Attached files
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| 8-K - S&P Global Inc. | v182172_8k.htm |
For
Immediate Release
THE
McGRAW-HILL
COMPANIES REPORTS
65%
INCREASE IN FIRST QUARTER EPS
First
Quarter 2010 Highlights
-Diluted
earnings per share of $0.33
-Net
income increases by 63.9% to $103.3 million
-Operating
margin expands in all segments
New York, NY, April 27, 2010 —
The McGraw-Hill Companies (NYSE: MHP) today reported diluted earnings per share
of $0.33 for the first quarter of 2010, a 65% increase compared to $0.20 for the
same period in 2009. Net income for the period increased 63.9% to
$103.3 million versus $63.0 million for the first quarter of
2009. Revenue grew by 3.7% in the first quarter to $1.2
billion.
“Recovery
in global bond markets, solid results in U.S. higher education, which is
benefiting from double-digit growth in digital products and services, and an
outstanding performance in global energy information markets were major factors
in our first quarter,” said Harold McGraw III, chairman, president and chief
executive officer of The McGraw-Hill Companies. “The operating margin
expanded in all three segments.”
Education: Revenue
for this segment increased by 1.5% to $317.2 million in the first quarter
compared to the same period last year. The operating loss for the
period was cut by 19.3% to $61.8 million. Foreign exchange rates
increased revenue by $5.8 million, and had an unfavorable impact on the
operating loss of $2.4 million.
The
McGraw-Hill School Education Group’s revenue declined by 9.0% to $111.6 million
in the first quarter as a modest gain in the instructional materials market was
offset by a decline in the testing market.
The
McGraw-Hill Higher Education, Professional and International Group’s revenue
increased by 8.3% to $205.7 million in the first quarter.
In the
elementary-high school market, the McGraw-Hill School Education Group increased
sales. Because most school districts do not make significant new purchases in
this period, supplemental, residual and intervention orders accounted for most
of the activity in the adoption states. North Carolina, usually the only
adoption state to purchase new materials in the first quarter, was not in the
market this year. In the open territory, the McGraw-Hill School Education Group
benefited from large orders for world languages in Ohio, reading in Maryland and
music in South Dakota, as well as supplemental and residual
orders.
Growth in
the expanding formative testing market was offset by the planned phase out of
statewide custom contracts in California, Florida and
Arizona. McGraw-Hill Education’s Acuity, a leader in the
formative assessment market, continued to add new customers.
For
McGraw-Hill Higher Education, Professional and International Group, surging
sales of digital products contributed to a strong first quarter performance in
the U.S. college and university market and improved results in professional
markets.
Increased
demand fueled by higher enrollments carried through from the fourth quarter of
2009 into the first quarter of 2010 in higher education. Double-digit
revenue increases were produced by e-books, online courses and online homework
management assessment products for students, including McGraw-Hill Connect™, the
industry’s most advanced interactive platform.
McGraw-Hill
Higher Education’s best sellers in the first quarter included:
- Sanderson,
Computers in the Medical
Office, 6th
Edition
- Shier,
Hole’s Human Anatomy and
Physiology, 12th
Edition
- Garrison,
Managerial Accounting,
13th
Edition
- Judson,
Law and Ethics for Medical
Careers, 5th
Edition
- Feldman,
Essentials of Understanding
Psychology, 8th
Edition
In
professional markets, digital revenue increased at a double-digit rate and
traditional book sales in retail channels got off to a positive start in the
first quarter.
Page 1
of 4
AccessPhysiotherapy,
the sixth vertical site in the AccessMedicine™ suite of online subscription
platforms for medical students, educators and physicians, was launched in the
first quarter. AccessPhysiotherapy includes content from across
McGraw-Hill Education, including Anatomy and Physiology Revealed, a virtual
dissection tool from McGraw-Hill Higher Education, and Clinical Sports Medicine
videos from McGraw-Hill Australia.
Revenue,
excluding the impact of foreign exchange, declined slightly in international
markets.
Financial
Services: Revenue for this segment increased by 9.3% to $667.0
million in the first quarter compared to the same period last year. Operating
profit grew by 12.3% to $260.0 million. Foreign exchange rates benefited revenue
growth by $11.7 million and had minimal impact on operating
profits.
Standard
& Poor’s Credit Market Services’ revenue increased by 15.4% to $451.5
million in the first quarter compared to the same period last year.
Standard
& Poor’s Investment Services’ revenue decreased by 1.5% to $215.5 million in
the first quarter compared to the same period last year. The decline
was primarily attributed to the divestiture of Vista Research and the expiration
of contracts with banks for independent equity research required by the research
settlement.
