10-QPeriod: Q3 FY2005

S&P Global Inc. Quarterly Report for Q3 Ended Sep 30, 2005

Filed October 28, 2005For Securities:SPGI

Summary

S&P Global Inc. (formerly The McGraw-Hill Companies) reported a strong performance for the nine months ending September 30, 2005. Total revenue increased by 14.8% year-over-year, reaching $4.46 billion, driven by robust growth in its Financial Services and McGraw-Hill Education segments. Net income saw a significant rise of 15.8% to $655 million, with diluted earnings per share increasing to $1.71 from $1.47 in the prior year period (adjusted for stock split). The company actively pursued its growth strategy through strategic acquisitions, notably J.D. Power and Associates and an increased stake in CRISIL Limited, which were integrated into the Financial Services and Information & Media Services segments. Additionally, the company divested its Corporate Value Consulting business, aligning with its focus on core competencies. The strong financial results reflect successful execution of its business strategy and operational efficiency. Key financial metrics demonstrate positive momentum. Operating profit increased by 18.0% to $1.14 billion, and the operating margin improved to 25.5% from 24.8%. The company also actively returned capital to shareholders through share repurchases and dividend increases. Despite a significant legal proceeding initiated by Parmalat's commissioner against Standard & Poor's, the company believes the claim lacks merit and intends to contest it vigorously. Overall, the period showcases solid top-line growth, enhanced profitability, and strategic portfolio management.

Key Highlights

  • 1Total revenue increased by 14.8% to $4.46 billion for the nine months ended September 30, 2005, compared to the same period in 2004.
  • 2Net income rose by 15.8% to $655 million for the nine months ended September 30, 2005.
  • 3Diluted earnings per share (EPS) increased to $1.71 for the nine months ended September 30, 2005, from $1.47 in the prior year (post-stock split).
  • 4Operating profit grew by 18.0% to $1.14 billion for the nine months ended September 30, 2005.
  • 5The company completed several strategic acquisitions, including J.D. Power and Associates and an increased investment in CRISIL Limited, enhancing its service offerings.
  • 6The Financial Services segment showed strong performance, with revenue increasing by 19.6% and operating profit by 24.2% for the nine months.
  • 7The company repurchased approximately 10 million shares for $444.3 million during the nine months ended September 30, 2005, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance in the Financial Services segment (up 19.6%) and the McGraw-Hill Education segment (up 11.4%). The acquisition of J.D. Power and Associates also contributed significantly to the overall revenue increase.

The company made several strategic acquisitions, including Vista Research, J.D. Power and Associates, and an increased investment in CRISIL Limited. These acquisitions contributed to revenue growth, particularly in the Financial Services and Information & Media Services segments, but also diluted earnings per share by $0.05 for the nine months ended September 30, 2005.

A writ of summons was served by Enrico Bondi, the Extraordinary Commissioner of Parmalat, against Standard & Poor's (a subsidiary of S&P Global) in Italy. The claim alleges negligence in issuing investment grade ratings for Parmalat. The company believes the allegations lack legal or factual merit and intends to contest the action vigorously. The company does not expect this to have a material adverse effect on its financial condition or results of operations.

The company actively managed its capital by repurchasing approximately 10 million shares for $444.3 million during the nine months ended September 30, 2005. Additionally, the quarterly common stock dividend was increased by 10% in January 2005. A two-for-one stock split was also effected in May 2005.