MCO - Earnings call transcript Q1 2018

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Operator

Good day, and welcome ladies and gentlemen to the Moody's Corporation First Quarter 2018 Earnings Conference Call. At this time, I'd like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for question-and-answers following the presentation. I will now turn the conference over to Steve Maire, Global Head of Investor Relations and Communications. Please go ahead.

Steve Maire

you. Thank XXXX. and first us well quarter current for everyone to this as for outlook Moody's discuss XXXX full-year thanks morning, on joining teleconference our Good results, as Investor I Relations am Global Steve Head and Maire, Communications. of This quarter XXXX, first outlook full as for current of year our morning, XXXX. released as Moody's results for the its well earnings release and teleconference on available both at press a ir.moodys.com. the An our are presentation to website accompany this Moody's President Executive morning's and conference lead McDaniel, Ray Officer, call. Chief will

will we view GAAP and to call, During non-GAAP To GAAP was presenting refer this adjusted figures. that be the or please this release nearest figures morning. our filed equivalent earnings reconciliations,

McDaniel. made Factors differ earnings Discussion begin, website materially that Report SEC point year Harbor I'll call over the in from can of XX, section website. I of Ray any and this Act may contain to mode. to a by with release. Harbor which attention also Before other call meaning on forth out company, important to our XXXX. In media attention XXXX forward-looking set ended members language, in statements the I now accordance Risk listen-only contained within be statement, to filings the may in in together the those with available cause such call statements. Reform Act, on morning the forward-looking could and which towards the results Litigation to I like the your turn for be actual and Private the are and Securities would Safe SEC's the the Safe Analysis Form our on the These, direct XX-K the Today's factors that we found discussed also of our Management's remarks your December the of the on Annual end

Ray McDaniel

particularly Results. Steve additional with and on with operating remarks for call. outlook summarizing me help First prepared is today's financial happy Financial out Good I'll following record achieve quarter a billion from XX your of the thank was van with period details non-recurring up Operating everyone going to acquisition-related the prior million, XXXX. operating up then the Adjusted service quarter growth from attributable operating for rating Dijk new income broad XXXX. totaled in the intangible the monitored from amortization of acquired to Dijk van based contributed including expense. XX% year first income questions. Steve. some first conclude revenue Moody's organic growth $XXX of up After from revenue investor remarks, current transaction first you, million Quarter Moody's first Operating credits. XXXX as begin quarter, became a mandates Moody's In we'll Moody's by and to morning as only respond to XXXX revenue Thank of finance but also the contribution I'll $XXX you prepared for activity joining highlights. a Bureau XXXX and reflecting comments analytics, $XXX XXXX, our XX% up expenses, increased to as XX% of points solid not percentage well quarter growth XX%. from first $X.X assets Bureau strong million and recurring quarter expenses structured be was of our by

expenses. amortization assets of EPS $X.XX XXXX. Adjusted quarter each. quarter for X% and share operating intangible EPS diluted income of was share $X.XX XX%. the share XX.X% impacted favorably X% operating margin diluted translation and quarter the operating was and for The was from operating currency per acquisition-related the per was adjusted margin excludes up adjusted to $X.XX Foreign income by the XX%, first of per and related acquired Moody's

and realignment excludes a primarily from strategic quarter China CC adjusted affiliate EPS First Moody's diluted per gain expansion XXXX involving $X.XX Exxon. share

remains full $X.XX provide over XXXX in $X.XX of affirming and turn the XXXX our and business to call such as EPS. diluted $X.XX benefit further Steve guidance from back we for our well-positioned financial other adjusted now are and expansion diluted commentary results Our year to EPS I'll economic global to continued to on $X.XX for to upticks.

