-
1Q11 revenue up 21% to $577.1 million
-
Reported 1Q11 EPS of $0.67 up 43% from 1Q10
-
Raising FY 2011 EPS guidance to a range of $2.22 to $2.32 from
previous range of $2.12 to $2.22
-
Increased quarterly dividend by 22% to $0.14 per share
NEW YORK--(BUSINESS WIRE)--
Moody’s Corporation (NYSE: MCO) today announced results for the first
quarter 2011.
Summary of Results for First Quarter 2011
Moody’s reported revenue of $577.1 million for the three months ended
March 31, 2011, an increase of 21% from $476.6 million for the first
quarter of 2010. Operating income for the quarter was $250.1 million, a
27% increase from $196.8 million for the same period last year. Diluted
earnings per share were $0.67 for the first quarter of 2011, 43% higher
than $0.47 reported in the first quarter of 2010.
"Moody's first quarter results reflected strong corporate debt issuance
and increased structured finance ratings activity, supporting growth at
Moody’s Investors Service, and continued solid performance from Moody’s
Analytics," said Raymond McDaniel, Chairman and Chief Executive Officer
of Moody’s. "We are raising our full-year 2011 EPS guidance to a range
of $2.22 to $2.32 based on strong first-quarter performance. Our
expectations for market conditions for the remainder of the year are
generally unchanged from our February guidance.”
First Quarter Revenue
For Moody’s Corporation overall, global revenue of $577.1 million
increased 21% from the first quarter of 2010. The impact of foreign
currency translation was negligible. U.S. revenue of $301.4 million for
the first quarter of 2011 increased 18% from the first quarter of 2010,
while revenue generated outside the U.S. of $275.7 million increased 24%
from the prior-year period. Revenue generated outside the U.S.
represented 48% of Moody’s total revenue for the quarter, up from 47% in
the year-ago period.
Global revenue for Moody’s Investors Service (“MIS”) for the first
quarter of 2011 was $412.6 million, an increase of 23% from the
prior-year period. The impact of foreign currency translation was
negligible. U.S. revenue of $230.0 million for the first quarter of 2011
increased 22% from the first quarter of 2010. Outside the U.S., revenue
of $182.6 million increased 25% from the year-ago period.
Within MIS, global corporate finance revenue of $181.8 million in the
first quarter of 2011 was up 44% from the same quarter of 2010.
Corporate finance revenue grew 52% in the U.S. and 31% outside the U.S.,
due to strong issuance activity in both investment-grade and high-yield
markets.
Global structured finance revenue totaled $89.4 million for the first
quarter of 2011, an increase of 25% from a year earlier. U.S. structured
finance revenue grew 11% from the year-ago period, reflecting strength
in commercial real-estate finance issuance, partially offset by declines
in asset-backed securities. Non-U.S. structured finance revenue
increased 39%, driven primarily by demand for ratings for
securitizations placed with government-sponsored facilities in Europe
and increased covered bond issuance.
Global financial institutions revenue of $76.9 million in the first
quarter of 2011 increased 1% compared to the same quarter of 2010. U.S.
financial institutions revenue declined 2%, while non-U.S. revenue grew
3 percent.
Global public, project and infrastructure finance revenue was $64.5
million for the first quarter of 2011, an increase of 5% from the first
quarter of 2010. U.S. revenue declined 10% from the prior-year period
reflecting weakness in public and project finance issuance. Non-U.S.
revenue grew 35%, primarily due to gains in infrastructure finance.
Global revenue for Moody’s Analytics (“MA”) for the first quarter of
2011 was $164.5 million, up 17% from the first quarter of 2010.
Excluding the unfavorable impact of foreign currency translation,
revenue grew 18 percent. Revenue from research, data and analytics of
$109.6 million increased by 5% from the prior-year period and risk
management software revenue of $39.6 million grew 19 percent. Software
revenue in the quarter was helped by the early completion of
transactions that were expected to be realized later this year.
Professional services revenue of $15.3 million increased more than
fourfold from the prior-year period, reflecting both the acquisition of
CSI Global Education in November 2010 and much stronger results in the
base business.
In the U.S., MA revenue of $71.4 million for the first quarter of 2011
increased 9% from the prior-year period. Outside the U.S., revenue of
$93.1 million grew 23% compared to the same quarter of 2010.
