-
1Q16 revenue of $816.1 million down 6% from 1Q15
-
1Q16 EPS of $0.93 down 16% from 1Q15
-
FY 2016 EPS guidance now $4.55 to $4.65, including $0.02 dilution from
the acquisition of GGY
NEW YORK--(BUSINESS WIRE)--
Moody’s Corporation (NYSE:MCO) today announced results for the first
quarter of 2016 and updated its outlook for full year 2016.
“Reduced global bond issuance in the first quarter weighed on Moody’s
financial performance despite strong results at Moody’s Analytics, which
is not sensitive to debt issuance activity,” said Raymond McDaniel,
President and Chief Executive Officer of Moody’s. “Given market
conditions, we have scaled back our revenue and earnings expectations
for full year 2016, and are managing our cost base accordingly.”
FIRST QUARTER 2016 HIGHLIGHTS
Moody’s Corporation reported revenue of $816.1 million for the three
months ended March 31, 2016, down 6% from $865.6 million for the same
period of 2015.
Operating expense totaled $512.0 million, up 4% from $494.3 million, and
operating income was $304.1 million, down 18% from $371.3 million.
Adjusted operating income (operating income before depreciation and
amortization) was $334.0 million, down 16% from $399.9 million in the
prior-year period. Operating margin for the first quarter of 2016 was
37.3% and adjusted operating margin was 40.9%.
EPS of $0.93 was down 16% from the first quarter of 2015.
MCO FIRST QUARTER 2016 REVENUE DOWN 6%
Moody’s Corporation reported global revenue of $816.1 million for the
first quarter of 2016, down 6% from the first quarter of 2015. Foreign
currency translation unfavorably impacted revenue by 2%.
US revenue was $480.0 million, down 4% from $499.8 million, while non-US
revenue was $336.1 million, down 8% from $365.8 million. Revenue
generated outside the US constituted 41% of total revenue, versus 42% in
the prior-year period.
MIS First Quarter Revenue Down 13%
Global revenue for Moody’s Investors Service (MIS) for the first quarter
of 2016 was $525.1 million, down 13% from $602.3 million in the
prior-year period. Foreign currency translation unfavorably impacted MIS
revenue by 1%. US revenue was $336.0 million, down 10%, while non-US
revenue was $189.1 million, down 18%.
Global corporate finance revenue was $240.3 million, down 20% from the
prior-year period. This result reflected lower levels of global
speculative-grade issuance as well as a decline in the number of
investment-grade bond offerings. US corporate finance revenue decreased
10%, while non-US revenue decreased 36%.
Global structured finance revenue totaled $90.6 million, down 11% from a
year earlier, as US securitization activity slowed, primarily within the
CMBS and CLO markets. US structured finance revenue was down 15%, while
non-US revenue was flat.
Global financial institutions revenue was $94.9 million, up 1% compared
to the prior-year period. US financial institutions revenue was down 3%,
while non-US revenue was up 4%.
Global public, project and infrastructure finance revenue was $91.5
million, down 9% from the prior-year period as US project finance
activity and European infrastructure-related issuance fell amid choppy
market conditions. US public, project and infrastructure finance revenue
was down 6%, while non-US revenue was down 14%.
MA First Quarter Revenue Up 11%
Global revenue for Moody’s Analytics (MA) for the first quarter of 2016
was $291.0 million, up 11% from the first quarter of 2015. Foreign
currency translation unfavorably impacted MA revenue by 2%. MA’s US
revenue was $144.0 million, up 12%, and its non-US revenue was $147.0
million, up 9%.
Global revenue from research, data and analytics (RD&A) was $164.9
million, up 10% from the prior-year period. Growth was mainly due to
strong new sales of research and data as well as record customer
retention. US RD&A revenue was up 14%, while non-US revenue was up 5%.
Global enterprise risk solutions (ERS) revenue of $89.5 million was up
16%, primarily from accelerated project deliveries. US ERS revenue was
up 14%, while non-US revenue was up 17%.
Global revenue from professional services of $36.6 million was flat to
the prior-year period. US professional services revenue was down 6%,
while non-US revenue was up 3%.
FIRST QUARTER 2016 EXPENSE UP 4%
Expenses for the first quarter of 2016 were $512.0 million, up 4% from
the prior-year period. The increase was primarily due to higher
compensation costs in MA, reflecting additional headcount required to
support business growth, as well as Moody’s ongoing technology
investments. Expenses in MIS were down slightly compared to the
prior-year period. Foreign currency translation favorably impacted
expense by 2%.
