10-QPeriod: Q1 FY2020

S&P Global Inc. Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 28, 2020For Securities:SPGI

Summary

S&P Global Inc. (SPGI) reported strong financial results for the first quarter of 2020, with a significant increase in revenue and operating profit compared to the prior year period. Revenue grew by 14% to $1,786 million, driven by broad-based growth across all reportable segments, particularly in Ratings due to higher corporate bond issuance and in Indices from increased derivative trading volumes and AUM. Operating profit saw a substantial 29% increase to $912 million, leading to a 59% rise in diluted earnings per share to $2.62. This robust performance reflects the essential nature of SPGI's data and analytics services in volatile market conditions. The company also demonstrated strong operational execution, with expense management contributing to margin expansion. Despite the onset of the COVID-19 pandemic, which the company is closely monitoring, its diversified business model and essential services provided resilience. SPGI continued its commitment to shareholder returns through increased dividends and significant share repurchases, underscoring its solid financial position and confidence in its business outlook.

Financial Highlights

51 data points
Beta

Revenue

$1.79B

71.0% Gross Margin

Net Income

$639.00M

35.8% Net Margin

EPS (Diluted)

$2.62

Total Assets

$10.46B

Cash & Equivalents

$1.95B

Free Cash Flow

$680.00M

Financial Statements
Beta
Revenue$1.79B
Cost of Revenue$518.00M
Gross Profit$1.27B
SG&A Expenses$314.00M
Operating Expenses$881.00M
Operating Income$912.00M
Net Income$639.00M
EPS (Basic)$2.64
EPS (Diluted)$2.62
Shares Outstanding (Basic)242.10M
Shares Outstanding (Diluted)243.30M

Key Highlights

  • 1Revenue increased by 14% to $1,786 million, driven by strong performance across all segments, especially Ratings and Indices.
  • 2Operating profit surged by 29% to $912 million, reflecting revenue growth and effective expense management.
  • 3Diluted Earnings Per Share (EPS) rose by 59% to $2.62, demonstrating enhanced profitability.
  • 4Significant share repurchases totaling $1,153 million during the quarter, alongside a dividend increase, highlight capital return to shareholders.
  • 5The Ratings segment saw robust growth driven by increased corporate bond and bank loan issuance.
  • 6The Indices segment benefited from higher exchange-traded derivative volumes and increased Assets Under Management (AUM).
  • 7The company is actively monitoring the impact of COVID-19 but reported no material adverse effect on its Q1 results.

Frequently Asked Questions

Revenue growth was driven by increases across all reportable segments. Specifically, the Ratings segment benefited from higher corporate bond ratings revenue due to increased corporate bond issuance, and the Indices segment saw growth from higher exchange-traded derivatives trading volumes and increased Assets Under Management (AUM) for ETFs and mutual funds.

Total expenses increased by a modest 2% year-over-year, significantly less than the 14% revenue growth. This controlled expense growth, combined with higher revenue, led to a substantial 29% increase in operating profit. Reductions in selling and general expenses, particularly at Ratings and Market Intelligence, and favorable impacts from foreign exchange rates contributed to margin expansion.

S&P Global Inc. demonstrated a strong commitment to returning capital to shareholders. During the first quarter of 2020, the company repurchased shares totaling $1,153 million. Additionally, the Board of Directors approved an increase in the quarterly common stock dividend from $0.57 to $0.67 per share, reflecting confidence in the company's financial strength and future prospects.

S&P Global Inc. is closely monitoring the impact of COVID-19. While the pandemic did not materially affect the reported results for the first quarter, the company is unable to predict the ultimate impact. They are modeling various recovery scenarios and have incorporated potential impacts into their expectations. The company noted that its diversified business model and essential services provide some resilience.