-
1Q12 revenue of $646.8 million up 12% from 1Q11
-
Reported 1Q12 EPS of $0.76 up 13% from 1Q11
-
Reaffirming FY 2012 EPS guidance of $2.62 to $2.72; expecting to be
toward the upper end of the range
NEW YORK--(BUSINESS WIRE)--
Moody’s Corporation (NYSE: MCO) today announced results for the first
quarter 2012.
Summary of Results for First Quarter 2012
Moody’s reported revenue of $646.8 million for the three months ended
March 31, 2012 as compared to $577.1 million for the first quarter of
2011. Operating income for the quarter was $269.0 million, an 8%
increase from $250.1 million for the same period last year. Diluted
earnings per share were $0.76 for the first quarter of 2012.
"Moody’s delivered strong financial results for the first quarter of
2012, primarily reflecting increased corporate and public, project and
infrastructure debt issuance as well as continued solid performance from
Moody’s Analytics," said Raymond McDaniel, President and Chief Executive
Officer of Moody’s. “While the level of activity was strong in the first
quarter, we remain cautious about market conditions for the remainder of
the year. As a result, we are reaffirming our 2012 EPS guidance of $2.62
to $2.72 but now expect to be toward the upper end of the range.”
First Quarter Revenue
For Moody’s Corporation overall, global revenue of $646.8 million for
the first quarter of 2012 was up 12% from the first quarter of 2011.
U.S. revenue of $344.0 million for the first quarter of 2012 increased
14% from the first quarter of 2011, while revenue generated outside the
U.S. of $302.8 million increased 10% from the prior-year period. Global
revenue for Moody’s Investors Service (MIS) for the first quarter of
2012 was $452.7 million, an increase of 10% from the prior-year period.
U.S. revenue of $259.2 million for the first quarter of 2012 increased
13% from the first quarter of 2011. Outside the U.S., revenue of $193.5
million increased 6% from the year-ago period. Foreign currency
translation unfavorably impacted MIS revenue by $4.4 million.
Within MIS, global corporate finance revenue of $200.5 million in the
first quarter of 2012 was up 10% from the same quarter of 2011,
reflecting stronger investment grade and solid speculative grade bond
issuance activity. Corporate finance revenue increased 8% in the U.S.
and 15% outside the U.S.
Global structured finance revenue totaled $94.3 million for the first
quarter of 2012, an increase of 5% from a year earlier. U.S. structured
finance revenue grew 15% from the year-ago period, primarily due to
strength in asset-backed securities and commercial real estate. Non-U.S.
structured finance revenue was down 2%, reflecting weaker issuance
volumes in European asset-backed securities in the first quarter of 2012
as well as demand in the first quarter of 2011 for ratings of
outstanding securitizations placed with European government-sponsored
facilities.
Global financial institutions revenue of $78.8 million in the first
quarter of 2012 increased 2% compared to the prior-year period. U.S.
financial institutions revenue was essentially flat, while non-U.S.
revenue grew 4 percent.
Global public, project and infrastructure finance revenue was $79.1
million for the first quarter of 2012, an increase of 23% from the first
quarter of 2011. U.S. revenue was up 37% from the prior-year period,
primarily due to gains in public and project finance, while non-U.S.
revenue grew 4 percent.
Global revenue for Moody’s Analytics (MA) for the first quarter of 2012
was $194.1 million, up 18% from the first quarter of 2011. The impact of
foreign currency translation was negligible. Revenue from research, data
and analytics of $119.5 million increased by 9% from the prior-year
period, primarily due to increased sales of credit research and related
data. Revenue from enterprise risk solutions, formerly risk management
software, of $48.1 million was up 11% over the prior-year period.
Professional services revenue of $26.5 million more than doubled from
the prior-year period, reflecting both the acquisition of a majority
stake in Copal Partners in November 2011 and organic growth in MA’s
training and education business.
