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--Reported FY 2011 EPS of $2.49 up 16% from FY 2010
--4Q11 revenue flat at $567.1 million; reported 4Q11 EPS of $0.43 down 26% from 4Q10
--Projected FY 2012 EPS between $2.62 and $2.72
Moody’s Corporation (MCO) today announced results for the fourth
quarter and full-year 2011.
Summary of Results for Fourth Quarter 2011
Moody’s reported revenue of $567.1 million for the three months ended
December 31, 2011 as compared to $564.3 million for the fourth quarter
of 2010. Operating income for the quarter was $172.1 million, a 12%
decrease from $196.6 million for the same period last year. Diluted
earnings per share were $0.43 for the fourth quarter of 2011.
"Moody’s achieved strong performance for full-year 2011, with growth in
all lines of business at both Moody’s Investors Service and Moody’s
Analytics despite volatile business conditions," said Raymond McDaniel,
Chairman and Chief Executive Officer of Moody’s. "For 2012, we
anticipate revenue growth across most areas of our business and earnings
per share in the range of $2.62 to $2.72."
Summary of Results for Full-Year 2011
Moody’s Corporation revenue for full-year 2011 totaled $2,280.7 million,
an increase of 12% from $2,032.0 million for 2010. U.S. revenue of
$1,177.0 million grew 8%, while non-U.S. revenue of $1,103.7 million
rose 17% from the prior year. Foreign currency translation favorably
impacted MIS revenue by $28.2 million, and was negligible for MA.
Operating income of $888.4 million increased 15% from $772.8 million in
2010. The operating margin was 39.0% for full-year 2011, up 100 basis
points from 2010’s margin of 38.0 percent. Foreign currency translation
favorably impacted operating income by $4.1 million.
Diluted earnings per share of $2.49 for full-year 2011 grew 16% from
$2.15 in 2010 and included a legacy tax benefit of $0.03 in the second
quarter of 2011, as well as other tax benefits totaling $0.09 in the
second and third quarters of 2011.
Revenue at Moody’s Investors Service ("MIS") totaled $1,568.9 million
for full-year 2011, an increase of 12% from the prior-year period. U.S.
revenue of $879.1 million grew 8%. Non-U.S. revenue of $689.8 million
was up 17% from the prior year and represented 44% of MIS revenue, up
from 42% in 2010.
Moody’s Analytics ("MA") revenue rose to $711.8 million for full-year
2011, up 14% from full-year 2010. U.S. revenue of $297.9 million
increased 9 percent. Non-U.S. revenue of $413.9 million increased 17%
and represented 58% of MA revenue, up from 56% in 2010.
Fourth Quarter Revenue
For Moody’s Corporation overall, global revenue of $567.1 million for
the fourth quarter of 2011 was flat as compared to the fourth quarter of
2010. U.S. revenue of $286.3 million for the fourth quarter of 2011
decreased 3% from the fourth quarter of 2010, while revenue generated
outside the U.S. of $280.8 million increased 4% from the prior-year
period. Revenue generated outside the U.S. represented 50% of Moody’s
total revenue for the quarter, up slightly from 48% in the year-ago
period.
Global revenue for MIS for the fourth quarter of 2011 was $366.9
million, a decrease of 4% from the prior-year period. U.S. revenue of
$205.3 million for the fourth quarter of 2011 decreased 9% from the
fourth quarter of 2010. Outside the U.S., revenue of $161.6 million
increased 2% from the year-ago period.
Within MIS, global corporate finance revenue of $141.2 million in the
fourth quarter of 2011 was down 14% from the same quarter of 2010,
reflecting weaker issuance primarily in speculative grade bonds and
loans. Corporate finance revenue was down 13% in the U.S. and 16%
outside the U.S.
Global structured finance revenue totaled $86.9 million for the fourth
quarter of 2011, an increase of 14% from a year earlier. U.S. structured
finance revenue grew 13% from the year-ago period, primarily due to
strength in asset-backed securities. Non-U.S. structured finance revenue
increased 15%, driven primarily by European asset-backed and residential
mortgage-backed securities.
Global financial institutions revenue of $66.8 million in the fourth
quarter of 2011 increased 2% compared to the prior-year period. U.S.
financial institutions revenue was down 7%, while non-U.S. revenue grew
7 percent.
Global public, project and infrastructure finance revenue was $72.0
million for the fourth quarter of 2011, a decrease of 6% from the fourth
quarter of 2010. U.S. revenue declined 14% from the prior-year period
reflecting lower project and infrastructure finance. Non-U.S. revenue
grew 14%, primarily due to gains in infrastructure finance.