Transaction
revenue at Standard & Poor’s Credit Market Services increased by 33.6% to
$149.0 million, or 33.0% of Standard & Poor’s Credit Market Services top
line in the first quarter. Keys to this performance were tight credit
spreads and an improving economy, which contributed to record first quarter
issuance in the high-yield market and a surge in bank loan rating
activity. Transaction revenue includes the rating of new issuance for
corporate, public finance, structured finance instruments, bank loans and
corporate credit estimates.
Non-transaction
revenue at Standard & Poor’s Credit Market Services, which includes annual
contracts, surveillance and subscription fees, grew by 8.1% to $302.4 million in
the first quarter compared to the same period last year. Growth in
annual fees and increases in subscriptions were important contributors to the
improved performance.
Based on
the domicile of the issuer, new issue dollar volume in the first quarter
declined by 14.8% in the United States and by 3.6% in Europe compared to the
same period last year according to S&P estimates, and information from
Thomson Financial and Harrison Scott Publications.
Although
U.S. corporate issuance fell by 36.3% in the first quarter, high-yield issuance
portion climbed by 469.4% and accounted for 31.3% of the new issue dollar
volume. Public finance increased by 17.4%. The structured finance market
produced big increases off a small base. Mortgage-backed securities grew by
34.9%. Asset-backed increased by 184.7%. Collateralized debt obligations were up
by 70.0%.
In
Europe, a surge in high-yield and a pick-up in structured finance issuance
against easy comparisons partially offset the decline in investment-grade
corporate issuance. The $16.0 billion in high-yield issuance in the
first quarter of 2010 in Europe compares with $1.1 billion for the same period
last year.
International
revenue grew by 18.4% to $210.7 million in the first quarter and accounted for
46.7% of Standard & Poor’s Credit Market Services’ revenue in the period
compared to 45.5% for the first quarter of 2009.
Standard
& Poor’s Investment Services, which accounted for 32.3% of Financial
Services’ revenue in the first quarter, benefited from gains at Capital IQ and
S&P Indices.
Recovery
in global markets helped produce a new record for assets under management in
exchange-traded funds based on S&P indices and offset a 10.2% decline in the
average daily trading volume of exchange-traded derivative
contracts. At the end of the first quarter of 2010, there were $254.2
billion in assets under management in exchange-traded funds using S&P
indices, a year-over-year increase of 60.3% and surpassing the previous record
of $247 billion set at year end 2009. In the first quarter of 2010, 21 new
exchange-traded funds based on S&P indices were launched — 10 in North
America and 11 in international markets — bringing the total to
238.
Page 2
of 4
Capital
IQ continued to add new clients in the first quarter, and now has more than
3,000, an increase of 13.5% compared to the first quarter of 2009.
Information &
Media: Revenue for this segment in the first quarter declined
by 8.5% to $206.2 million, but grew by 4.3% excluding the divestiture of BusinessWeek. Operating profit increased by
$25.0 million to $27.8 million reflecting solid growth by global energy products
and the divestiture of BusinessWeek.
The
Business-to-Business Group’s revenue in the first quarter declined 9.5% to
$187.5 million, but grew 4.5% excluding BusinessWeek, which was divested on December
1, 2009. The Group includes the following brands: Aviation Week, J.D. Power and
Associates, McGraw-Hill Construction and Platts. Revenue growth at Platts in
global energy markets was the primary driver in the Business-to-Business Group
in the first quarter.
The
Broadcasting Group’s revenue increased 2.2% to $18.7 million in the first
quarter compared to the same period last year. National and local time sales
benefited from an increase in automobile advertising. Health care
issues, propositions in California, the race for governor in California and a
Senate seat in Colorado combined to produce an increase in political advertising
in the first quarter.
The Outlook: “We
are off to a good start, but the first quarter is also seasonally our smallest
of the year,” said Mr. McGraw. “Until we get greater visibility on
trends in our key markets, we are maintaining our original guidance for
2010. We still expect diluted earnings per share of $2.55 to $2.65
for the year.”
Conference Call/Webcast
Details: The Corporation’s senior management will review the
first quarter earnings results on a conference call scheduled for this morning,
April 27, at 8:30 AM Eastern Time. This call is open to all interested parties.
Discussions may include forward-looking information. Additional information
presented on the conference call may be made available on the Corporation’s
Investor Relations Website at http://www.mcgraw-hill.com/investor_relations.
The
Webcast will be available live and in replay at http://investor.mcgraw-hill.com/phoenix.zhtml?p=irol-eventDetails&c=96562&eventID=3012033.
(Please copy and paste URL into web browser.)
Telephone
access is available. Domestic participants may call (888) 323-5423;
international participants may call +1 (415) 228-5016 (long distance charges
will apply). The passcode is McGraw-Hill and the conference leader is Harold
McGraw III. A recorded telephone replay will be available approximately two
hours after the meeting concludes and will remain available until May 27, 2010.
