NEW YORK--(BUSINESS WIRE)--
Moody's Corporation (NYSE: MCO) today announced results for the first
quarter 2009.
Summary of Results for First Quarter 2009
Moody's reported revenue of $408.9 million for the three months ended
March 31, 2009, a decrease of 5% from $430.7 million for the first
quarter of 2008. Operating income for the quarter was $148.9 million, a
25% decline from $199.3 million for the same period last year. Diluted
earnings per share were $0.38 for the first quarter of 2009, and
included a charge of $0.03 relating to restructuring actions in the
quarter. Excluding the restructuring charge, diluted earnings per share
declined 15% to $0.41 for the quarter versus $0.48 in the prior-year
period.
"Moody's results in the first quarter reflected some improvement in
credit market activity compared to the fourth quarter of 2008, despite
the broader economic downturn," said Raymond McDaniel, Chairman and
Chief Executive Officer of Moody's. "While we are encouraged by the
increased level of activity, certain areas of the credit markets remain
largely inactive and we continue to expect only limited recovery in
2009. As a result, we are reaffirming our full-year 2009 EPS guidance of
$1.40 to $1.50."
First Quarter Revenue
For Moody's Corporation overall, global revenue of $408.9 million
declined 5% from the first quarter of 2008. U.S. revenue of $208.9
million for the first quarter of 2009 decreased 10% from the first
quarter of 2008, while non-U.S. revenue of $200.0 million increased 1%
from the prior-year period. Non-U.S. revenue accounted for 49% of
Moody's total revenue for the quarter, up from 46% in the year-ago
period.
Global revenue for Moody's Investors Service ("MIS") for the first
quarter of 2009 was $270.2 million, a decrease of 9% from the prior-year
period. U.S. revenue of $145.4 million for the first quarter of 2009
decreased 13% from the first quarter of 2008. Outside the U.S., revenue
of $124.8 million declined 5% from the year-ago period.
Within the ratings business, global structured finance revenue totaled
$72.4 million for the first quarter of 2009, a decrease of 29% from a
year earlier. U.S. structured finance revenue decreased 42%, due to
limited new issuance. Non-U.S. structured finance revenue decreased 16%,
driven by declines in European credit derivatives ratings.
Global corporate finance revenue of $84.1 million in the first quarter
of 2009 increased 15% from the same quarter of 2008. U.S. corporate
finance revenue increased 18% from the first quarter of 2008. Outside
the U.S., revenue increased 9% from the prior-year period. Growth was
driven by strong issuance of investment-grade bonds primarily due to
refinancing of maturing debt.
Global financial institutions revenue of $56.3 million in the first
quarter of 2009 decreased 16% compared to the same quarter of 2008.
Financial institutions revenue in the U.S. decreased 26% due to issuance
declines in the insurance and banking sectors. Outside the U.S., revenue
decreased 7% as issuance growth was more than offset by unfavorable
foreign currency impact.
Global public, project and infrastructure finance revenue was $57.4
million for the first quarter of 2009, increasing 3% from the first
quarter of 2008. U.S. revenue was about flat with the prior-year period
as solid infrastructure finance activity offset lower issuance in the
municipal sector. Non-U.S. revenue increased 8% with strong increases in
public finance issuance in Europe.
Global revenue for Moody's Analytics for the first quarter of 2009
reached $138.7 million, up 5% from the same quarter of 2008.
Subscription revenue of $117.0 million was about flat with the
prior-year period, and continued to represent more than 80% of Moody's
Analytics revenue. Software revenue, which includes the effect of the
Fermat acquisition in October 2008, grew 69% while revenue in the
consulting business grew 17% from the prior-year period.
In the U.S., Moody's Analytics revenue of $63.5 million for the first
quarter of 2009 decreased 4% from the first quarter of 2008. Weakness
among financial services customers resulted in higher customer attrition
that was partially offset by new subscription contracts, software
licenses and consulting engagements. Outside the U.S., revenue increased
13% over the prior-year period to $75.2 million, reflecting the impact
of acquisitions made in 2008.
First Quarter Expenses
First quarter 2009 expenses for Moody's Corporation of $260.0 million
were 12% higher than in the prior-year period. Excluding the
restructuring charge of $11.8 million, expenses were 7% higher than in
the prior-year period. Moody's reported operating margin for the first
quarter of 2009 was 36.4%. Excluding the restructuring charge, operating
margin was 39.3%.
First Quarter Effective Tax Rate
Moody's effective tax rate was 35.7% for the first quarter of 2009,
compared with 38.4% for the prior-year period. The decrease was due
primarily to a larger portion of taxable income generated in lower tax
jurisdictions outside the U.S. and net reductions to tax and tax-related
liabilities.
Share Repurchases and Debt Capacity
During the first quarter of 2009 Moody's had no share repurchase
activity and issued 0.7 million shares under employee stock-based
compensation plans. Outstanding shares as of March 31, 2009 totaled
235.7 million, representing a 4% decrease from a year earlier.