First Quarter Expenses
First quarter 2011 expenses for Moody’s Corporation of $327.0 million
were 17% greater than in the prior-year period, primarily due to
increased headcount compared to the first quarter 2010, higher accruals
for incentive compensation reflecting the stronger full-year outlook and
ongoing technology spending. Moody’s reported operating margin for the
first quarter of 2011 was 43.3%, compared to 41.3% in the first quarter
of 2010. Excluding the unfavorable impact of foreign currency
translation, expenses increased 16 percent.
Moody’s effective tax rate was 33.2% for the first quarter of 2011,
compared with 37.2% for the prior-year period. The decrease was
primarily due to a higher proportion of taxable income generated
internationally in lower tax jurisdictions and a reduction in U.S. state
income taxes.
Capital Allocation and Liquidity
On April 26, 2011, Moody’s increased its quarterly dividend by 22% from
$0.115 to $0.14 per share of Moody’s common stock. During the first
quarter of 2011, Moody’s repurchased 4.3 million shares at a total cost
of $128 million and issued 1.4 million shares under employee stock-based
compensation plans. Outstanding shares as of March 31, 2011 totaled
227.8 million, representing a 4% decrease from a year earlier. As of
March 31, 2011, Moody’s had $1.1 billion of share repurchase authority
remaining under its current program. At quarter-end, Moody’s had $1.2
billion of outstanding debt and $1 billion of additional debt capacity
available under its revolving credit facility. At quarter-end, total
cash and cash equivalents were $720 million, an increase of $223 million
from a year earlier.
Assumptions and Outlook for Full-Year 2011
Moody’s outlook for 2011 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
eventual withdrawal 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 the
current outlook.
Moody’s is revising its guidance for the full-year 2011 to reflect
stronger than expected first quarter performance. The outlook for market
conditions for the remainder of the year is generally unchanged from
original guidance as of February 3, 2011. Moody’s guidance assumes
foreign currency translation at end-of-quarter exchange rates. For
Moody’s overall, the Company now expects full-year 2011 revenue to grow
in the low-double-digit percent range. Revenue expectations for certain
areas have changed based on conditions specific to those businesses and
geographies. Full-year 2011 expenses are now projected to increase in
the high-single-digit percent range. Full-year 2011 operating margin is
still projected between 38% and 40% and the effective tax rate is still
expected to be approximately 36 percent. Share repurchase is expected to
continue at modest levels in 2011 subject to available cash flow and
other capital allocation decisions. The Company now expects diluted
earnings per share for full-year 2011 in the range of $2.22 to $2.32.
For the global MIS business, revenue for full-year 2011 is now expected
to increase in the low-double-digit percent range. Within the U.S., MIS
revenue is now expected to increase in the mid- to high-single-digit
percent range, while non-U.S. revenue is now projected to increase in
the mid- to high-teens percent range. Corporate finance revenue is now
forecast to grow in the high-teens percent range. Structured finance
revenue is now forecast to increase in the mid-single-digit percent
range. Revenue from financial institutions is now expected to grow in
the high-single-digit percent range, while public, project and
infrastructure finance revenue is expected to increase in the
mid-single-digit percent range.
For Moody’s Analytics, full-year 2011 revenue is still expected to
increase in the high-single to low-double-digit percent range. Revenue
growth is still projected in the mid-single-digit percent range for
research, data and analytics and in the low- to mid-single-digit percent
range for risk management software. Professional services revenue is
still projected to more than double, primarily reflecting revenue from
the late 2010 acquisition of CSI Global Education and very strong
performance in the risk management advisory business. MA revenue is
still expected to increase in the high-single-digit percent range in the
U.S. and in the low-double-digit percent range outside the U.S.
Conference Call
A conference call to discuss first quarter 2011 results will be held
this morning, April 27, 2011, at 11:30 a.m. Eastern Time. Individuals
within the U.S. and Canada can access the call by dialing
1-800-289-0722. Other callers should dial +1-913-905-3198. Please dial
into the call by 11:20 a.m. Eastern Time. The passcode for the call is
“Moody’s Corporation.”
The teleconference will be webcast with a slide presentation and can be
accessed on Moody's Shareholder Relations website, http://ir.moodys.com,
until midnight Eastern Time, May 26, 2011.
A replay of the teleconference will be available from 4:00 p.m. Eastern
Time, April 27, 2011 until midnight Eastern Time, May 26, 2011. The
replay can be accessed from within the U.S. and Canada by dialing
1-888-203-1112. Other callers can access the replay at +1-719-457-0820.