Operating income was $304.1 million, down 18% from $371.3 million. The
impact of foreign currency translation on operating income was
negligible. Adjusted operating income of $334.0 million was down 16%
from the prior-year period. The operating margin was 37.3%, down from
42.9%. The adjusted operating margin was 40.9%, down from 46.2%.
Moody’s effective tax rate was 32.3% for first quarter of 2016, compared
with 32.9% for the prior-year period.
2016 CAPITAL ALLOCATION AND LIQUIDITY
$334 Million Returned to Shareholders in First
Quarter
During the first quarter of 2016, Moody’s repurchased 2.9 million shares
at a total cost of $262.1 million, or an average cost of $89.83 per
share, and issued 1.6 million shares under its annual employee
stock-based compensation plans. Moody’s also paid $72.1 million in
dividends during the quarter.
Outstanding shares as of March 31, 2016 totaled 194.3 million, down 4%
from the prior year. As of March 31, 2016, Moody’s had $1.2 billion of
share repurchase authority remaining.
At quarter-end, Moody’s had $3.4 billion of outstanding debt and $1.0
billion of additional debt capacity available under its revolving credit
facility. Total cash, cash equivalents and short-term investments at
quarter-end were $2.1 billion. Free cash flow in the first three months
of 2016 was $211.0 million, down 13% from the first three months of
2015, primarily due to the year-over-year decline in net income and
changes in working capital.
ASSUMPTIONS AND OUTLOOK FOR FULL YEAR 2016
Moody’s outlook for 2016 is based on assumptions about many
macroeconomic and capital market factors, including interest rates,
foreign currency exchange rates, corporate profitability and business
investment spending, mergers and acquisitions, consumer borrowing and
securitization and the amount of debt issued. These assumptions are
subject to uncertainty, and results for the year could differ materially
from our current outlook. Our guidance assumes foreign currency
translation at end-of-quarter exchange rates. Specifically, our forecast
reflects exchange rates for the British pound (£) of $1.44 to £1 and for
the euro (€) of $1.14 to €1.
MCO Full Year 2016 Outlook
Moody’s full year 2016 revenue is now expected to increase in the
low-single-digit percent range.
In response to this revised revenue outlook, Moody’s has reduced its
projected base business spending for the year by approximately $50
million through expense management actions and reduced incentive
compensation. These savings allow the Company to maintain guidance for
operating expenses to increase in the mid-single-digit percent range
despite the addition of GGY’s operating expenses and the negative impact
of foreign currency translation.
Moody’s now projects an operating margin of approximately 41%, while
adjusted operating margin is still expected to be approximately 45%. The
effective tax rate is still expected to be 32% to 32.5%.
The Company now expects 2016 EPS of $4.55 to $4.65, inclusive of $0.02
dilution from the March 2016 acquisition of GGY.
Free cash flow is now expected to be approximately $1 billion. Moody’s
still expects share repurchases to be approximately $1 billion, subject
to available cash, market conditions and other ongoing capital
allocation decisions. Capital expenditures are now expected to be
approximately $125 million. Depreciation and amortization expense is
still expected to be approximately $130 million.
MIS Full Year 2016 Outlook
For MIS, Moody’s now expects 2016 revenue to be approximately flat. US
revenue is now expected to decrease in the low-single-digit percent
range, while non-US revenue is now expected to increase in the
low-single-digit percent range.
Corporate finance revenue is now expected to decrease in the
low-single-digit percent range.
Structured finance revenue is now expected to decrease in the
mid-single-digit percent range as a result of continued challenges to US
securitization activity.
Financial institutions revenue is still expected to increase in the
mid-single-digit percent range.
Public, project and infrastructure finance revenue is now also expected
to increase in the mid-single-digit percent range.
MA Full Year 2016 Outlook
For MA, 2016 revenue is now expected to increase in the
high-single-digit percent range. US revenue is now expected to increase
in the low-double-digit percent range, while non-US revenue is now
expected to increase in the mid-single-digit percent range.
Research, data and analytics revenue is now expected to increase in the
high-single-digit percent range.
Enterprise risk solutions revenue is now expected to increase in the
high-single-digit percent range, including revenue associated with the
March 2016 acquisition of GGY.
Professional services revenue is still expected to decrease in the
low-single-digit percent range.
CONFERENCE CALL
Moody’s will hold a conference call to discuss its first quarter of 2016
results and its updated 2016 outlook on April 29, 2016 at 11:30 a.m.
EST. Individuals within the US 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. EST. The passcode for the call is “Moody’s
Corporation.”