Steve Maire

with the begin I'll Ray. Thanks, company revenue level. with

and As revenue $X.X $XXX of of X%; represented Ray quarter XX%. of total of revenue. Recurring Moody's first up Moody's and total revenue record $XXX XX% up revenue. $XXX up revenue million of total mentioned, a million revenue was represented up non-U.S. was for was the million was billion, U.S. XX% was XX% XX%

favorably translation impacted Foreign by Moody's X%. revenue currency

MIS each to Moody's X%. increased X% $XXX starting at our was to of quarter the now revenue Looking revenue with of $XXX businesses represented Non-U.S. was million. U.S. up $XXX total XX% and revenue Total of for up Investors MIS XX% Service. million revenue. million,

revenue currency X%. by Foreign impacted translation favorably MIS

of lines the business for to Moving MIS.

contribution First, U.S. corporate grade an U.S. XX% investment This as growth $XXX and as mandates recurring corporate non-U.S. resulted finance loans revenue revenue and bank reflected quarter result strong from revenues respectively. X%. from EMEA in new X% XXXX. the in up in for first finance million, was and increase well up were

new finance million, totaled non-U.S. structured were securitization CLO revenues $XXX up XX% formation. respectively. broad revenue in up structured and markets with strong XX%. reflected particularly Second, levels finance U.S. results This strength XX% at and

in from U.S. revenue This revenue was in municipal up Third, exemptions institutions for X%. while revenue revenue loss decrease public tax decrease with down finance project finance revenue growth insurance was was X%. banks. This reflected U.S. X% Asian non-US advanced U.S. of financial revenue partially a Fourth, up was companies transaction. and refunding and was million and project a by issuance in result infrastructure financial banks million public X%. and EMEA U.S. XX%. reflected the $XX XX% activities insurance while from non result $XXX U.S. offset of institutions primarily down U.S. up down infrastructure was

revenue was XX%. up up U.S. was of of $XXX revenue now Turning million represented was million XX% up U.S. revenue million to and revenue. MA while for Analytics, $XXX MA $XXX non XX%, of Moody's total total the of X%

up quarter for XXXX was Foreign of by $XXX X%. favorably the translation first MA currency year MA million X% impacted prior Organic from period. revenue the revenue

business Moving the lines now of Analytics. for Moody's to

RD&A result First, revenue a or non-US of in first up million, as from revenue and Organic sales deferred research data than was million was XXXX, million double. Bureau approximately was under search required of quarter revenue more included RD&A rating $XXX of fees. driven XX% acquisition by $XXX rules. reduction and up the Dijk's quarterly of revenue million adjustment data contribution XX% the accounting up revenue U.S. strength XX%. RD&A $XX a and analytics $XX of RD&A van revenue

by revenue solutions was million period. decline the projects Trailing month up strength risk This $XXX of up ERS revenue enterprise U.S. X% or revenue subscription reflected while license. Second, and from X%, ERS sales onetime non-US partially XX was XX%. increased offset result was flat. software from revenue down for revenue while prior revenue in approximately ERS X% year were

make year revenue represented on the total progress higher-margin product We emphasize XX% XX mix the XX% first the prior business period. products Recurring month down and up trailing continue ERS from ERS of of quarter in XXXX, sales XX%. the revenue with shifting service X% to in sales of

down professional Finally, professional revenue XX%. up U.S. X%. up was services revenue million revenue while services was X%, non-US $XX was of

this year Other expenses hiring. million merit first compensation Turning of for were assets related and intangible period. totaled operating up increases expense of acquisition $XXX points prior include of driven percentage now from growth and expenses, operating expenses. expense the acquired to XX increase operating expenses. XX% Moody's quarter amortization by additional drivers

revenue operating impacted unfavorably immature with translation ASC was of to modified corporation XXX On The X, be expenses adopted the retrospective currency quarter Foreign and company XXXX immaterial both could to remainder the January by create those of year, XXX impact some approach. however volatility. adoption revenues standard The the accounting using the and expected the quarterly of new X%. ASC in expenses the first it of XXXX. impact the was

Ray prior benefit Moody's statutory reflects tax rate was down for decline expected margin for rate in adjusted As tax accretive statutory quarter relating the uncertain rate accounting compensation. XX%. higher U.S. margin benefits of to tax XX.X% to lower XX.X% tax net first in operating and the was year related the its was limitation exploration XXXX tax physician period. the from the Moody's XX.X% The mentioned, and operating

