10-QPeriod: Q3 FY2010

S&P Global Inc. Quarterly Report for Q3 Ended Sep 30, 2010

Filed October 29, 2010For Securities:SPGI

Summary

S&P Global Inc. (formerly The McGraw-Hill Companies, Inc.) reported solid financial results for the nine months ended September 29, 2010, demonstrating revenue growth across its key segments and improved profitability. Total revenue increased by 3.5% to $4.64 billion, while operating profit saw a significant jump of 20.2% to $1.27 billion. This growth was primarily driven by strength in the McGraw-Hill Education (MHE) and Financial Services segments, with MHE revenue up 3.7% and operating profit up 43.2%, and Financial Services revenue up 6.7% and operating profit up 4.4%. The company highlighted the strategic acquisition of TheMarkets.com LLC within its Financial Services segment, aimed at enhancing its data and analytics offerings. Despite a revenue decline in the Information & Media segment, operating profit in this segment also improved year-over-year, largely due to the divestiture of BusinessWeek in late 2009. The company also reported an increase in net income attributable to The McGraw-Hill Companies, Inc. by 19.7% to $674.2 million for the nine-month period, with diluted earnings per share rising to $2.15.

Financial Highlights

56 data points
Beta

Revenue

$1.96B

63.8% Gross Margin

Net Income

$380.00M

19.4% Net Margin

EPS (Diluted)

$1.23

Total Assets

$6.88B

Cash & Equivalents

$1.32B

Free Cash Flow

$677.24M

Financial Statements
Beta
Revenue$1.96B
Cost of Revenue$708.00M
Gross Profit$1.25B
SG&A Expenses$597.60M
Operating Expenses$1.34B
Operating Income$630.00M
Interest Expense$19.30M
Net Income$380.00M
EPS (Basic)$1.24
EPS (Diluted)$1.23
Shares Outstanding (Basic)307.20M
Shares Outstanding (Diluted)309.30M

Key Highlights

  • 1Total revenue for the nine months ended September 30, 2010, increased by 3.5% to $4.64 billion compared to the prior year.
  • 2Operating profit for the nine months ended September 30, 2010, grew by 20.2% to $1.27 billion.
  • 3Net income attributable to The McGraw-Hill Companies, Inc. increased by 19.7% to $674.2 million for the nine-month period.
  • 4Diluted earnings per share rose to $2.15 for the nine months ended September 30, 2010, up from $1.80 in the prior year.
  • 5The Financial Services segment saw revenue increase by 6.7% and operating profit by 4.4%, boosted by corporate industrial ratings and index services.
  • 6The McGraw-Hill Education segment experienced a 3.7% revenue increase and a significant 43.2% rise in operating profit.
  • 7The company acquired TheMarkets.com LLC to strengthen its Financial Services segment's data and analytics capabilities.

Frequently Asked Questions

Revenue growth was primarily driven by increases in the McGraw-Hill Education (MHE) segment, particularly in adoption states and for both print and digital products in Higher Education. The Financial Services segment also contributed positively, with growth in transaction revenues from high-yield corporate bond issuance, index services, and credit ratings-related information products.

Profitability improved significantly. Operating profit increased by 20.2% for the nine months ended September 30, 2010, to $1.27 billion. Net income attributable to The McGraw-Hill Companies, Inc. rose by 19.7% to $674.2 million, and diluted earnings per share increased to $2.15.

During the nine months ended September 30, 2010, the company acquired substantially all assets of TheMarkets.com LLC for its Financial Services segment to enhance investment information offerings. The company also divested its Australian secondary education business and certain equity interests in India, which contributed to gains. The divestiture of 'BusinessWeek' in late 2009 continued to impact the Information & Media segment's results.

The company noted continued pressures on educational budgets affecting school districts. In Financial Services, a strong rebound in corporate issuance and investor demand was observed, though ABS market trends might be impacted by new regulations. The Information & Media segment saw growth in commodities products and broadcasting revenue due to political and base advertising, while construction business declines were partially offset.