The teleconference will also be webcast with an accompanying slide
presentation which can be accessed through Moody's Investor Relations
website, http://ir.moodys.com
under “Events & Presentations”. The webcast will be available until 3:30
p.m. EST on May 28, 2016.
A replay of the teleconference will be available from 3:30 p.m. EST,
April 29, 2016 until 3:30 p.m. EST, May 28, 2016. The replay can be
accessed from within the United States and Canada by dialing
+1-888-203-1112. Other callers can access the replay at +1-719-457-0820.
The replay confirmation code is 2495047.
*****
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
$3.5 billion in 2015, employs approximately 10,800 people worldwide and
maintains a presence in 36 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 2016 and other forward-looking
statements in this release are made as of April 29, 2016, 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, risks and uncertainties
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 and other securities issued in domestic
and/or global capital markets; other matters that could affect the
volume of debt and other securities issued in domestic and/or global
capital markets, including credit quality concerns, changes in interest
rates and other volatility in the financial markets; the level of merger
and acquisition activity in the US and abroad; the uncertain
effectiveness and possible collateral consequences of US and foreign
government initiatives to respond to the current world-wide credit
market disruptions and economic slowdown; concerns in the marketplace
affecting Moody’s credibility or otherwise affecting market perceptions
of the integrity or utility of independent credit agency ratings; the
introduction of competing products or technologies by other companies;
pricing pressure from competitors and/or customers; the level of success
of new product development and global expansion; the impact of
regulation as an NRSRO, the potential for new US, state and local
legislation and regulations, including provisions in the Financial
Reform Act and regulations resulting from that Act; the potential for
increased competition and regulation in the EU and other foreign
jurisdictions; exposure to litigation related to Moody’s rating
opinions, as well as any other litigation, government and regulatory
proceedings, investigations and inquiries to which the Company may be
subject from time to time; provisions in the Financial Reform Act
legislation modifying the pleading standards, and EU regulations
modifying the liability standards, applicable to credit rating agencies
in a manner adverse to credit rating agencies; provisions of EU
regulations imposing additional procedural and substantive requirements
on the pricing of services; the possible loss of key employees; failures
or malfunctions of Moody’s operations and infrastructure; any
vulnerabilities to cyber threats or other cybersecurity concerns; the
outcome of any review by controlling tax authorities of the Company’s
global tax planning initiatives; the outcome of those Legacy Tax Matters
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; exposure to potential criminal sanctions or
civil remedies if the Company fails to comply with foreign and US laws
and regulations that are applicable in the jurisdictions in which the
Company operates, including sanctions laws, anti-corruption laws and
local laws prohibiting corrupt payments to government officials; the
impact of mergers, acquisitions or other business combinations and the
ability of the Company to successfully integrate acquired businesses;
currency and foreign exchange volatility; the level of future cash
flows; the levels of capital investments; and a decline in the demand
for credit risk management tools by financial institutions; and other
risk factors as discussed in the Company’s annual report on Form 10-K
for the year ended December 31, 2015 and in other filings made by the