Additionally, as of March 31, 2009, Moody's had $1.4 billion of share
repurchase authority remaining under its current program. At
quarter-end, Moody's had $1.4 billion of outstanding debt and
approximately $300 million of additional debt capacity available under
its revolving credit facility.
Assumptions and Outlook for Full-Year 2009
Moody's outlook for 2009 is based on assumptions about many
macroeconomic and capital market factors, including interest rates,
corporate profitability and business investment spending, merger and
acquisition activity, consumer borrowing and securitization, and the
impact of government-sponsored economic stabilization initiatives. There
is an important degree of uncertainty surrounding these assumptions and,
if actual conditions differ from these assumptions, Moody's results for
the year may differ materially from our current outlook.
Moody's is reaffirming its 2009 full-year EPS guidance; however, other
components of 2009 guidance have been modified to reflect our current
view on credit market conditions and implications for the Company. This
outlook assumes foreign currency translation in 2009 at current exchange
rates. For Moody's overall, the Company now expects full-year 2009
revenue to decline in the mid-single-digit percent range. Revenue
expectations for certain areas have changed based on conditions specific
to those sectors and geographies. We continue to anticipate
issuance-based revenue to reflect generally weak conditions throughout
2009. We expect a more constant level of expense throughout 2009 versus
2008, with full-year 2009 expenses expected to increase in the low- to
mid-single-digit percent range. Full-year 2009 operating margin is
projected in the mid- to high-thirties percent range. The Company
expects diluted earnings per share for full-year 2009 in the range of
$1.40 to $1.50.
For the global MIS business, we expect revenue for the full-year 2009 to
decline in the high-single-digit percent range, both in the U.S. and
internationally. We now expect structured finance revenue for full-year
2009 to decrease in the low-twenties percent range, with declines across
all asset classes. Corporate finance revenue for full-year 2009 is now
expected to be about flat with full-year 2008, reflecting higher
issuance forecasts for ongoing refinancing activity. Revenue from
financial institution ratings is now expected to decline in the
mid-single-digit percent range and we expect public, project and
infrastructure finance revenue for full-year 2009 to be about flat with
full-year 2008.
For Moody's Analytics, we anticipate full-year 2009 revenue growth in
the mid-single-digit percent range. We expect strong growth in software
and consulting revenue to offset a decline in subscription revenue in
the low-single-digit percent range. Within the U.S., we now project
Moody's Analytics revenue to decline in the low-single-digit percent
range. Outside the U.S., we expect Moody's Analytics revenue to increase
in the low-double-digit percent range.
*****
Moody's is an essential component of the global capital markets,
providing credit ratings, research, tools and analysis that contribute
to transparent and integrated financial markets. Moody's Corporation
(NYSE: MCO) is the parent company of Moody's Investors Service, which
provides credit ratings and research covering debt instruments and
securities, and Moody's Analytics, which encompasses the growing array
of Moody's non-ratings businesses including risk management software for
financial institutions, quantitative credit analysis tools, economic
research and data services, data and analytical tools for the structured
finance market, and training and other professional services. The
Corporation, which reported revenue of $1.8 billion in 2008, employs
approximately 3,900 people worldwide and maintains a presence in 29
countries. Further information is available at www.moodys.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995
Certain statements contained in this release 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. Moody's outlook for 2009 and other forward-looking
statements in this release are made as of April 29, 2009, and the
Company disclaims any duty to supplement, update or revise such
statements on a going-forward basis, whether as a result of subsequent
developments, changed expectations or otherwise. In connection with the
"safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995, the Company is identifying certain factors that could cause
actual results to differ, perhaps materially, from those indicated by
these forward-looking statements. Those factors include, but are not
limited to, the current world-wide credit market disruptions and
economic slowdown, which is affecting and could continue to affect the
volume of debt securities issued in domestic and/or global capital
markets; other matters that could affect the volume of debt securities
issued, including credit quality concerns, changes in interest rates and
other volatility in the financial markets; the uncertain effectiveness
and possible collateral consequences of U.S. and foreign government
initiatives to respond to the economic slowdown; possible loss of market
share through competition; introduction of competing products or
technologies by other companies; pricing pressures from competitors
and/or customers; the potential emergence of government-sponsored credit
rating agencies; proposed U.S., foreign, state and local legislation and
regulations; regulations relating to the oversight of Nationally
Recognized Statistical Rating Organizations; possible judicial decisions
in various jurisdictions regarding the status of and potential
liabilities of rating agencies; the possible loss of key employees; the
outcome of any review by controlling tax authorities of the Company's
global tax planning initiatives; the outcome of those legacy tax and
legal contingencies that relate to the Company, its predecessors and
their affiliated companies for which Moody's has assumed portions of the
financial responsibility; the outcome of other legal actions to which
the Company, from time to time, may be named as a party; the ability of
the Company to successfully integrate acquired businesses; a decline in
the demand from financial institutions for credit risk management tools;
and other risk factors as discussed in the Company's annual report on
Form 10-K for the year ended December 31, 2008 and in other filings made
by the Company from time to time with the Securities and Exchange
Commission.
