10-QPeriod: Q1 FY2012

S&P Global Inc. Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 25, 2012For Securities:SPGI

Summary

S&P Global Inc. (SPGI) reported first-quarter 2012 results showing a modest increase in revenue and operating income compared to the prior year. Total revenue rose by 6% to $1.33 billion, while operating income grew by 2% to $221 million. Diluted Earnings Per Share (EPS) increased by 12% to $0.43, reflecting effective cost management and a reduction in outstanding shares due to share repurchases. The company is actively executing a "Growth and Value Plan" aimed at separating into two distinct public companies: McGraw-Hill Financial and McGraw-Hill Education. This strategic move is expected to be completed by the end of 2012. First-quarter results were impacted by $33 million in costs associated with this separation plan, primarily within selling and general expenses. Despite these costs, key growth drivers included S&P Capital IQ / S&P Indices and Commodities & Commercial (C&C) segments, which saw revenue increases of 9% and 13%, respectively. S&P Ratings experienced a slight revenue increase but a modest operating income decline due to higher personnel and legal expenses.

Financial Highlights

54 data points
Beta

Revenue

$1.03B

65.1% Gross Margin

Net Income

$123.00M

11.9% Net Margin

EPS (Diluted)

$0.43

Total Assets

$6.35B

Cash & Equivalents

$806.00M

Free Cash Flow

$26.00M

Financial Statements
Beta
Revenue$1.03B
Cost of Revenue$361.00M
Gross Profit$674.00M
SG&A Expenses$361.00M
Operating Expenses$753.00M
Operating Income$282.00M
Interest Expense$21.00M
Net Income$123.00M
EPS (Basic)$0.44
EPS (Diluted)$0.43
Shares Outstanding (Basic)278.00M
Shares Outstanding (Diluted)283.80M

Key Highlights

  • 1Total revenue increased by 6% to $1.33 billion for the three months ended March 31, 2012.
  • 2Operating income grew by 2% to $221 million.
  • 3Diluted EPS saw a significant increase of 12% to $0.43.
  • 4The company is progressing with its plan to separate into two distinct public companies, McGraw-Hill Financial and McGraw-Hill Education, expected by year-end 2012.
  • 5S&P Capital IQ / S&P Indices segment revenue increased by 9%, driven by subscription growth and acquisitions.
  • 6Commodities & Commercial (C&C) segment revenue increased by 13%, boosted by strong performance in Platts and JD Power.
  • 7Costs related to the separation plan totaled $33 million in the quarter, impacting selling and general expenses.

Frequently Asked Questions

The company's primary strategic focus is the planned separation into two independent public companies: McGraw-Hill Financial, focusing on financial markets content and analytics, and McGraw-Hill Education, focusing on education services and digital learning. This separation is anticipated to conclude by the end of 2012. Both entities will pursue strategies to capitalize on market trends and growth opportunities within their respective sectors.

The company incurred $33 million in costs related to its Growth and Value Plan for separation and cost reduction initiatives during the first quarter of 2012. These costs were primarily included in selling and general expenses and had an impact on the quarter's profitability.

The S&P Capital IQ / S&P Indices and Commodities & Commercial (C&C) segments demonstrated strong performance, with revenue increases of 9% and 13%, respectively. S&P Ratings experienced revenue growth but a slight decrease in operating income due to increased expenses. The McGraw-Hill Education (MHE) segment saw a 2% revenue decrease and an improved operating loss due to restructuring efforts and cost savings.

The company maintains a strong financial position, with cash on hand, operating cash flows, and available credit facilities expected to be sufficient for future needs. While operations are impacted by seasonality, particularly in the education segment, the core businesses remain strong cash generators. The company also announced an increase in its quarterly common stock dividend.