In the U.S., MA revenue of $84.8 million for the first quarter of 2012
increased 19% from the prior-year period. Outside the U.S., revenue of
$109.3 million grew 17% as compared with the same quarter of 2011.
First Quarter Expenses
First quarter 2012 expenses for Moody’s Corporation were $377.8 million,
16% higher than in the prior-year period, primarily due to increased
headcount as well as non-compensation costs related to technology and
acquisitions that closed in late 2011. Moody’s reported operating margin
for the first quarter of 2012 was 41.6%, down from 43.3% in the first
quarter of 2011. The impact of foreign currency translation on first
quarter expenses was negligible.
Moody’s effective tax rate was 32.1% for the first quarter of 2012,
compared with 33.2% for the prior-year period. The decrease in the
effective tax rate was primarily due to benefits derived from
international tax initiatives and tax audit settlements partially offset
by miscellaneous discrete items.
Capital Allocation and Liquidity
During the first quarter of 2012, Moody’s did not repurchase any shares,
but issued 2.6 million shares under employee stock-based compensation
plans. Outstanding shares as of March 31, 2012 totaled 224.7 million,
representing a 1% decline from a year earlier. As of March 31, 2012,
Moody’s had $0.9 billion of share repurchase authority remaining under
its current program. At quarter-end, Moody’s had $1.2 billion of
outstanding debt and $1.0 billion of additional debt capacity available
under its revolving credit facility. Total cash and cash equivalents at
quarter-end were $814.7 million, an increase of $95.2 million from a
year earlier.
Assumptions and Outlook for Full-Year 2012
Moody’s outlook for 2012 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
amount of debt issued. There is an important degree of uncertainty
surrounding these assumptions and, if actual conditions differ, Moody’s
results for the year may differ materially from the current outlook. Our
guidance assumes foreign currency translation at end-of-quarter exchange
rates.
Moody’s is reaffirming its EPS guidance for the full-year 2012 in the
range of $2.62 to $2.72; however, certain components of 2012 guidance
have been modified to reflect our current view of credit market
conditions. For Moody’s overall, the Company now expects full-year 2012
revenue to grow in the low-double-digit percent range. Full-year 2012
expenses are now projected to increase in the low-double-digit percent
range. Full-year 2012 operating margin is still projected to be
approximately 39 percent. The effective tax rate is still expected to be
approximately 33 percent. The Company still expects diluted earnings per
share for full-year 2012 in the range of $2.62 to $2.72 but now expects
to be toward the upper end of the range.
For the global MIS business, revenue for full-year 2012 is now expected
to increase in the mid- to high-single-digit percent range. Within the
U.S., MIS revenue is still expected to increase in the low-double-digit
percent range, while non-U.S. revenue is now expected to increase in the
low-single-digit percent range. Corporate finance revenue is now
forecasted to grow in the low-double-digit percent range. Revenue from
each of structured finance and financial institutions is now expected to
be flat to slightly up, while public, project and infrastructure finance
revenue is now expected to increase in the mid-teens percent range.
For MA, full-year 2012 revenue is still expected to increase in the
high-teens percent range both inside and outside the U.S. Revenue growth
is still projected in the mid-single-digit percent range for research,
data and analytics and in the low 20’s percent range for enterprise risk
solutions, reflecting growth in the core business as well as the
December 2011 acquisition of Barrie & Hibbert. Professional services
revenue is now projected to grow by approximately 80%, inclusive of
revenue from the late 2011 acquisition of a majority stake in Copal
Partners and continued growth in MA’s existing training and education
businesses.
Conference Call
A conference call to discuss first quarter 2012 results will be held
this morning, April 26, 2012, at 11:30 a.m. Eastern Time. Individuals
within the U.S. and Canada can access the call by dialing
1-877-400-0505. Other callers should dial +1-719-234-7477. 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 Investor Relations website, http://ir.moodys.com,
until 11:59 p.m. Eastern Time, May 25, 2012.