Company from time to time with the Securities and Exchange Commission.
|
|
|
Table 1 - Consolidated Statements of Operations (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Amounts in millions, except per share amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
816.1
|
|
$
|
865.6
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Operating
|
|
249.2
|
|
|
244.4
|
|
|
Selling, general and administrative
|
|
232.9
|
|
|
221.3
|
|
|
Depreciation and amortization
|
|
29.9
|
|
|
28.6
|
|
|
|
Total expenses
|
|
512.0
|
|
|
494.3
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
304.1
|
|
|
371.3
|
|
Non-operating (expense) income, net
|
|
|
|
|
|
|
|
Interest expense, net
|
|
(34.1)
|
|
|
(29.3)
|
|
|
Other non-operating income, net
|
|
5.6
|
|
|
2.5
|
|
|
|
Total non-operating expense, net
|
|
(28.5)
|
|
|
(26.8)
|
|
Income before provision for income taxes
|
|
275.6
|
|
|
344.5
|
|
|
Provision for income taxes
|
|
89.0
|
|
|
113.2
|
|
Net income
|
|
186.6
|
|
|
231.3
|
|
|
Less: net income attributable to noncontrolling interests
|
|
2.2
|
|
|
1.2
|
|
Net income attributable to Moody's Corporation
|
$
|
184.4
|
|
$
|
230.1
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Moody's common shareholders
|
|
|
Basic
|
$
|
0.95
|
|
$
|
1.14
|
|
|
Diluted
|
$
|
0.93
|
|
$
|
1.11
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
195.0
|
|
|
202.7
|
|
|
Diluted
|
|
197.9
|
|
|
206.5
|
|
|
|
|
|
|
|
|
|
|
|
Table 2- Supplemental Revenue Information (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
Amounts in millions
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moody's Investors Service
|
|
|
|
|
|
|
|
Corporate Finance
|
$
|
240.3
|
|
$
|
298.7
|
|
|
Structured Finance
|
|
90.6
|
|
|
101.3
|
|
|
Financial Institutions
|
|
94.9
|
|
|
93.8
|
|
|
Public, Project and Infrastructure Finance
|
|
91.5
|
|
|
100.7
|
|
|
MIS Other
|
|
7.8
|
|
|
7.8
|
|
|
Intersegment royalty
|
|
24.0
|
|
|
22.3
|
|
|
Sub-total MIS
|
|
549.1
|
|
|
624.6
|
|
|
Eliminations
|
|
(24.0)
|
|
|
(22.3)
|
|
|
Total MIS revenue
|
|
525.1
|
|
|
602.3
|
|
|
|
|
|
|
|
|
|
Moody's Analytics
|
|
|
|
|
|
|
|
Research, Data and Analytics
|
|
164.9
|
|
|
149.6
|
|
|
Enterprise Risk Solutions
|
|
89.5
|
|
|
77.1
|
|
|
Professional Services
|
|
36.6
|
|
|
36.6
|
|
|
Intersegment revenue
|
|
2.8
|
|
|
3.3
|
|
|
Sub-total MA
|
|
293.8
|
|
|
266.6
|
|
|
Eliminations
|
|
(2.8)
|
|
|
(3.3)
|
|
|
Total MA revenue
|
|
291.0
|
|
|
263.3
|
|
|
|
|
|
|
|
|
|
Total Moody's Corporation revenue
|
$
|
816.1
|
|
$
|
865.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moody's Corporation revenue by geographic area
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
480.0
|
|
$
|
499.8
|
|
|
International
|
|
336.1
|
|
|
365.8
|
|
|
|
|
|
|
|
|
|
|
|
$
|
816.1
|
|
$
|
865.6
|
|
|
|
|
|
|
|
|
|
|
|
Table 3 - Selected Consolidated Balance Sheet Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2016
|
|
2015*
|
|
Amounts in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,576.1
|
|
$
|
1,757.4
|
|
Short-term investments
|
|
|
490.6
|
|
|
474.8
|
|
Total current assets
|
|
|
3,085.3
|
|
|
3,243.1
|
|
Non-current assets
|
|
|
2,029.6
|
|
|
1,859.9
|
|
Total assets
|
|
|
5,114.9
|
|
|
5,103.0
|
|
Total current liabilities
|
|
|
1,151.9
|
|
|
1,218.5
|
|
Total debt
|
|
|
3,428.6
|
|
|
3,380.6
|
|
Other long-term liabilities
|
|
|
885.9
|
|
|
836.9
|
|
Total shareholders' (deficit)
|
|
|
(351.5)
|
|
|
(333.0)
|
|
Total liabilities and shareholders' equity
|
5,114.9
|
|
|
5,103.0
|
|
|
|
|
|
|
|
|
|
Actual number of shares outstanding
|
|
|
194.3
|
|
|
196.1
|
|
|
|
*In the first quarter of 2016, the Company adopted a new accounting
update on a retrospective basis which requires debt issuance costs
to be presented as a reduction of debt rather than as an asset.
Accordingly, the Company reclassified debt issuance costs, which
were previously included in non-current assets, as a reduction of
total debt.