Domestic participants may call (800) 839-4838; international participants may
call +1 (402) 220-5089 (long distance charges will apply). No passcode is
required.
Page 3
of 4
The
forward-looking statements in this news release involve risks and uncertainties
and are subject to change based on various important factors, including
worldwide economic, financial, liquidity, political and regulatory conditions;
the health of debt (including U.S. residential mortgage-backed securities and
collateralized debt obligations) and equity markets, including possible future
interest rate changes; the health of the economy and in advertising; the level
of expenditures and state new adoptions and open territory sales in the
education market; the successful marketing of competitive products; and the
effect of competitive products and pricing.
About The McGraw-Hill
Companies: Founded in 1888, The McGraw-Hill Companies is a global
information and education company providing knowledge, insights and analysis in
the financial, education and business information sectors through leading brands
including Standard & Poor’s, McGraw-Hill Education, Platts, and J.D. Power
and Associates. The Corporation has more than 280 offices in 40 countries. Sales
in 2009 were $5.95 billion. Additional information is available at
http://www.mcgraw-hill.com.
Investor Relations: http://www.mcgraw-hill.com/investor_relations
Get news direct from McGraw-Hill via
RSS:
http://investor.mcgraw-hill.com/phoenix.zhtml?c=96562&p=newsRSS
Release
issued: April 27, 2010
* *
*
Contacts
for The McGraw-Hill Companies:
Investor
Relations:
Donald S.
Rubin
Senior
Vice President, Investor Relations
(212)
512-4321 (office)
donald_rubin@mcgraw-hill.com
News
Media:
Frank
Briamonte
Senior
Director, Corporate Communications
(212)
512-4145 (office)
(201)
725-6133 (mobile)
frank_briamonte@mcgraw-hill.com
Page 4
of 4
Statements
of Income
Periods
ended March 31, 2010 and 2009
(dollars
in thousands, except per share data)
|
(unaudited)
|
Three Months
|
|||||||||||
|
2010
|
2009
|
% Change
|
||||||||||
|
Revenue
|
$ | 1,190,390 | $ | 1,148,207 | 3.7 | % | ||||||
|
Expenses
|
1,000,126 | 1,023,866 | (2.3 | )% | ||||||||
|
Income
from operations
|
190,264 | 124,341 | 53.0 | % | ||||||||
|
Interest
expense - net
|
22,039 | 20,591 | 7.0 | % | ||||||||
|
Income
before taxes on income
|
168,225 | 103,750 | 62.1 | % | ||||||||
|
Provision
for taxes on income
|
61,234 | 37,765 | 62.1 | % | ||||||||
|
Net
income
|
106,991 | 65,985 | 62.1 | % | ||||||||
|
Less:
net income attributable to noncontrolling interests
|
(3,705 | ) | (2,981 | ) | 24.3 | % | ||||||
|
Net
income attributable to The McGraw-Hill Companies, Inc.
|
$ | 103,286 | $ | 63,004 | 63.9 | % | ||||||
|
Earnings
per common share:
|
||||||||||||
|
Basic
|
$ | 0.33 | $ | 0.20 | 65.0 | % | ||||||
|
Diluted
|
$ | 0.33 | $ | 0.20 | 65.0 | % | ||||||
|
Dividend
per common share
|
$ | 0.235 | $ | 0.225 | 4.4 | % | ||||||
|
Average
number of common shares outstanding:
|
||||||||||||
|
Basic
|
313,372 | 312,017 | ||||||||||
|
Diluted
|
316,264 | 312,017 | ||||||||||
Exhibit
1
The
McGraw-Hill Companies
Operating
Results by Segment
Periods
ended March 31, 2010 and 2009
(dollars
in thousands)
|
(unaudited)
|
Revenue
|
|||||||||||
|
%
Favorable
|
||||||||||||
|
2010
|
2009
|
(Unfavorable)
|
||||||||||
|
Three Months
|
||||||||||||
|
McGraw-Hill
Education
|
$ | 317,247 | $ | 312,628 | 1.5 | % | ||||||
|
Financial
Services
|
666,983 | 610,154 | 9.3 | % | ||||||||
|
Information
& Media
|
206,160 | 225,425 | (8.5 | )% | ||||||||
|
Total
revenue
|
$ | 1,190,390 | $ | 1,148,207 | 3.7 | % | ||||||
|
(unaudited)
|
Segment Expenses
|
|||||||||||
|
%
Favorable
|
||||||||||||
|
2010
|
2009
|
(Unfavorable)
|
||||||||||
|
Three Months
|
||||||||||||
|
McGraw-Hill
Education
|