provide I'll allocation. on capital update Now, an

payable of first per quarter average common on includes quarterly XXXX share returned an of million Moody's XXXX. or XXXX, XX, repurchased of million taxes. the per million, Board million with shares flat cost its shares of stock. May plans its employees record business the year to shares payments payroll dividend $XX declared XX, will XX, net This the as be of and March $XX During of cost close April also to $XXX.X dividend approximately amount Moody's of and dividend the XXXX total a on also XXX,XXX of shareholders held Moody's approximately totaled of at as share. a of $X.XX employee stockholders via at ago. on net compensation $XXX.XX to X.X Moody's June regular Outstanding a shares XX, stock-based for Directors part a issued

of quarter-end, from XX, year These of flow for $X.X cash outstanding general March credit due million available call XXXX XXXX turn was remaining. its increases borrowing increase made the additional with billion Moody's that, of Justice debt an three $XXX in revolving from over As of facility. year Moody's XXXX, largely share in and months through various negative U.S. flow capacity Total Free $XXX had of XXXX. prior of $XXX were repurchase from XX% under to million authority and XXX period. from back to operations the the had prior increase At at with flow short-term the Ray. investments three payments and million, $XXX first of quarter million states months end million million of of Department for the $X.X from quarter increase was cash first company XXXX I'll XXX and negative attorneys period. the in cash, pursuing the cash settlement were the And first equivalents XXXX billion, XX, an December Cash approximately

Ray McDaniel

Steve. Okay, thanks

business. Before on van rightsizing to In on like changes only program nine efforts cities deployed since increased Dijk regulatory van of integration Dijk sales to for consolidation reducing with the some month to and staff track just estate the and disruption practices in with we are acquisition full-year across operations XXXX. seven and Having analytics real employee Dijk expected and offices order Bureau reductions well-positioned realize gain We costs. van base sales through to we significant compensation co-located the are Moody's a expense. additional reductions March, Bureau legal requirements, not discussion productivity. analytics provide for Moody's in highlights After progress completed cost efficiencies guidance the nearly plus Bureau with our combined synergy year-end I'd to in and executed our our activities. without to integration closing

including pursuing performance. comments and by van prepared quarter growth for cross-selling specialized many factors, Bureau is Moody's investor Dijk's website first geopolitical ir.moodys.com. complete found marketing which Our are interest with business and the when consistent profitability our from on corporate conclude discussing uncertainty business These a macroeconomic year borrowing product release, efforts A and merger we of the rates, areas, can included about we that our the of securitization making opportunities. continues to XXXX acquisitions, could and our table In the we morning's the debt building differ near-term rates, issued. conditions Moody's full Moody's and And materially good based assumptions we XXXX. on the at is transaction. its are exchange and on announced I'll earnings guidance amount capital anticipate toward joint spending, foreign guidance synergies be for outlook. pipeline progress of press year XXXX subject legacy and list solid results for market for this the current of assumptions are consumer in historical investment the and currency results relations XX changes short,

end outlook currency assumes foreign at Our quarter exchange of translation rates.

$X.XX of the Specifically, $X.XX euro £X and our to forecast the the €X. for the pound British rates to reflects for exchange

range. now percent percent range. finance expected We Structured high to single-digit are in to revenue finance increase the corporate revenue increase mid-single-digit now in expecting is the

environment. we turning an to Q&A create the on update future with for on their Moody's communities week Before approach better to the need around a they the this information, and empowering to the over resources I would global corporate world themselves to a call confidence social CSR like people responsibility provide Earlier launched strategy. and focused

organizations with succeed about for essential of their partnership chances We provide sources also announced proposals We Moody's Shape financial connect growing people Tomorrow, resources and Tomorrow Shape Shape them initiative from knowledge, provide empowerment and vital We success. information of Tomorrow in that help seeking credit process signature small small help owners financing. financial increase our programs access businesses. We the business to will to

that more and Analytics you pleased Almeida, on Service. April For any questions be for joining remarks issued information our me are and visit Moody's see CSR proposal, please would take and Mark and submit release Fauber, This President the a of or we press We Rob may to the session President moodys.com/csr. concludes XX of have. Investor Moody's question-and-answer Steve to

Operator

from And our first Sachs. Please ahead. Conor question with comes Fitzgerald go Goldman

Conor Fitzgerald

wanted rating a particularly pretty to side revenue dig corporate a good recurring little Just in on the the quarter where had bit you finance. on

think this pace are talk the trends of you the little can do Just you and seeing in you is? a sustainable bit growth about space how

