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FY 2016 GAAP EPS guidance of $4.70 to $4.80
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FY 2016 non-GAAP EPS guidance of $4.55 to $4.65
NEW YORK--(BUSINESS WIRE)--
Moody’s Corporation (NYSE:MCO) today updated its guidance for the full
year ending December 31, 2016.
Full year 2016 GAAP EPS is currently expected to be $4.70 to $4.80,
which now includes an anticipated non-cash foreign exchange gain of
approximately $0.18 related to a subsidiary reorganization, offset in
part by an approximate $0.04 restructuring charge associated with cost
management initiatives. Excluding these items, the Company expects full
year 2016 non-GAAP EPS of $4.55 to $4.65. The Company expects to record
the foreign exchange gain in its fourth quarter results and the
restructuring charge in its third quarter results.
“Increased issuance activity combined with a greater impact from our
cost savings initiatives has resulted in a modestly improved outlook,”
said Raymond McDaniel, President and Chief Executive Officer of Moody’s.
“Excluding the impact of the specific items noted above, we expect 2016
EPS of $4.55 to $4.65.”
To reflect the Company’s current view of business conditions as well as
the impact of the aforementioned foreign exchange gain and restructuring
charge, the Company is updating certain components of Moody’s 2016
revenue and expense guidance.
Full year global MIS revenue is still expected to decrease in the
low-single-digit-percent range, while US revenue is now expected to be
approximately flat and public, project and infrastructure finance
revenue is now expected to increase approximately 10%.
The effective tax rate is now expected to be 31% to 31.5%, including an
approximate one percentage point favorable change due to the foreign
exchange gain noted above which is not taxable.
A full summary of Moody’s guidance as of September 28, 2016 is included
in the table at the end of this press release. Moody’s outlook for 2016
is based on assumptions about many geopolitical conditions and
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 August 31, 2016 exchange rates. Specifically, our
forecast reflects exchange rates for the British pound (£) of $1.31 to
£1 and for the euro (€) of $1.11 to €1.
Moody’s will host its Investor Day conference today in New York City.
The event will start at 8:30 a.m. Eastern Time and is expected to
conclude at 12:00 p.m. The event will feature presentations from Moody's
management team and showcase important aspects of the business. A copy
of the presentation will be posted on Moody’s Investor Relations
website, http://ir.moodys.com,
at the start of the event.
In-person attendance is by invitation only; however, the event will be
webcast live and can be accessed on Moody’s Investor Relations website
at http://ir.moodys.com.
The event will also be accessible through a live conference call.
Individuals within the U.S. and Canada can access the call by dialing
1-855-309-1713 toll-free. Other callers should dial 804-419-7747. Please
dial into the call by 8:20 a.m. Eastern Time. The participant access
code for the call is 61523561.
A replay of the event will be available approximately one week following
the event on Moody’s Investor Relations website, http://ir.moodys.com,
until 11:59 p.m. Eastern Time, December 28, 2016.
*****
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 September 28, 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 regulation, credit quality concerns, changes
in interest rates and other volatility in the financial markets such as
that due to the UK’s referendum vote whereby the UK citizens voted to
withdraw from the EU; the level of merger and acquisition activity in
the U.S. and abroad; the uncertain effectiveness and possible collateral
consequences of U.S. and foreign government initiatives to respond to
the current world-wide credit market disruptions and economic slowdown;
concerns in the marketplace affecting our 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 U.S., 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
our rating opinions, as well as any other litigation, government and
regulatory proceedings, investigations and inquires 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 our 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; exposure to potential criminal
sanctions or civil remedies if the Company fails to comply with foreign
and U.S. 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. These factors, risks and uncertainties as well as other
risks and uncertainties that could cause Moody’s actual results to
differ materially from those contemplated, expressed, projected,
anticipated or implied in the forward-looking statements are described
in greater detail under “Risk Factors” in Part I, Item 1A of 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 SEC or in materials incorporated herein or therein. Stockholders and
investors are cautioned that the occurrence of any of these factors,
risks and uncertainties may cause the Company’s actual results to differ
materially from those contemplated, expressed, projected, anticipated or
implied in the forward-looking statements, which could have a material
and adverse effect on the Company’s business, results of operations and
financial condition. New factors may emerge from time to time, and it is
not possible for the Company to predict new factors, nor can the Company
assess the potential effect of any new factors on it.