$ | 379,039 | $ | 389,224 | 2.6 | % | ||||||
|
Financial
Services
|
406,967 | 378,561 | (7.5 | )% | ||||||||
|
Information
& Media
|
178,331 | 222,653 | 19.9 | % | ||||||||
|
Total
segment expenses
|
$ | 964,337 | $ | 990,438 | 2.6 | % | ||||||
|
(unaudited)
|
Operating Profit/(Loss)
|
|||||||||||
|
%
Favorable
|
||||||||||||
|
2010
|
2009
|
(Unfavorable)
|
||||||||||
|
Three
Months
|
||||||||||||
|
McGraw-Hill
Education
|
$ | (61,792 | ) | $ | (76,596 | ) | 19.3 | % | ||||
|
Financial
Services
|
260,016 | 231,593 | 12.3 | % | ||||||||
|
Information
& Media
|
27,829 | 2,772 | N/M | |||||||||
|
Total
operating segments
|
226,053 | 157,769 | 43.3 | % | ||||||||
|
General
corporate expense
|
(35,789 | ) | (33,428 | ) | (7.1 | )% | ||||||
|
Interest
expense, net
|
(22,039 | ) | (20,591 | ) | (7.0 | )% | ||||||
|
Total
operating profit *
|
$ | 168,225 | $ | 103,750 | 62.1 | % | ||||||
N/M - not meaningful
*Income
before taxes on income
Exhibit 2
Financial
Services Segment
Credit
Market Services
Periods
ended March 31, 2010 and 2009
(dollars
in thousands)
Transaction
vs. Non-Transaction Revenue
(unaudited)
|
2010
|
2009
|
% Change
|
||||||||||
|
Three
Months
|
||||||||||||
|
Transaction
revenue (a)
|
$ | 149,044 | $ | 111,579 | 33.6 | % | ||||||
|
Non-transaction
revenue (b)
|
302,411 | 279,771 | 8.1 | % | ||||||||
|
Total
Credit Market Services Revenue
|
$ | 451,455 | $ | 391,350 | 15.4 | % | ||||||
(a)
Revenue related to rating new issuance of corporate, public finance and
structured finance instruments; bank loans; and corporate credit
estimates.
(b)
Revenue from annual fees for frequent issuer programs, surveillance and
subscriptions.
Domestic
vs. International Revenue
(unaudited)
|
2010
|
2009
|
% Change
|
||||||||||
|
Three
Months
|
||||||||||||
|
Domestic
revenue
|
$ | 240,801 | $ | 213,455 | 12.8 | % | ||||||
|
International
revenue
|
210,654 | 177,895 | 18.4 | % | ||||||||
|
Total
Credit Market Services Revenue
|
$ | 451,455 | $ | 391,350 | 15.4 | % | ||||||
Exhibit
3
The
McGraw-Hill Companies
Non-GAAP
Financial Information
(dollars
in thousands)
|
(unaudited)
|
Three Months
|
|||||||||||
|
March 31,
2010
|
March 31,
2009
|
% Change
|
||||||||||
|
Revenue:
|
||||||||||||
|
Information
& Media
|
$ | 206,160 | $ | 225,425 | (8.5 | )% | ||||||
|
Excluding
BusinessWeek
|
- | (27,791 | ) | |||||||||
| $ | 206,160 | $ | 197,634 | 4.3 | % | |||||||
|
Information
& Media - Business-to-Business
|
$ | 187,484 | $ | 207,143 | (9.5 | )% | ||||||
|
Excluding
BusinessWeek
|
- | (27,791 | ) | |||||||||
| $ | 187,484 | $ | 179,352 | 4.5 | % | |||||||
|
(unaudited)
|
Three Months
|
Full Year
|
||||||||||||||
|
June 30,
2009
|
September 30,
2009
|
December 31,
2009
|
December 31,
2009
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Information
& Media
|
$ | 236,203 | $ | 238,904 | $ | 253,340 | $ | 953,872 | ||||||||
|
Excluding
BusinessWeek
|
(27,497 | ) | (22,231 | ) | (21,636 | ) | (99,155 | ) | ||||||||
| $ | 208,706 | $ | 216,673 | $ | 231,704 | $ | 854,717 | |||||||||
|
Information
& Media - Business-to-Business
|
$ | 215,800 | $ | 219,768 | $ | 230,016 | $ | 872,727 | ||||||||
|
Excluding
BusinessWeek
|
(27,497 | ) | (22,231 | ) | (21,636 | ) | (99,155 | ) | ||||||||
| $ | 188,303 | $ | 197,537 | $ | 208,380 | $ | 773,572 | |||||||||
In
addition to including financial measures under accounting principles generally
accepted in the United States of America (U.S. GAAP), The McGraw-Hill Companies
disclosed non-GAAP measures that exclude the impact of the divestiture of BusinessWeek. The non-GAAP
measures are provided because management believes they provide useful
supplemental information for meaningful comparisons of the Company's results.
These non-GAAP financial measures are not meant to be considered in isolation or
as a substitute for the comparable GAAP measure.
Exhibit
4