Ray McDaniel

offer thoughts some happy I'll that. Sure Conor to to Rob Fauber initial on and ask

Bob Fauber

recurring revenue. was Yes, around so first your question

think the we growth Asia we FX. second modest have had corporate we the And have Europe a strong first monitored benefit revenue we seen if in mandates that's you very increases I question quarter somewhere growth. your some current from other over things And saw around particularly to credits, was mandate time So first where also in in support fourth recall helping to XXXX, among and generally. so X,XXX got time and

So good higher globally corporate I somewhere on was commercial mix, from revenues. this at we XX% mentioned, execution, some growth FX. CFT the mandates in it neighborhood looking down of credit Whereof new monitored some benefitted issuance that favorable and the

our transaction to the rating issuance also world grade which to mitigated good largely the that's service declines revenue includes that growth of We some confined in impact driven investment activity other and adjustment typically saw and M&A by extent. rest some were the issuers revenue European

Steve Maire

that and in our new just far driven as the would is as mandates off XXXX. at benefiting from add strength we for new I And We rating rating of extent are MIS mandates another do in of recurring revenue robust that the that expect to year 'XX.

Ray McDaniel

be rate me And do different we in a remain the hearing an trillion in at least as what investment take consensus bond from let Connor and street for would every both revenue grades non-financial XX% strong and then to so quarter that from guidance variety the to far conditions record in financial we investment we're necessarily in included on levels give India. and XXXX. ground and were the the these will what consolidated has opportunity instructed what about markets hearing solid full-year on we're line categorized relatively to views U.S. large but of the week. keep roughly X% here But are mind just and be in update banks are from again hopefully with X.X are levels this that's down in out front we remain Overall a pipeline and fundamentals stable the seeing

to spreads of April. we're billion was blackout shaping Credit a next what be that start is fairly first instance rallied here in XX active from than roll-off market quarter investment-grade, is calling higher the index to XX up Barclays, earnings I today. slightly as around which bond or Bloomberg as widened a have typically hearing month week another The equity For basis think roughly aggregate bit is in but volatility given wider in May so.

thing other cash the on And so in showing QX is far trip round that. the so of widening been then out I've on let's year-to-date eye basis. a have repatriates keep some out in sort modest an So pointed market

market with be XX% but investors today primarily pricing an say likely flat market in the in we've given I market credit and taken full-year excellent but to the that and billion. June by some heights three weeks or Moving this this on is heights so March selling billion flat plus incremental of and seen really XXXX, Again loan high driven high refinancing just been is this probability. grade base. On are as yield relatively and volume over two the will Issuance story between the volumes roughly volatility February in very what future a a to demand similar bond joining far strong would and XX% The bonds. remained down side off that's is the XXX year-to-date hearing have leverage game close January investment a XXX every from the one and in Fed in obviously year we full-year buster forecast is XXXX, is year. forecast rallying about has to last was in for interest yield class on several to so tightening and a unchanged in of to asset year-to-date and terms high then been the spreads

loan obviously that environment. a trend Repricing last As with and know now we upside slightly the than an directed rising Full-year floating more activity is this remain XXXX robust activity to seeing attractive or mentioned see market year refinancing if still was XXXX was through continue. does leverage in accelerate with and as remains down to somewhat class rate we're and already potential we rate asset rates we strong for that that regard as some I expected demand be create base think. M&A rising

so but profits. strong Dijk corporate dynamics have on Europe dollar of remain standard we GDP tight solid beginning spread moved to side year has see of The and up wider to are grade. demand seeing the investment a continues bit picked the U.S. Bureau year. as by investment the the are van remained in the what historical hoping]. Moving to the [we similar from in grade The on issuance beginning growth spreads

are and XXXX. fueling demand to both narrow what spreads issuance and high of comps side levels -- yield over are due tough a good refinancing condition. So strong our some strong And that's the healthy opportunistic loan of rate and issuance, markets though pipeline is face was the some happy repricing. shape, spec in On leverage our