|
|
|
|
|
|
Table 4 - Selected Consolidated Balance Sheet Data (Unaudited)
Continued
|
|
Total debt consists of the following:
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
Principal
Amount
|
|
|
Fair Value of
Interest Rate Swap (1)
|
|
|
Unamortized
(Discount)
Premium
|
|
|
Unamortized Debt
Issuance Cost (2)
|
|
|
Carrying Value
|
|
Notes Payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.06% Series 2007-1 Notes due 2017
|
|
$
|
300.0
|
|
$
|
-
|
|
$
|
-
|
|
$
|
(0.1)
|
|
$
|
299.9
|
|
|
5.50% 2010 Senior Notes, due 2020
|
|
|
500.0
|
|
|
22.1
|
|
|
(1.6)
|
|
|
(1.9)
|
|
|
518.6
|
|
|
4.50% 2012 Senior Notes, due 2022
|
|
|
500.0
|
|
|
-
|
|
|
(2.7)
|
|
|
(2.4)
|
|
|
494.9
|
|
|
4.875% 2013 Senior Notes, due 2024
|
|
|
500.0
|
|
|
-
|
|
|
(2.2)
|
|
|
(3.0)
|
|
|
494.8
|
|
|
2.75% 2014 Senior Notes (5-Year), due 2019
|
|
|
450.0
|
|
|
10.2
|
|
|
(0.5)
|
|
|
(2.2)
|
|
|
457.5
|
|
|
5.25% 2014 Senior Notes (30-Year), due 2044
|
|
|
600.0
|
|
|
-
|
|
|
3.4
|
|
|
(6.1)
|
|
|
597.3
|
|
|
1.75% 2015 Senior Notes, due 2027
|
|
|
569.8
|
|
|
-
|
|
|
-
|
|
|
(4.2)
|
|
|
565.6
|
|
Total long-term debt
|
|
$
|
3,419.8
|
|
$
|
32.3
|
|
$
|
(3.6)
|
|
$
|
(19.9)
|
|
$
|
3,428.6
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
Principal
Amount
|
|
|
Fair Value of
Interest Rate Swap (1)
|
|
|
Unamortized
(Discount)
Premium
|
|
|
Unamortized Debt
Issuance Cost (2)
|
|
|
Carrying Value
|
|
Notes Payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.06% Series 2007-1 Notes due 2017
|
|
$
|
300.0
|
|
$
|
-
|
|
$
|
-
|
|
$
|
(0.2)
|
|
$
|
299.8
|
|
|
5.50% 2010 Senior Notes, due 2020
|
|
|
500.0
|
|
|
9.4
|
|
|
(1.6)
|
|
|
(2.0)
|
|
|
505.8
|
|
|
4.50% 2012 Senior Notes, due 2022
|
|
|
500.0
|
|
|
-
|
|
|
(2.8)
|
|
|
(2.5)
|
|
|
494.7
|
|
|
4.875% 2013 Senior Notes, due 2024
|
|
|
500.0
|
|
|
-
|
|
|
(2.3)
|
|
|
(3.1)
|
|
|
494.6
|
|
|
2.75% 2014 Senior Notes (5-Year), due 2019
|
|
|
450.0
|
|
|
2.3
|
|
|
(0.5)
|
|
|
(2.4)
|
|
|
449.4
|
|
|
5.25% 2014 Senior Notes (30-Year), due 2044
|
|
|
600.0
|
|
|
-
|
|
|
3.4
|
|
|
(6.2)
|
|
|
597.2
|
|
|
1.75% 2015 Senior Notes, due 2027
|
|
|
543.1
|
|
|
-
|
|
|
-
|
|
|
(4.0)
|
|
|
539.1
|
|
Total long-term debt
|
|
$
|
3,393.1
|
|
$
|
11.7
|
|
$
|
(3.8)
|
|
$
|
(20.4)
|
|
$
|
3,380.6
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects interest rate swaps on the 2010 Senior Notes and the 2014
Senior Notes (5-Year).
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Pursuant to a new accounting update, unamortized debt issuance costs
are presented as a reduction to the carrying value of the debt.
|
|
|
|
|
|
|
|
|
|
Table 5 - Non-operating (expense) income, net
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in millions
|
|
2016
|
|
|
2015
|
|
Interest expense, net:
|
|
|
|
|
|
|
|
|
|
Expense on borrowings
|
|
$
|
(34.6)
|
|
|
$
|
(28.3)
|
|
|
Income
|
|
|
2.9
|
|
|
|
1.9
|
|
|
UTPs and other tax related liabilities
|
|
|
(2.8)
|
|
|
|
(3.2)
|
|
|
Interest capitalized
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
Total interest expense, net
|
|
$
|
(34.1)
|
|
|
$
|
(29.3)
|
|
Other non-operating (expense) income, net:
|
|
|
|
|
|
|
|
|
|
FX gain
|
|
$
|
4.0
|
|
|
$
|
-
|
|
|
Joint venture income
|
|
|
1.9
|
|
|
|
1.9
|
|
|
Other
|
|
|
(0.3)
|
|
|
|
0.6
|
|
|
|
Other non-operating income, net
|
|
|
5.6
|
|
|
|
2.5
|
|
Total non-operating expense, net
|
|
$
|
(28.5)
|
|
|
$
|
(26.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6 - Financial Information by Segment:
|
|
The table below presents revenue, adjusted operating income and
operating income by reportable segment. The Company defines adjusted
operating income as operating income excluding depreciation and
amortization.