Global revenue for MA for the fourth quarter of 2011 was $200.2 million,
up 10% from the fourth quarter of 2010. Revenue from research, data and
analytics of $115.4 million increased by 6% from the prior-year period,
primarily due to higher customer retention rates. Risk management
software revenue of $55.9 million fell 3% as a result of project timing.
The December 2011 acquisition of Barrie & Hibbert, a Scotland-based
provider of insurance risk management tools, had a negligible impact on
software revenue in the fourth quarter of 2011. Professional services
revenue of $28.9 million doubled from the prior-year period, reflecting
both organic growth and the acquisition of a majority stake in Copal
Partners, an India-based outsourced research and consulting business, in
November 2011.
In the U.S., MA revenue of $81.0 million for the fourth quarter of 2011
increased 15% from the prior-year period. Outside the U.S., revenue of
$119.2 million grew 7% as compared with the same quarter of 2010. The
impact of foreign currency translation on both MIS and MA revenue was
negligible.
Fourth Quarter and Full-Year Expenses
Fourth quarter 2011 expenses for Moody’s Corporation were $395.0
million, 7% higher than in the prior-year period. The impact of foreign
currency translation on fourth quarter expenses was negligible. Moody’s
reported operating margin for the fourth quarter of 2011 was 30.3%, down
from 34.8% in the fourth quarter of 2010 primarily due to increased
headcount and technology investments to support growth initiatives, as
well as acquisition-related costs.
Full-year 2011 expenses for Moody’s Corporation of $1,392.3 million were
11% higher than the prior year. Excluding the impact of foreign currency
translation, expenses grew 9 percent.
Moody’s effective tax rate was 37.0% for the fourth quarter of 2011,
compared with 19.5% for the prior-year period. The increase in the
effective tax rate was primarily due to the utilization of foreign tax
credits and lower state taxes in 2010. The annual effective tax rate for
2011 was 31.2% compared with 28.1% for 2010.
Capital Allocation and Liquidity
On December 14, 2011, Moody’s increased its quarterly dividend by 14%
from $0.14 to $0.16 per share of Moody’s common stock. During the fourth
quarter of 2011, Moody’s did not repurchase any shares, but issued 0.4
million shares under employee stock-based compensation plans. For
full-year 2011, Moody’s repurchased 11.0 million shares at a total cost
of $333.8 million, or $30.30 per share, and issued 2.9 million shares
under employee stock-based compensation plans. Outstanding shares as of
December 31, 2011 totaled 222.4 million, representing a 4% decline from
a year earlier. As of December 31, 2011, Moody’s had $0.9 billion of
share repurchase authority remaining under its current program. At
year-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 year-end were $760.0
million, an increase of $100.4 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, and consumer borrowing and securitization. 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. Our guidance
assumes foreign currency translation at end-of-quarter exchange rates.
For Moody’s overall, the Company expects full-year 2012 revenue to grow
in the high-single to low-double-digit percent range. Full-year 2012
expenses are also projected to increase in the high-single to
low-double-digit percent range. Full-year 2012 operating margin is
projected to be approximately 39 percent. The effective tax rate is
expected to be approximately 33 percent. The Company expects diluted
earnings per share for full-year 2012 in the range of $2.62 to $2.72.
For the global MIS business, revenue for full-year 2012 is expected to
increase in the mid-single-digit percent range. Within the U.S., MIS
revenue is expected to increase in the low-double-digit percent range,
while non-U.S. revenue is expected to be about flat. Corporate finance
revenue is forecasted to grow in the high-single-digit percent range.
Revenue from each of structured finance and financial institutions is
projected to be flat to slightly down, while public, project and
infrastructure finance revenue is expected to increase in the low-teens
percent range.
For MA, full-year 2012 revenue is expected to increase in the high-teens
percent range both in the U.S. and outside the U.S. Revenue growth is
projected in the mid-single-digit percent range for research, data and
analytics and in the low 20’s percent range for risk management
software, reflecting growth in the core business as well as the December
2011 acquisition of Barrie & Hibbert. Professional services revenue is
projected to grow by approximately 70%, inclusive of revenue from the
late 2011 acquisition of a majority stake in Copal Partners and
continued growth in our legacy businesses.
Conference Call
A conference call to discuss fourth quarter and full-year 2011 results
will be held this morning, February 8, 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, March 8, 2012.
A replay of the teleconference will be available from 3:30 p.m. Eastern
Time, February 8, 2012 until 11:59 p.m. Eastern Time, March 8, 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 5429080.