Moody's Corporation
Consolidated Statements of Operations (unaudited)
Three Months Ended
March 31,
2009 2008
Amounts in millions, except per share amounts
Revenue $ 408.9 $ 430.7
Expenses:
Operating 122.4 119.9
Selling, general and administrative 110.2 99.7
Restructuring 11.8 (0.7 )
Depreciation and amortization 15.6 12.5
Total expenses 260.0 231.4
Operating income 148.9 199.3
Non-operating (expense) income, net
Interest (expense) income, net (3.3 ) (11.5 )
Other non-operating (expense) income, net (4.0 ) 8.9
Total (7.3 ) (2.6 )
Income before provision for income taxes 141.6 196.7
Provision for income taxes 50.5 75.5
Net income 91.1 121.2
Less: net income attributable to noncontrolling interests 0.9 0.5
Net income attributable to Moody's Corporation $ 90.2 $ 120.7
Earnings per share attributable to Moody's common
shareholders
Basic $ 0.38 $ 0.49
Diluted $ 0.38 $ 0.48
Weighted average number of shares outstanding
Basic 235.4 247.4
Diluted 236.5 251.0
Moody's Corporation
Supplemental Revenue Information (unaudited)
Three Months Ended
March 31,
Amounts in millions 2009 2008
Moody's Investors Service
Structured Finance $ 72.4 $ 102.4
Corporate Finance 84.1 73.3
Financial Institutions 56.3 67.0
Public, Project and Infrastructure Finance 57.4 55.5
Intersegment royalty 14.7 16.0
Sub-total MIS 284.9 314.2
Eliminations (14.7 ) (16.0 )
Total MIS revenue 270.2 298.2
Moody's Analytics
Subscriptions 117.0 118.2
Software 16.1 9.5
Consulting 5.6 4.8
Total MA revenue 138.7 132.5
Total Moody's Corporation revenue $ 408.9 $ 430.7
Moody's Corporation revenue by geographic area
United States $ 208.9 $ 232.9
International 200.0 197.8
$ 408.9 $ 430.7
Moody's Corporation
Selected Consolidated Balance Sheet Data (unaudited)
March 31, December 31,
2009 2008
Amounts in millions
Cash and cash equivalents $ 341.7 $ 245.9
Short-term investments 6.8 7.1
Total current assets 856.1 809.1
Non-current assets 917.5 964.3
Total assets 1,773.6 1,773.4
Total current liabilities 1,338.8 1,393.1
Total debt (1) 1,410.5 1,467.7
Other long-term liabilities 632.6 616.4
Total shareholders' deficit (947.8 ) (986.1 )
Total liabilities and shareholders' deficit 1,773.6 1,773.4
Actual number of shares outstanding 235.7 235.1
(1)Includes long-term debt of $750.0 million at March 31, 2009 and
December 31, 2008. Additionally, this includes amounts outstanding under
the Company's commercial paper program and revolving credit facility of
$192.5 million and $468.0 million, respectively, at March 31, 2009, and
$104.7 million and $613.0 million, respectively, at December 31, 2008,
which are included in total current liabilities.
Moody's Corporation
Reconciliation to Non-GAAP Financial Measures (unaudited)
Three Months Ended March 31,
Amounts in
millions, 2009 2008
except per
share amounts
Non-GAAP Non-GAAP
As Financial As Financial
Reported Adjustments Measures Reported Adjustments Measures
* *
Revenue $ 408.9 $ - $ 408.9 $ 430.7 $ - $ 430.7
Expenses 260.0 (11.8 ) 248.2 231.4 0.7 232.1
Operating 148.9 11.8 160.7 199.3 (0.7 ) 198.6
income
Non-operating
(expense) (7.3 ) - (7.3 ) (2.6 ) - (2.6 )
income, net
Income before
provision for 141.6 11.8 153.4 196.7 (0.7 ) 196.0
income taxes
Provision
for income 50.5 4.5 55.0 75.5 (0.3 ) 75.2
taxes
Net 91.1 7.3 98.4 121.2 (0.4 ) 120.8
income
Less: net
income
attributable 0.9 - 0.9 0.5 - 0.5
to
noncontrolling
interests
Net income
attributable $ 90.2 $ 7.3 $ 97.5 $ 120.7 $ (0.4 ) $ 120.3
to Moody's
Corporation
Earnings per
share
attributable
to Moody's
common
shareholders
Basic $ 0.38 $ 0.41 $ 0.49 $ 0.49
Diluted $ 0.38 $ 0.41 $ 0.48 $ 0.48
*In addition to its reported results, Moody's has included in the table above
adjusted results that the Securities and Exchange Commission defines as "non-GAAP
financial measures." Management believes that such non-GAAP financial measures,
when read in conjunction with the company's reported results, can provide useful
supplemental information for investors analyzing period to period comparisons of
the company's results. The table above shows Moody's results for each of the three
month periods ended March 31, 2009 and 2008, adjusted to exclude the impact of
restructuring.
Source: Moody's Corporation