The replay confirmation code is 1135212.
*****
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 offers leading-edge software,
advisory services and research for credit and economic analysis and
financial risk management. The Corporation, which reported revenue of
$2.0 billion in 2010, employs approximately 4,500 people worldwide and
maintains a presence in 26 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 2011 and other forward-looking
statements in this release are made as of April 27, 2011, 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; both proposed and recently adopted U.S., foreign, state
and local legislation and regulations, including the Dodd-Frank Wall
Street Reform and Consumer Protection Act; regulations relating to the
oversight of credit rating agencies; provisions in the Dodd-Frank Act
modifying pleading and liability standards applicable to credit rating
agencies in a manner adverse to rating agencies; possible judicial
decisions in various jurisdictions regarding the status of and potential
liabilities of credit 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,
2010 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,
|
|
Amounts in millions, except per share amounts
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
577.1
|
|
|
|
$
|
476.6
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Operating
|
|
|
|
160.8
|
|
|
|
|
135.9
|
|
|
Selling, general and administrative
|
|
|
|
148.5
|
|
|
|
|
128.8
|
|
|
Restructuring
|
|
|
|
-
|
|
|
|
|
(0.7
|
)
|
|
Depreciation and amortization
|
|
|
|
17.7
|
|
|
|
|
15.8
|
|
|
Total expenses
|
|
|
|
327.0
|
|
|
|
|
279.8
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
250.1
|
|
|
|
|
196.8
|
|
|
Non-operating (expense) income, net
|
|
|
|
|
|
|
|
Interest (expense) income, net
|
|
|
|
(18.2
|
)
|
|
|
|
(13.3
|
)
|
|
Other non-operating (expense) income, net
|
|
|
|
3.3
|
|
|
|
|
(1.0
|
)
|
|
Total
|
|
|
|
(14.9
|
)
|
|
|
|
(14.3
|
)
|
|
Income before provision for income taxes
|
|
|
|
235.2
|
|
|
|
|
182.5
|
|
|
Provision for income taxes
|
|
|
|
78.1
|
|
|
|
|
67.8
|
|
|
Net income
|
|
|
|
157.1
|
|
|
|
|
114.7
|
|
|
Less: net income attributable to noncontrolling interests
|
|
|
|
1.6
|
|
|
|
|
1.3
|
|
|
Net income attributable to Moody's Corporation
|
|
|
$
|
155.5
|
|
|
|
$
|
113.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Moody's common shareholders
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.68
|
|
|
|
$
|
0.48
|
|
|
Diluted
|
|
|
$
|
0.67
|
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
|
228.9
|
|
|
|
|
236.9
|
|
|
Diluted
|
|
|
|
231.4
|
|
|
|
|
239.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moody's Corporation
|
|
Supplemental Revenue Information (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
Amounts in millions
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
Moody's Investors Service
|
|
|
|
|
|
|
|
Corporate Finance
|
|
|
$
|
181.8
|
|
|
|
$
|
126.4
|
|
|
Structured Finance
|
|
|
|
89.4
|
|
|
|
|
71.5
|
|
|
Financial Institutions
|
|
|
|
76.9
|
|
|
|
|
76.2
|
|
|
Public, Project and Infrastructure Finance
|
|
|
|
64.5
|
|
|
|
|
61.4
|
|
|
Intersegment royalty (1)
|
|
|
|
16.0
|
|
|
|
|
15.3
|
|
|
Sub-total MIS
|
|
|
|
428.6
|
|
|
|
|
350.8
|
|
|
Eliminations
|
|
|
|
(16.0
|
)
|
|
|
|
(15.3
|
)
|
|
Total MIS revenue
|
|
|
|
412.6
|
|
|
|
|
335.5
|
|
|
|
|
|
|
|
|
|
|
Moody's Analytics
|
|
|
|
|
|
|
|
Research, Data and Analytics
|
|
|
|
109.6
|
|
|
|
|
104.6
|
|
|
Risk Management Software
|
|
|
|
39.6
|
|
|
|
|
33.3
|
|
|
Professional Services
|
|
|
|
15.3
|
|
|
|
|
3.2
|
|
|
Intersegment license fee (2)
|
|
|
|
2.6
|
|
|
|
|
2.3
|
|
|
Sub-total MA
|
|
|
|
167.1
|
|
|
|
|
143.4
|
|
|
Eliminations
|
|
|
|
(2.6
|
)
|
|
|
|
(2.3
|
)
|
|
Total MA revenue
|
|
|
|
164.5
|
|
|
|
|
141.1
|
|
|
|
|
|
|
|
|
|
|
Total Moody's Corporation revenue
|
|
|
$
|
577.1
|
|
|
|
$
|
476.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moody's Corporation revenue by geographic area
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
$
|
301.4
|
|
|
|
$
|
254.6
|
|
|
International
|
|
|
|
275.7
|
|
|
|
|
222.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
577.1
|
|
|
|
$
|
476.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents intersegment royalty charged to MA from MIS for the
rights to use and distribute content, data and products developed by
MIS.