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
MIS
|
|
|
MA
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
MIS
|
|
|
MA
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Revenue
|
|
$
|
549.1
|
|
|
$
|
293.8
|
|
|
$
|
(26.8)
|
|
|
$
|
816.1
|
|
|
$
|
624.6
|
|
|
$
|
266.6
|
|
|
$
|
(25.6)
|
|
|
$
|
865.6
|
|
Operating, selling,
general and
administrative
expense
|
|
|
278.6
|
|
|
|
230.3
|
|
|
|
(26.8)
|
|
|
|
482.1
|
|
|
|
281.3
|
|
|
|
210.0
|
|
|
|
(25.6)
|
|
|
|
465.7
|
|
Adjusted operating
income
|
|
|
270.5
|
|
|
|
63.5
|
|
|
|
-
|
|
|
|
334.0
|
|
|
|
343.3
|
|
|
|
56.6
|
|
|
|
-
|
|
|
|
399.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
17.5
|
|
|
|
12.4
|
|
|
|
-
|
|
|
|
29.9
|
|
|
|
16.0
|
|
|
|
12.6
|
|
|
|
-
|
|
|
|
28.6
|
|
Operating income
|
|
$
|
253.0
|
|
|
$
|
51.1
|
|
|
$
|
-
|
|
|
$
|
304.1
|
|
|
$
|
327.3
|
|
|
$
|
44.0
|
|
|
$
|
-
|
|
|
$
|
371.3
|
|
Adjusted operating
margin
|
|
|
49.3%
|
|
|
|
21.6%
|
|
|
|
|
|
|
|
40.9%
|
|
|
|
55.0%
|
|
|
|
21.2%
|
|
|
|
|
|
|
|
46.2%
|
|
Operating margin
|
|
|
46.1%
|
|
|
|
17.4%
|
|
|
|
|
|
|
|
37.3%
|
|
|
|
52.4%
|
|
|
|
16.5%
|
|
|
|
|
|
|
|
42.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7 - Transaction and Relationship Revenue:
|
|
The tables below summarize the split between transaction and
relationship revenue. In the MIS segment, excluding MIS Other,
transaction revenue represents the initial rating of a new debt
issuance as well as other one-time fees while relationship revenue
represents the recurring monitoring of a rated debt obligation
and/or entities that issue such obligations, as well as revenue from
programs such as commercial paper, medium-term notes and shelf
registrations. In MIS Other, transaction revenue represents revenue
from professional services and outsourcing engagements and
relationship revenue represents subscription based revenues. In the
MA segment, relationship revenue represents subscription-based
revenues and software maintenance revenue. Transaction revenue in MA
represents software license fees and revenue from risk management
advisory projects, training and certification services, and
outsourced research and analytical engagements.
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Transaction
|
|
|
Relationship
|
|
|
Total
|
|
|
Transaction
|
|
|
Relationship
|
|
|
Total
|
|
Corporate Finance
|
|
|
$151.0
|
|
|
|
$89.3
|
|
|
|
$240.3
|
|
|
|
$213.6
|
|
|
|
$85.1
|
|
|
|
$298.7
|
|
|
|
|
63%
|
|
|
|
37%
|
|
|
|
100%
|
|
|
|
72%
|
|
|
|
28%
|
|
|
|
100%
|
|
Structured Finance
|
|
|
$49.8
|
|
|
|
$40.8
|
|
|
|
$90.6
|
|
|
|
$61.8
|
|
|
|
$39.5
|
|
|
|
$101.3
|
|
|
|
|
55%
|
|
|
|
45%
|
|
|
|
100%
|
|
|
|
61%
|
|
|
|
39%
|
|
|
|
100%
|
|
Financial Institutions
|
|
|
$37.0
|
|
|
|
$57.9
|
|
|
|
$94.9
|
|
|
|
$37.8
|
|
|
|
$56.0
|
|
|
|
$93.8
|
|
|
|
|
39%
|
|
|
|
61%
|
|
|
|
100%
|
|
|
|
40%
|
|
|
|
60%
|
|
|
|
100%
|
|
Public, Project and Infrastructure Finance
|
|
|
$53.8
|
|
|
|
$37.7
|
|
|
|
$91.5
|
|
|
|
$64.4
|
|
|
|
$36.3
|
|
|
|
$100.7
|
|
|
|
|
59%
|
|
|
|
41%
|
|
|
|
100%
|
|
|
|
64%
|
|
|
|
36%
|
|
|
|
100%
|
|
MIS Other
|
|
|
$2.9
|
|
|
|
$4.9
|
|
|
|
$7.8
|
|
|
|
$3.3
|
|
|
|
$4.5
|
|
|
|
$7.8
|
|
|
|
|
37%
|
|
|
|
63%
|
|
|
|
100%
|
|
|
|
42%
|
|
|
|
58%
|
|
|
|
100%
|
|
Total MIS
|
|
|
$294.5
|
|
|
|
$230.6
|
|
|
|
$525.1
|
|
|
|
$380.9
|
|
|
|
$221.4
|
|
|
|
$602.3
|
|
|
|
|
56%
|
|
|
|
44%
|
|
|
|
100%
|
|
|
|
63%
|
|
|
|
37%
|
|
|
|
100%
|
|
Moody's Analytics
|
|
|
$69.3