A replay of the teleconference will be available from 3:30 p.m. Eastern
Time, April 26, 2012 until 11:59 p.m. Eastern Time, May 25, 2012. The
replay can be accessed from within the U.S. and Canada by dialing
888-203-1112. Other callers can access the replay at +1-719-457-0820.
The replay confirmation code is 3921834.
*****
ABOUT MOODY'S CORPORATION
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
$2.3 billion in 2011, employs approximately 6,400 people worldwide and
maintains a presence in 28 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 2012 and other forward-looking
statements in this release are made as of April 26, 2012, 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,
2011 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
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
646.8
|
|
|
$
|
577.1
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Operating
|
|
|
185.5
|
|
|
|
160.8
|
|
|
Selling, general and administrative
|
|
|
168.8
|
|
|
|
148.5
|
|
|
Depreciation and amortization
|
|
|
23.5
|
|
|
|
17.7
|
|
|
Total expenses
|
|
|
377.8
|
|
|
|
327.0
|
|
|
Operating income
|
|
|
269.0
|
|
|
|
250.1
|
|
|
Non-operating (expense) income, net
|
|
|
|
|
|
Interest (expense) income, net
|
|
|
(10.3
|
)
|
|
|
(18.2
|
)
|
|
Other non-operating (expense) income, net
|
|
|
(0.1
|
)
|
|
|
3.3
|
|
|
Total
|
|
|
(10.4
|
)
|
|
|
(14.9
|
)
|
|
Income before provision for income taxes
|
|
|
258.6
|
|
|
|
235.2
|
|
|
Provision for income taxes
|
|
|
83.1
|
|
|
|
78.1
|
|
|
Net income
|
|
|
175.5
|
|
|
|
157.1
|
|
|
Less: net income attributable to noncontrolling interests
|
|
|
2.0
|
|
|
|
1.6
|
|
|
Net income attributable to Moody's Corporation
|
|
$
|
173.5
|
|
|
$
|
155.5
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Moody's common shareholders
|
|
|
|
|
|
Basic
|
|
$
|
0.78
|
|
|
$
|
0.68
|
|
|
Diluted
|
|
$
|
0.76
|
|
|
$
|
0.67
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
Basic
|
|
|
223.4
|
|
|
|
228.9
|
|
|
Diluted
|
|
|
227.4
|
|
|
|
231.4
|
|
|
Moody's Corporation
|
|
Supplemental Revenue Information (Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
Amounts in millions
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Moody's Investors Service
|
|
|
|
|
|
Corporate Finance
|
|
$
|
200.5
|
|
|
$
|
181.8
|
|
|
Structured Finance
|
|
|
94.3
|
|
|
|
89.4
|
|
|
Financial Institutions
|
|
|
78.8
|
|
|
|
76.9
|
|
|
Public, Project and Infrastructure Finance
|
|
|
79.1
|
|
|
|
64.5
|
|
|
Intersegment royalty
|
|
|
17.1
|
|
|
|
16.0
|
|
|
Sub-total MIS
|
|
|
469.8
|
|
|
|
428.6
|
|
|
Eliminations
|
|
|
(17.1
|
)
|
|
|
(16.0
|
)
|
|
Total MIS revenue
|
|
|
452.7
|
|
|
|
412.6
|
|
|
|
|
|
|
|
|
Moody's Analytics
|
|
|
|
|
|
Research, Data and Analytics
|
|
|
119.5
|
|
|
|
109.6
|
|
|
Enterprise Risk Solutions
|
|
|
48.1
|
|
|
|
43.2
|
|
|
Professional Services
|
|
|
26.5
|
|
|
|
11.7
|
|
|
Intersegment revenue
|
|
|
3.0
|
|
|
|
2.6
|
|
|
Sub-total MA
|
|
|
197.1
|
|
|
|
167.1
|
|
|
Eliminations
|
|
|
(3.0
|
)
|
|
|
(2.6
|
)
|
|
Total MA revenue
|
|
|
194.1
|
|
|
|
164.5
|
|
|
|
|
|
|
|
|