|
|
(2)
|
|
Represents intersegment license fee charged to MIS from MA for the
use of certain MA products and services in the MIS ratings process.
|
|
|
|
|
|
|
|
Moody's Corporation
|
|
Consolidated Interest (Expense) / Income, Net (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
Amounts in millions
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) / income:
|
|
|
|
|
|
|
|
|
|
Expense on borrowings
|
|
|
$ (16.4)
|
|
|
|
$ (10.8)
|
|
|
Income
|
|
|
1.0
|
|
|
|
0.6
|
|
|
UTPs and other tax related liabilities
|
|
|
(3.6)
|
|
|
|
(3.5)
|
|
|
Interest capitalized
|
|
|
0.8
|
|
|
|
0.4
|
|
|
|
Total interest (expense) income, net
|
|
|
$ (18.2)
|
|
|
|
$ (13.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moody's Corporation
|
|
Selected Consolidated Balance Sheet Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
Amounts in millions
|
|
|
2011
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
719.5
|
|
|
|
$
|
659.6
|
|
|
Short-term investments
|
|
|
6.7
|
|
|
|
|
12.7
|
|
|
Total current assets
|
|
|
1,339.6
|
|
|
|
|
1,343.0
|
|
|
Non-current assets
|
|
|
1,184.8
|
|
|
|
|
1,197.3
|
|
|
Total assets
|
|
|
2,524.4
|
|
|
|
|
2,540.3
|
|
|
Total current liabilities
|
|
|
841.0
|
|
|
|
|
933.8
|
|
|
Total debt (1)
|
|
|
1,234.2
|
|
|
|
|
1,239.6
|
|
|
Other long-term liabilities
|
|
|
685.5
|
|
|
|
|
676.6
|
|
|
Total shareholders' deficit
|
|
|
(223.2
|
)
|
|
|
|
(298.4
|
)
|
|
Total liabilities and shareholders' deficit
|
|
|
2,524.4
|
|
|
|
|
2,540.3
|
|
|
|
|
|
|
|
|
|
|
Actual number of shares outstanding
|
|
|
227.8
|
|
|
|
|
230.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
(1) Total debt consists of the following:
|
|
|
2011
|
|
|
|
|
2010
|
|
|
Series 2005-1 Notes due 2015 (a)
|
|
$
|
292.8
|
|
|
|
$
|
296.3
|
|
|
Series 2007-1 Notes due 2017
|
|
|
300.0
|
|
|
|
|
300.0
|
|
|
2008 Term Loan due 2013 (b)
|
|
|
144.4
|
|
|
|
|
146.3
|
|
|
2010 Senior Notes due 2020 (c)
|
|
|
497.0
|
|
|
|
|
497.0
|
|
|
Total debt (d)
|
|
$
|
1,234.2
|
|
|
|
$
|
1,239.6
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Net of $7.2 million and $3.7 million fair value adjustment on an
interest rate hedge at March 31, 2011 and December 31, 2010,
respectively.
|
|
(b)
|
|
Various payments through 2013
|
|
(c)
|
|
During the third quarter of 2010 the Company issued $500 million
of 5.5% publicly traded Senior Notes which mature on September 1,
2020. The notes were offered to the public at 99.374% of the face
amount and are shown net of unamortized discount of $3.0 million
at both March 31, 2011 and December 31, 2010.
|
|
(d)
|
|
Of the total debt shown in the table above, $13.1 million and
$11.3 million are classified within total current liabilities at
March 31, 2011 and December 31, 2010, respectively, and consist of
the current portion of borrowings under the 2008 Term Loan.
|
Source: Moody's Corporation