|
|
|
|
$221.7
|
|
|
|
$291.0
|
|
|
|
$60.6
|
|
|
|
$202.7
|
|
|
|
$263.3
|
|
|
|
|
24%
|
|
|
|
76%
|
|
|
|
100%
|
|
|
|
23%
|
|
|
|
77%
|
|
|
|
100%
|
|
Total Moody's Corporation
|
|
|
$363.8
|
|
|
|
$452.3
|
|
|
|
$816.1
|
|
|
|
$441.5
|
|
|
|
$424.1
|
|
|
|
$865.6
|
|
|
|
|
45%
|
|
|
|
55%
|
|
|
|
100%
|
|
|
|
51%
|
|
|
|
49%
|
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures:
|
|
The tables below reflect certain adjusted results that the SEC
defines as "non-GAAP financial measures" as well as a reconciliation
of each non-GAAP measure to its most directly comparable GAAP
measure. 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 performance,
facilitate comparisons to competitors' operating results and to
provide greater transparency to investors of supplemental
information used by management in its financial and operational
decision-making. These non-GAAP measures, as defined by the Company,
are not necessarily comparable to similarly defined measures of
other companies. Furthermore, these non-GAAP measures should not be
viewed in isolation or used as a substitute for other GAAP measures
in assessing the operating performance or cash flows of the Company.
|
|
|
|
Table 8 - Adjusted Operating Income and Adjusted Operating
Margin:
|
|
The table below reflects a reconciliation of the Company’s operating
income and operating margin to adjusted operating income and
adjusted operating margin. The Company defines adjusted operating
income as operating income excluding depreciation and amortization.
The Company presents adjusted operating income because management
deems this metric to be a useful measure of assessing the operating
performance of Moody’s, measuring the Company's ability to service
debt, fund capital expenditures, and expand its business. Adjusted
operating income excludes depreciation and amortization because
companies utilize productive assets of different ages and use
different methods of both acquiring and depreciating productive
assets. Management believes that the exclusion of this item,
detailed in the reconciliation below, allows for a more meaningful
comparison of the Company’s results from period to period and across
companies. The Company defines adjusted operating margin as adjusted
operating income divided by revenue.
|
|
|
|
|
Three Months Ended
March 31,
|
|
(amounts in millions)
|
|
2016
|
|
2015
|
|
Operating income
|
|
$
|
304.1
|
|
$
|
371.3
|
|
|
Depreciation & amortization
|
|
|
29.9
|
|
|
28.6
|
|
Adjusted operating income
|
|
$
|
334.0
|
|
$
|
399.9
|
|
Operating margin
|
|
|
37.3%
|
|
|
42.9%
|
|
Adjusted operating margin
|
|
|
40.9%
|
|
|
46.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
Operating margin guidance
|
|
|
Approximately 41%
|
|
|
Depreciation & amortization
|
|
|
Approximately 4%
|
|
Adjusted operating margin guidance
|
|
|
Approximately 45%
|
|
|
|
|
|
|
|
|
Table 9 - Free Cash Flow:
|
|
The table below reflects a reconciliation of the Company’s net
cash flows from operating activities to free cash flow. The
Company defines free cash flow as net cash provided by operating
activities minus payments for capital expenditures. Management
believes that free cash flow is a useful metric in assessing the
Company’s cash flows to service debt, pay dividends and to fund
acquisitions and share repurchases. Management deems capital
expenditures essential to the Company’s product and service
innovations and maintenance of Moody’s operational capabilities.
