Summary
S&P Global Inc. (SPGI), formerly McGraw Hill Financial, Inc., reported solid financial results for the third quarter and the first nine months of 2015, demonstrating revenue growth and improved operating profit. The company's performance was largely driven by strategic acquisitions, notably the significant purchase of SNL Financial LC, which bolstered the S&P Capital IQ and SNL segment. This acquisition, along with smaller ones like Petromedia and Used Car Guide, contributed to revenue growth across most segments. Despite some headwinds from foreign exchange rates impacting international revenue, the overall financial health appears robust, supported by strong cash flow generation and a healthy balance sheet. Investors will find the continued revenue growth, particularly in subscription-based services, and the strategic expansion through acquisitions to be positive indicators. The company's focus on driving growth and performance, coupled with operational efficiency, suggests a commitment to long-term value creation. However, ongoing legal and regulatory matters, though managed, remain a point of attention.
Financial Highlights
50 data points| Revenue | $1.32B |
| Cost of Revenue | $419.00M |
| Gross Profit | $905.00M |
| SG&A Expenses | $458.00M |
| Operating Expenses | $914.00M |
| Operating Income | $410.00M |
| Interest Expense | $30.00M |
| Net Income | $252.00M |
| EPS (Basic) | $0.93 |
| EPS (Diluted) | $0.92 |
| Shares Outstanding (Basic) | 271.30M |
| Shares Outstanding (Diluted) | 274.40M |
Key Highlights
- 1Revenue increased by 5% to $1,324 million for the three months ended September 30, 2015, and by 5% to $3,938 million for the nine months ended September 30, 2015, compared to the prior year periods.
- 2Operating profit saw a significant increase of 12% to $410 million for the three months and 18% to $1,493 million for the nine months, indicating improved operational efficiency and profitability.
- 3The acquisition of SNL Financial LC for $2.225 billion in September 2015 was a major strategic move, significantly contributing to the S&P Capital IQ and SNL segment's revenue and future growth potential.
- 4Diluted earnings per share from continuing operations rose by 35% to $0.92 for the three months and by 27% to $3.30 for the nine months, showing strong bottom-line performance.
- 5Long-term debt significantly increased to $3,489 million from $799 million, largely due to the issuance of new senior notes to finance the SNL acquisition.
- 6The company generated strong cash flow from financing activities ($1,927 million for nine months ended Sep 30, 2015), driven by new debt issuances, while cash flow from operations was negatively impacted by significant legal and regulatory settlement payments.
- 7Effective income tax rate decreased to 25.9% for the three months and 30.7% for the nine months in 2015, primarily due to tax audit resolutions and income in lower tax rate jurisdictions.