10-QPeriod: Q3 FY2016

S&P Global Inc. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 3, 2016For Securities:SPGI

Summary

S&P Global Inc. (SPGI) reported strong financial performance for the nine months ended September 30, 2016, with a significant increase in revenue and operating profit compared to the same period in 2015. This growth was largely driven by the successful integration of the SNL Financial acquisition and solid performance across its core segments, particularly S&P Global Market Intelligence and S&P Global Ratings. A substantial contributor to the period's results was the gain of $722 million from the sale of the J.D. Power business. Excluding this one-time gain, the company demonstrated robust organic growth, highlighting the resilience and strategic positioning of its information and analytics services. The company also continued its commitment to shareholder returns through significant share repurchases and dividend payouts, reinforcing its financial strength.

Financial Highlights

50 data points
Beta

Revenue

$1.44B

70.0% Gross Margin

Net Income

$892.00M

62.0% Net Margin

EPS (Diluted)

$3.36

Total Assets

$8.68B

Cash & Equivalents

$2.40B

Free Cash Flow

$617.00M

Financial Statements
Beta
Revenue$1.44B
Cost of Revenue$431.00M
Gross Profit$1.01B
SG&A Expenses$337.00M
Operating Expenses$813.00M
Operating Income$1.35B
Interest Expense$39.00M
Net Income$892.00M
EPS (Basic)$3.39
EPS (Diluted)$3.36
Shares Outstanding (Basic)262.90M
Shares Outstanding (Diluted)265.30M

Key Highlights

  • 1Revenue increased by 8% to $4.26 billion for the nine months ended September 30, 2016, compared to the prior year period.
  • 2Operating profit saw a significant increase of 68% to $2.51 billion, largely boosted by a $722 million gain from the sale of J.D. Power.
  • 3Diluted Earnings Per Share (EPS) from continuing operations rose by 79% to $5.89 for the nine months ended September 30, 2016.
  • 4S&P Global Market Intelligence revenue grew 25% driven by the SNL acquisition and strong contract value growth.
  • 5S&P Global Ratings reported a 1% revenue increase, with transaction revenue growth offsetting a slight decline in non-transaction revenue.
  • 6The company actively returned capital to shareholders, with $1.12 billion in share repurchases and $286 million in dividends paid during the first nine months of 2016.
  • 7Cash provided by operating activities was $1.17 billion for the nine months ended September 30, 2016, a substantial improvement from the prior year's cash usage, primarily due to the absence of large legal settlements.

Frequently Asked Questions

Revenue growth was driven by several factors, including the acquisition of SNL Financial, which boosted S&P Global Market Intelligence's performance. Additionally, strong demand for proprietary content from S&P Global Platts and increased corporate bond and U.S. bank loan ratings revenue from S&P Global Ratings contributed to the overall increase.

The sale of J.D. Power, completed in September 2016, resulted in a significant pre-tax gain of $722 million ($521 million after-tax) recognized in the third quarter of 2016. This gain substantially increased the reported operating profit and net income for the nine-month period.

S&P Global Inc. is committed to returning capital to shareholders. For the nine months ended September 30, 2016, the company repurchased approximately $1.12 billion of its common stock, including through an accelerated share repurchase program, and paid out $286 million in dividends. The company also has an active share repurchase program with approximately 26.6 million shares remaining available for purchase as of September 30, 2016.

Yes, S&P Global is involved in various legal and regulatory proceedings, including financial crisis litigation, inquiries from the U.S. Securities and Exchange Commission, and a prosecutorial proceeding in Italy. While the company believes it has meritorious defenses, the outcomes are uncertain and could potentially have a material adverse effect on its financial condition, cash flows, or business.