10-QPeriod: Q2 FY2016

S&P Global Inc. Quarterly Report for Q2 Ended Jun 30, 2016

Filed July 28, 2016For Securities:SPGI

Summary

S&P Global Inc. (SPGI) reported solid financial results for the second quarter and first half of 2016, showcasing revenue growth and improved operating profit. The company saw a 10% increase in revenue for the quarter, reaching $1.48 billion, and an 8% increase for the first half, totaling $2.82 billion, driven by strong performance across its S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices, and S&P Global Platts segments. This growth was bolstered by acquisitions, particularly SNL Financial, and organic expansion in contract values and demand for proprietary content. Operating profit also demonstrated healthy gains, increasing by 12% for the quarter to $651 million and 7% for the first half to $1.16 billion. Diluted earnings per share rose to $1.44 for the quarter and $2.54 for the first half, reflecting the company's ability to convert revenue growth into profitability. The company also reaffirmed its financial strength, with ample liquidity and ongoing share repurchase programs, signaling confidence in its business model and future prospects.

Financial Highlights

50 data points
Beta

Revenue

$1.48B

68.4% Gross Margin

Net Income

$383.00M

25.8% Net Margin

EPS (Diluted)

$1.44

Total Assets

$8.29B

Cash & Equivalents

$1.57B

Free Cash Flow

$455.00M

Financial Statements
Beta
Revenue$1.48B
Cost of Revenue$469.00M
Gross Profit$1.01B
SG&A Expenses$317.00M
Operating Expenses$831.00M
Operating Income$651.00M
Interest Expense$42.00M
Net Income$383.00M
EPS (Basic)$1.45
EPS (Diluted)$1.44
Shares Outstanding (Basic)264.50M
Shares Outstanding (Diluted)266.70M

Key Highlights

  • 1Revenue increased by 10% year-over-year to $1.48 billion for the three months ended June 30, 2016, and by 8% to $2.82 billion for the six months ended June 30, 2016.
  • 2Operating profit rose by 12% to $651 million for the quarter and 7% to $1.16 billion for the first half, indicating strong operational leverage.
  • 3Diluted EPS increased to $1.44 for the quarter and $2.54 for the first half, demonstrating improved profitability on a per-share basis.
  • 4The company is undergoing significant divestitures, including agreements to sell J.D. Power and Standard & Poor’s Securities Evaluations, Inc. (SPSE) and Credit Market Analysis (CMA), with assets and liabilities reclassified as held for sale.
  • 5Acquisitions, such as SNL Financial, contributed to revenue growth, particularly in the S&P Global Market Intelligence segment.
  • 6Shareholder returns remain a focus, with a dividend increase announced and ongoing share repurchase programs.
  • 7The company continues to manage its debt effectively, with a strong credit facility and adherence to covenants.

Frequently Asked Questions

Revenue growth was primarily driven by increases across all reportable segments, including S&P Global Market Intelligence (benefiting from the SNL Financial acquisition and annualized contract value growth), S&P Global Ratings (growth in bank loan and corporate bond ratings), S&P Global Platts (continued demand for proprietary content and acquisitions), and S&P Dow Jones Indices (increased data revenue and exchange-traded derivatives).

S&P Global has entered into definitive agreements to sell J.D. Power for $1.1 billion, with regulatory approval obtained and closing expected in Q3 2016. Additionally, agreements are in place to sell SPSE and CMA, with these sales subject to extended regulatory review. The assets and liabilities of these businesses have been classified as held for sale.

Profitability improved significantly. Operating profit increased by 12% to $651 million for the quarter and 7% to $1.16 billion for the first half. Diluted EPS also saw a healthy increase, rising to $1.44 for the quarter and $2.54 for the first half, indicating effective cost management and revenue growth translating into shareholder value.

S&P Global maintains a strong financial position and cash flow. Key capital allocation priorities include strategic acquisitions, share repurchases, and dividend payments. The company announced an increase in its quarterly common stock dividend and continued to execute its share repurchase program, demonstrating a commitment to returning capital to shareholders.