Total Moody's Corporation revenue
|
|
$
|
646.8
|
|
|
$
|
577.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moody's Corporation revenue by geographic area
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
344.0
|
|
|
$
|
301.4
|
|
|
International
|
|
|
302.8
|
|
|
|
275.7
|
|
|
|
|
$
|
646.8
|
|
|
$
|
577.1
|
|
|
|
|
|
|
|
|
Moody's Corporation
|
|
Consolidated Interest (Expense) / Income, Net (Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
Amounts in millions
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Interest (expense) / income:
|
|
|
|
|
|
Expense on borrowings
|
|
$
|
(16.4
|
)
|
|
$
|
(16.4
|
)
|
|
Income
|
|
|
1.3
|
|
|
|
1.0
|
|
|
UTPs and other tax related liabilities
|
|
|
5.0
|
|
|
|
(3.6
|
)
|
|
Interest capitalized
|
|
|
(0.2
|
)
|
|
|
0.8
|
|
|
Total interest (expense) income, net
|
|
$
|
(10.3
|
)
|
|
$
|
(18.2
|
)
|
|
Moody's Corporation
|
|
Selected Consolidated Balance Sheet Data (Unaudited)
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
Amounts in millions
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
814.7
|
|
$
|
760.0
|
|
|
Short-term investments
|
|
|
13.3
|
|
|
14.8
|
|
|
Total current assets
|
|
|
1,526.6
|
|
|
1,424.4
|
|
|
Non-current assets
|
|
|
1,467.8
|
|
|
1,451.7
|
|
|
Total assets
|
|
|
2,994.4
|
|
|
2,876.1
|
|
|
Total current liabilities
|
|
|
1,011.5
|
|
|
1,134.0
|
|
|
Total debt (1)
|
|
|
1,236.8
|
|
|
1,243.8
|
|
|
Other long-term liabilities
|
|
|
684.9
|
|
|
667.5
|
|
|
Total shareholders' equity (deficit)
|
|
|
91.2
|
|
|
(158.4
|
)
|
|
Redeemable noncontrolling interest*
|
|
|
69.4
|
|
|
60.5
|
|
|
Total liabilities, redeemable noncontrolling interest and
shareholders' equity (deficit)
|
|
|
2,994.4
|
|
|
2,876.1
|
|
|
|
|
|
|
|
|
Actual number of shares outstanding
|
|
|
224.7
|
|
|
222.4
|
|
|
|
|
|
|
|
|
* Represents a noncontrolling interest related to the November 2011
acquisition of Copal Partners
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
(1) Total debt consists of the following:
|
|
2012
|
|
2011
|
|
Series 2005-1 Notes due 2015 (a)
|
|
|
308.2
|
|
|
311.5
|
|
|
Series 2007-1 Notes due 2017
|
|
|
300.0
|
|
|
300.0
|
|
|
2008 Term Loan due 2013 (b)
|
|
|
131.3
|
|
|
135.0
|
|
|
2010 Senior Notes due 2020 (c)
|
|
|
497.3
|
|
|
497.3
|
|
|
Total debt (d)
|
|
$
|
1,236.8
|
|
$
|
1,243.8
|
|
(a) Includes an $8.2 million and $11.5 million fair value
adjustment on an interest rate hedge at March 31, 2012 and December 31,
2011, respectively.
(b) Various payments through 2013.
(c) Represents $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.
(d) Of the total debt shown in the table above, $99.4 million
and $71.3 million are classified within total current liabilities at
March 31, 2012 and December 31, 2011, respectively, and consist of the
current portion of borrowings under the 2008 Term Loan.
Media Contact:
Michael Adler
Vice President
Corporate
Communications
212-553-4667
michael.adler@moodys.com
or
Investor
Relations Contact:
Salli Schwartz
Global Head of Investor
Relations
212-553-4862
sallilyn.schwartz@moodys.com
Source: Moody's Corporation