
Slide 44: Summary: Where McGraw-Hill is Going
Summary: Where McGraw-Hill is Going From To • One multi-sector company • Two pure-play companies • Holding company structure • Tailored, lower-cost operating company structures • Diverse business characteristics • Distinct growth and return profiles • Diverse shareholder base • Two distinct sharehol
Slide 45: Growth and Value Plan
Growth and Value Plan Investor Presentation September 12, 2011
Slide 46: Growth and Value Plan: Replay Information
Growth and Value Plan Investor Presentation Replay Information Internet replay available approximately two hours after the end of the call and will remain available for one year - Go to www.mcgraw-hill.com/investor_relations Telephone replay available through October 12, 2011 - Domestic: 800-513-116
Slide 47: Reconciliation to Reported Financials
Reconciliation to Reported Financials ($ in millions) LTM 1 1H '11 1H '10 FY '10 FY '09 Revenue Consolidated - As Reported $ 6,367 $ 2,863 $ 2,664 $ 6,168 $ 5,952 Less: McGraw-Hill Education 2,390 839 882 2,433 2,388 Broadcasting 96 44 44 96 81 BusinessWeek - - - - 99 McGraw-Hill Markets $ 3,880 $ 1
The McGraw-Hill Companies — Investor Presentation (September 2011) on 6ix