*****
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
(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 6,000 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 February 8, 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,
2010, quarterly reports on Form 10-Q for the quarters ended March 31,
2011, June 30, 2011, September 30, 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 Twelve Months Ended
December 31, December 31,
------------------------- -----------------------------
Amounts in millions, except per share amounts 2011 2010 2011 2010
-------------------------------------------------------------- ------------ ------------ -------------- --------------
Revenue $ 567.1 $ 564.3 $ 2,280.7 $ 2,032.0
-------------------------------------------------------------- -- ----- -- ----- -- ------- -- -------
Expenses:
Operating 181.2 180.9 683.5 604.8
Selling, general and administrative 193.2 169.5 629.6 588.0
Restructuring (0.1 ) 0.1 - 0.1
Depreciation and amortization 20.7 17.2 79.2 66.3
----- ----- ------- -------
Total expenses 395.0 367.7 1,392.3 1,259.2
Operating income 172.1 196.6 888.4 772.8
----- ----- ------- -------
Non-operating (expense) income, net
Interest (expense) income, net (16.9 ) (17.4 ) (62.1 ) (52.5 )
Other non-operating (expense) income, net 0.4 (6.6 ) 13.5 (5.9 )
----- ----- -- ------- ------- --
Total (16.5 ) (24.0 ) (48.6 ) (58.4 )
----- -- ----- -- ------- -- ------- --
Income before provision for income taxes 155.6 172.6 839.8 714.4
Provision for income taxes 57.5 33.7 261.8 201.0
----- ----- ------- -------
Net income 98.1 138.9 578.0 513.4
Less: net income attributable to noncontrolling interests 1.9 1.5 6.6 5.6
----- ----- ------- -------
Net income attributable to Moody’s Corporation $ 96.2 $ 137.4 $ 571.4 $ 507.8
== ===== == ===== == ======= == =======
Earnings per share attributable to Moody’s common shareholders
Basic $ 0.43 $ 0.59 $ 2.52 $ 2.16
Diluted $ 0.43 $ 0.58 $ 2.49 $ 2.15
-------------------------------------------------------------- -- ----- -- ----- -- ------- -- -------
Weighted average number of shares outstanding
Basic 222.2 233.4 226.3 235.0
Diluted 225.7 235.3 229.4 236.6
-------------------------------------------------------------- ----- ----- ------- -------
Moody’s Corporation
Supplemental Revenue Information (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------- -----------------------------
Amounts in millions 2011 2010 2011 2010
------------------------------------------------- ------------ ------------ -------------- --------------
Moody’s Investors Service
Corporate Finance $ 141.2 $ 164.7 $ 652.1 $ 563.9
Structured Finance 86.9 76.1 344.6 290.8
Financial Institutions 66.8 65.7 294.9 278.7
Public, Project and Infrastructure Finance 72.0 76.2 277.3 271.6
Intersegment royalty 16.8 15.0 65.8 61.3
----- ----- ------- -------
Sub-total MIS 383.7 397.7 1,634.7 1,466.3
Eliminations (16.8 ) (15.0 ) (65.8 ) (61.3 )
----- -- ----- -- ------- -- ------- --
Total MIS revenue 366.9 382.7 1,568.9 1,405.0
----- ----- ------- -------
Moody’s Analytics
Research, Data and Analytics 115.4 109.2 451.3 425.0
Risk Management Software 55.9 57.9 183.4 173.2
Professional Services 28.9 14.5 77.1 28.8
Intersegment license fee 2.8 2.3 10.6 9.3
----- ----- ------- -------
Sub-total MA 203.0 183.9 722.4 636.3
Eliminations (2.8 ) (2.3 ) (10.6 ) (9.3 )
----- -- ----- -- ------- -- ------- --
Total MA revenue 200.2 181.6 711.8 627.0
----- ----- ------- -------
Total Moody’s Corporation revenue $ 567.1 $ 564.3 $ 2,280.7 $ 2,032.0
== ===== == ===== == ======= == =======
Moody’s Corporation revenue by geographic area
United States $ 286.3 $ 295.1 $ 1,177.0 $ 1,089.5
International 280.8 269.2 1,103.7 942.5
----- ----- ------- -------
$ 567.1 $ 564.3 $ 2,280.7 $ 2,032.0
== ===== == ===== == ======= == =======
Moody’s Corporation
Consolidated Interest (Expense) / Income, Net (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------- -------------------------
Amounts in millions 2011 2010 2011 2010
--------------------------------------------- ------------ ------------ ------------ ------------
Interest (expense) / income:
Expense on borrowings $ (16.6 ) $ (16.8 ) $ (65.5 ) $ (52.2 )
Income 1.4 1.2 5.3 3.1
Legacy Tax (a) - - 3.7 2.5
UTPs and other tax related liabilities (2.6 ) (2.4 ) (8.7 ) (7.7 )
Interest capitalized 0.9 0.6 3.1 1.8
----- ----- ----- -----
Total interest (expense) income, net $ (16.9 ) $ (17.4 ) $ (62.1 ) $ (52.5 )
== ===== == == ===== == == ===== == == ===== ==
(a) The 2011 amount represents a reversal of $2.8 million of
accrued interest expense relating to the favorable resolution of a
Legacy Tax Matter and $0.9 million of interest income related to a
pre-spinoff tax year. The 2010 amount represents interest income
related to the favorable settlement of Legacy Tax Matters.