2016 Outlook:
Moody’s outlook for 2016 is based on assumptions about many geopolitical
conditions and 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 some degree of uncertainty, and results
for the year could differ materially from our current outlook. Moody’s
guidance assumes foreign currency translation at August 31, 2016
exchange rates. Specifically, our forecast reflects exchange rates for
the British pound (£) of $1.31 to £1 and for the euro (€) of $1.11 to €1.
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Full-year 2016 Moody's Corporation guidance
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MOODY'S CORPORATION
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Current guidance as of September 28, 2016
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Last publicly disclosed guidance on
July 22, 2016
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Revenue
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increase in the low-single-digit percent range
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NC
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Operating expense
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increase in the mid-single-digit percent range
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NC
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Depreciation & amortization
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Approximately $130 million
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NC
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Operating margin
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Approximately 41%
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NC
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Adjusted operating margin
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Approximately 45%
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NC
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Effective tax rate
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31% - 31.5%
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32-32.5%
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GAAP EPS
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$4.70 to $4.80
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$4.55 to $4.651
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Non-GAAP EPS
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$4.55 to $4.65
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N/A
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Capital expenditures
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Approximately $125 million
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NC
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Free cash flow
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Approximately $1 billion
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NC
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Share repurchases2
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Approximately $1 billion
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NC
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Full-year 2016 revenue guidance
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MIS
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Current guidance as of September 28, 2016
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Last publicly disclosed guidance on
July 22, 2016
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MIS global
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decrease in the low-single-digit percent range
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NC
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MIS U.S.
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Approximately flat
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decrease in the low-single-digit percent range
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MIS Non-U.S.
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decrease in the low-single-digit percent range
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NC
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CFG
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decrease in the low-single-digit percent range
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NC
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SFG
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decrease in the high-single-digit percent range
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NC
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FIG
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increase in the mid-single-digit percent range
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NC
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PPIF
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increase approximately 10%
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increase in the mid-single-digit percent range
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MA
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MA global
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increase in the mid-single-digit percent range
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NC
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MA U.S.
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increase in the low-double-digit percent range
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NC
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MA Non-U.S.
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increase in the low-single-digit percent range
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NC
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RD&A
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increase in the high-single-digit percent range
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NC
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ERS
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increase in the high-single-digit percent range
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NC
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PS
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decrease in the low-single-digit percent range
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NC
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NC- There is no difference between the Company's current
guidance and the last publicly disclosed guidance for this item.
N/A – Not applicable.
1 Expected to be toward the lower end of the range.
2 Subject to available cash, market conditions and
other ongoing capital allocation decisions
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Non-GAAP Financial Measures:
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In addition to the non-GAAP financial measures presented and
reconciled in the text of this press release, 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 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.
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Adjusted Operating Income and Adjusted Operating Margin:
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The table below reflects a reconciliation of the Company’s
operating margin to adjusted operating margin. The Company defines
adjusted operating income as operating income excluding
depreciation and amortization and restructuring charges. The
Company utilizes adjusted operating income because management
deems this metric to be a useful measure for 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. Adjusted Operating Income also
excludes restructuring charges as the frequency and magnitude of
these charges may vary widely across periods and companies.
Management believes that the exclusion of these items, 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.
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Year Ended December 31,
2016
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Operating margin guidance
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Approximately 41%
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Depreciation and amortization
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Approximately 4%
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Restructuring
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Negligible impact
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Adjusted operating margin guidance
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Approximately 45%
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Free Cash Flow:
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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 additions. 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.
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Year Ended December 31,
2016
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Net cash flows from operating activities guidance
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Approximately $1.1 billion
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Capital additions guidance
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(Approximately $125 million)
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Free cash flow guidance
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Approximately $1.0 billion
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Non-GAAP EPS:
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The Company presents this non-GAAP measure to exclude the impact of
foreign exchange gains related to the liquidation of a finance
subsidiary as well as restructuring charges to allow for a more
meaningful comparison of Moody’s diluted earnings per share from
period to period. Management believes that the exclusion of these
items, detailed in the reconciliation below, allows for a more
meaningful comparison of the Company’s Diluted EPS from
period-to-period. Below is a reconciliation of these measures to
their most directly comparable U.S. GAAP amount (amounts do not
total due to rounding):
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Year Ended December 31,
2016
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Diluted EPS attributable to Moody's common shareholders-GAAP
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$4.70 to $4.80
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FX gain due to a subsidiary reorganization
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(Approximately $0.18)
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Restructuring
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Approximately $0.04
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Diluted EPS attributable to Moody's common shareholders - Non-GAAP
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$4.55 to $4.65
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View source version on businesswire.com: http://www.businesswire.com/news/home/20160928005331/en/
Source: Moody's Corporation Investor Relations