Accordingly, capital expenditures are deemed to be a recurring use
of Moody’s cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
(amounts in millions)
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Net cash flows from operating activities
|
|
|
|
|
$
|
237.3
|
|
$
|
261.8
|
|
|
Capital expenditures
|
|
|
|
|
|
|
|
|
|
(26.3)
|
|
|
(19.0)
|
|
Free cash flow
|
|
|
|
|
|
|
|
|
$
|
211.0
|
|
$
|
242.8
|
|
Net cash used in investing activities
|
|
|
$
|
(108.4)
|
|
$
|
(49.3)
|
|
Net cash (used in) provided by financing activities
|
|
|
$
|
(339.2)
|
|
$
|
123.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
2016
|
|
Net cash flows from operating activities guidance
|
|
Approximately $1.1 billion
|
|
Capital expenditures guidance
|
|
(Approximately $125 million)
|
|
Free cash flow guidance
|
|
Approximately $1.0 billion
|
|
|
|
|
|
|
|
Table 10 - 2016 Outlook
|
|
Moody’s outlook for 2016 is based on assumptions about many
macroeconomic and capital market factors, including interest
rates, foreign currency exchange rates, corporate profitability
and business investment spending, merger and acquisition activity,
consumer borrowing and securitization and the amount of debt
issued. These assumptions are subject to uncertainty and results
for the year could differ materially from our current outlook.
Moody’s guidance assumes foreign currency translation at
end-of-quarter exchange rates. Specifically, our forecast reflects
exchange rates for the British pound (£) of $1.44 to £1 and for
the euro (€) of $1.14 to €1.
|
|
Full-year 2016 Moody's Corporation guidance
|
|
MOODY'S CORPORATION
|
|
|
Current guidance
|
|
|
Last publicly disclosed guidance on February 5, 2016
|
|
Revenue
|
|
|
increase in the low-single-digit percent range
|
|
|
growth in the mid-single-digit percent range
|
|
Operating expenses
|
|
|
increase in the mid-single-digit percent range
|
|
|
NC
|
|
Depreciation & amortization
|
|
|
Approximately $130 million
|
|
|
NC
|
|
Operating margin
|
|
|
Approximately 41%
|
|
|
Approximately 42%
|
|
Adjusted operating margin
|
|
|
Approximately 45%
|
|
|
NC
|
|
Effective tax rate
|
|
|
32% - 32.5%
|
|
|
NC
|
|
EPS
|
|
|
$4.55 to $4.65
|
|
|
$4.75 to $4.85
|
|
Capital expenditures
|
|
|
Approximately $125 million
|
|
|
$125 - $135 million
|
|
Free cash flow
|
|
|
Approximately $1 billion
|
|
|
Approximately $1.1 billion
|
|
Share repurchases
|
|
|
Approximately $1 billion (subject to available cash, market
conditions
and other ongoing capital allocation decisions)
|
|
|
NC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-year 2016 revenue guidance
|
|
MIS
|
|
|
Current guidance
|
|
|
Last publicly disclosed guidance on February 5, 2016
|
|
MIS global
|
|
|
Approximately flat
|
|
|
growth in the mid-single-digit percent range
|
|
MIS US
|
|
|
decrease in the low-single-digit percent range
|
|
|
growth in the mid-single-digit percent range
|
|
MIS non-US
|
|
|
increase in the low-single-digit percent range
|
|
|
growth in the mid-single-digit percent range
|
|
CFG
|
|
|
decrease in the low-single-digit percent range
|
|
|
flat
|
|
SFG
|
|
|
decrease in the mid-single-digit percent range
|
|
|
growth in the high-single-digit percent range
|
|
FIG
|
|
|
increase in the mid-single-digit percent range
|
|
|
NC
|
|
PPIF
|
|
|
increase in the mid-single-digit percent range
|
|
|
growth in the high-single-digit percent range
|
|
MA
|
|
|
|
|
|
|
|
MA global
|
|
|
increase in the high-single-digit percent range
|
|
|
growth in the mid-single-digit percent range
|
|
MA US
|
|
|
increase in the low-double-digit percent range
|
|
|
growth in the high-single-digit percent range
|
|
MA non-US
|
|
|
increase in the mid-single-digit percent range
|
|
|
flat
|
|
RD&A
|
|
|
increase in the high-single-digit percent range
|
|
|
growth in the mid-single-digit percent range
|
|
ERS
|
|
|
increase in the high-single-digit percent range
|
|
|
growth in the low-single-digit percent range
|
|
PS
|
|
|
decrease in the low-single-digit percent range
|
|
|
NC
|
|
NC- There is no difference between the Company's current
guidance and the last publicly disclosed guidance for this item.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160429005286/en/
Salli Schwartz
Global Head of Investor Relations and
Communications
212.553.4862
sallilyn.schwartz@moodys.com
or
Katerina
Soumilova
Assistant Vice President
Corporate
Communications
212.553.1177
katerina.soumilova@moodys.com
Source: Moody's Corporation