10-QPeriod: Q1 FY2009

S&P Global Inc. Quarterly Report for Q1 Ended Mar 31, 2009

Filed April 29, 2009For Securities:SPGI

Summary

S&P Global Inc. (SPGI) reported its first quarter 2009 results, showing a decline in total revenue to $1.148 billion from $1.218 billion in the prior year, a decrease of 5.7%. This revenue decrease was driven by weaker performance across all three operating segments: Financial Services, McGraw-Hill Education, and Information & Media. The company experienced a significant drop in operating profit, down 14.7% to $157.8 million, primarily attributed to declines in the Financial Services and Information & Media segments. Despite the revenue and profit headwinds, the company highlighted a positive trend in operating cash flow, which improved to $67.1 million from a use of $112.3 million in the prior year's quarter. This improvement was largely due to better management of accounts payable and accrued expenses. The company also maintained a stable dividend, increasing it slightly to $0.225 per share. However, investors should note the ongoing challenges in the credit markets affecting the Financial Services segment and the general economic weakness impacting advertising and spending across its businesses.

Financial Highlights

51 data points
Beta

Revenue

$1.15B

57.4% Gross Margin

Net Income

$63.00M

5.5% Net Margin

EPS (Diluted)

$0.20

Total Assets

$5.85B

Cash & Equivalents

$496.80M

Free Cash Flow

$59.11M

Financial Statements
Beta
Revenue$1.15B
Cost of Revenue$488.94M
Gross Profit$659.26M
SG&A Expenses$491.31M
Operating Expenses$1.02B
Operating Income$124.34M
Interest Expense$20.59M
Net Income$63.00M
EPS (Basic)$0.20
EPS (Diluted)$0.20
Shares Outstanding (Basic)312.02M
Shares Outstanding (Diluted)312.02M

Key Highlights

  • 1Total revenue decreased by 5.7% year-over-year to $1.148 billion.
  • 2Operating profit declined by 14.7% to $157.8 million, with Financial Services and Information & Media segments showing the largest decreases.
  • 3Operating cash flow significantly improved to $67.1 million from a use of $112.3 million in the prior year's quarter.
  • 4McGraw-Hill Education segment revenue saw a 5.3% decline, but its operating loss improved due to cost-saving measures.
  • 5Financial Services segment revenue decreased by 5.3%, primarily due to weakness in Credit Market Services, though Investment Services showed slight growth.
  • 6Information & Media segment revenue fell 7.4%, largely impacted by declines in advertising due to the economic climate.
  • 7The company declared a slightly increased quarterly dividend of $0.225 per share.

Frequently Asked Questions

The primary drivers of the revenue decline were the challenging economic conditions impacting advertising spending in the Information & Media segment, continued weakness in Credit Market Services within the Financial Services segment, and softness in school education sales in the McGraw-Hill Education segment.

The company showed a significant improvement in operating cash flow, generating $67.1 million in the first quarter of 2009, compared to using $112.3 million in the same period of 2008. This improvement was mainly due to decreases in accounts payable and accrued expenses.

The Financial Services segment faces ongoing challenges, particularly in structured finance, due to continued credit market volatility and low investor confidence. While investment grade corporate issuance saw a rebound in Q1 2009, the outlook for structured finance remains uncertain and could persist through 2009.

The company continued to implement restructuring plans initiated in prior years (2008, 2007, 2006) to contain costs. For the first quarter of 2009, payments related to these past restructurings were made, and remaining reserves were noted on the balance sheet.