Moody’s Corporation
Selected Consolidated Balance Sheet Data (Unaudited)
December 31, December 31,
Amounts in millions 2011 2010
------------------ ------------------
Cash and cash equivalents $ 760.0 $ 659.6
Short-term investments 14.8 12.7
Total current assets 1,424.4 1,343.0
Non-current assets 1,451.7 1,197.3
Total assets 2,876.1 2,540.3
Total current liabilities 1,134.0 933.8
Total debt (1) 1,243.8 1,239.6
Other long-term liabilities 667.5 676.6
Total shareholders’ deficit (158.4 ) (298.4 )
Redeemable noncontrolling interest* 60.5 -
Total liabilities, redeemable noncontrolling interest and 2,876.1 2,540.3
shareholders’ deficit
Actual number of shares outstanding 222.4 230.8
* Represents a noncontrolling interest related to the
November 2011 acquisition of Copal Partners
December 31, December 31,
(1) Total debt consists of the following: 2011 2010
------------------ ------------------
Series 2005-1 Notes due 2015 (a) 311.5 296.3
Series 2007-1 Notes due 2017 300.0 300.0
2008 Term Loan due 2013 (b) 135.0 146.3
2010 Senior Notes due 2020 (c) 497.3 497.0
------- -------
Total debt (d) $ 1,243.8 $ 1,239.6
==== ======= ==== =======
(a) Includes an $11.5 million and ($3.7) million fair
value adjustment on an interest rate hedge at December 31, 2011
and December 31, 2010, 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, $71.3
million and $11.3 million are classified within total current
liabilities at December 31, 2011 and December 31, 2010,
respectively, and consist of the current portion of borrowings
under the 2008 Term Loan
Moody’s Corporation
Reconciliation to Non-GAAP Financial Measures (Unaudited)
Twelve Months Ended December 31,
---------------------------------------------------------------------------------------------------------------
Amounts in millions, except per share amounts 2011 2010
---------------------------------------------- --------------------------------------------------------------
As Legacy Tax Non-GAAP As Restructuring Legacy Tax Non-GAAP
Reported (b) Financial Reported (a) (b) Financial
Measures* Measures*
----------- ----------- ------------- ----------- ------------ ----------- -------------
Total expenses $ 1,392.3 $ - $ 1,392.3 $ 1,259.2 $ (0.1 ) $ - $ 1,259.1
Operating income $ 888.4 $ - $ 888.4 $ 772.8 $ 0.1 $ - $ 772.9
Interest (expense), income, net $ (62.1 ) $ (0.9 ) $ (63.0 ) $ (52.5 ) $ - $ (2.5 ) $ (55.0 )
Other non-operating (expense) income, net $ 13.5 $ (6.4 ) $ 7.1 $ (5.9 ) $ - $ - $ (5.9 )
Provision for income taxes $ 261.8 $ (0.3 ) $ 261.5 $ 201.0 $ - $ 2.1 $ 203.1
Net income attributable to Moody’s Corporation $ 571.4 $ (7.0 ) $ 564.4 $ 507.8 $ 0.1 $ (4.6 ) $ 503.3
Earnings per share attributable to Moody’s common shareholders
Basic $ 2.52 $ (0.03 ) $ 2.49 $ 2.16 $ - $ (0.02 ) $ 2.14
Diluted $ 2.49 $ (0.03 ) $ 2.46 $ 2.15 $ - $ (0.02 ) $ 2.13
*In addition to its reported results, Moody’s has included in the
table above adjusted results that the Securities and Exchange
Commission defines as "non-GAAP financial measures." Management
believes that such non-GAAP financial measures, when read in
conjunction with the Company’s reported results, can provide useful
supplemental information for investors analyzing period to period
comparisons of the Company’s results. May not add due to rounding.
The tables above show Moody’s consolidated results for each of the
twelve month periods ended December 31, 2011 and 2010, adjusted to
exclude the impact of the following:
(a) To exclude minor adjustments related to both the 2009 and 2007
restructuring charges; additionally, includes the tax impacts of the
aforementioned adjustments
(b) To exclude benefits relating to the resolution of certain
Legacy Tax Matters
SOURCE: Moody’s Corporation
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
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