that So helps. I hope

Conor Fitzgerald

one capital thinking with downs the you capital you moving have I on buybacks, the free quarter and return, thoughts you get little year. get pay cash room in think on doing wiggle what I and have some got a rest is through as your we pieces updated And just together, on et such wanted are of cash debt cetera. coming based those pay then guidance debt at the with about all flow? up extra to your down, still the just

to just updated get thoughts. your So wanted

Ray McDaniel

there thinking Connor. hasn't really Our changed,

of we very van amount as acquisition that share that We we have been from that debt would enough haven't our and acquisition. upfront But really same since offset deleveraging be Bureau off the our employee took you to announced to term Dijk shares from finance near to repurchase on the priority issuance. for that, XXXX million, XXXX dilution we the come took know XXX target that's we

along same our we the we to of marching is are reach I'd still To a then reevaluate it bit over debt. will times. right pace say term But than [fortunately] that initially we this leverage had targets ahead So at we we near point are those are prepaying than thought, to sooner able months expected, there. extent we actually now the

Operator

Toni our Morgan And question with next I'll take Stanley. Kaplan from

Toni Kaplan

really comp finance, basically in good a quarter that had up You in revenue difficult globally business. X% corporate and

year, about talk I'm of markets sure guide the first so So just okay not you I in you for it totally [indiscernible] just rest I can on for quarter. the but you as little the year going think revenue just lowered given what but what's I was the to and the to like -- surprised a guide think that talked just bit guess about

Ray McDaniel

do investment guidance. color really to U.S. the Yes, for answer in the that's add level of additional a issuance bonds. Rob what is foreign high-yield be shift and but reset some adverse modest we may to we moderation many currency will have that grade in you high and our want anticipate an And expectations to contributing provide translation

Toni Kaplan

for -- that -- were sequentially for but they were points from of margins half the And second 'XX. about points about down up Moody's Analytics, noticed the -- basis XX we basis it then are XXX was

legacy wondering legacy been to at look about margin as the you think just if expansion included. have exclude you so expansion And we that? we to sort if the are of business margin How just BVD opposed should

Ray McDaniel

try Mark and you want that. address to

Mark Almeida

thought we months basis. moreover, margin Yes, good did what a margin XX was Toni we of we another and have on year-on-year expansion expansion trailing have got quarter

on that's as So we XX are Bureau the and consecutive of really from margin Dijk. hair trailing Both the Bureau that of is MIS pieces legacy with on now And that extra accounting from the the expansion I discreet relative Dijk. you Bureau quarter. going the with the allocation numbers revenue the in anyone well the expansion if the business now Dijk you van on quarters because get spite that addition scale that's can five because also look at Moody's a to as the months contributing of weird expanding. and associated think margin overhead of the on attracting business to things Analytics that's van in cut is But basis number both some coming with van the the is focused growth

we with focusing where performance delivering talked to are the So what pleased months are -- heavily we quite about and on than the rather we delivering the feel we is respect expanding margin progress on in we consistent like again XX with and way the margin trailing really the very discreet quarters. expanding actually are gradual

Steve Maire

and [indiscernible] differed just cut experienced that largely then hair way. revenue will of mentioned. you it. after of and goes just quarter, the be the we to We X will should million most that I way of this got comment it are Mark it through and Toni likely change done We next hit on so X left, some quarter And XX

for will that uplift So us. nice be a

Operator

from with Alex Kramm UBS. next Our comes question

Alex Kramm

BVD Staying for Analytics guess here. minute on a I

particular morning on think surprised people this RD&A BVD. by of I and a were the revenue lot in performance and

the all us does why and all wrong the think in was number some have I importantly most expected maybe I given color seasonality throughout great. FX growth it So bit you maybe little got So about some would BVD particular maybe I that of guess ramp terms more year? quarter-over-quarter for maybe it But would was little how a adjusted can bit the be of more helpful? that flat talk so a in

Ray McDaniel

Sure. Mark?

Mark Almeida

is your are missing Bureau first, take to That numbers add it's the from quarter. the back did if the haircut fourth right what the a you the that you you in point van hit did second on quarter the What Dijk hurt the first top we the line we top there to flat reported to transition XXX. the taking that Alex to first standard quarter ASC because of accounting line. us new are

some our revenue and or commercial those some also see We once have of really expected. to operational don't shortly we like matters that we with the acceleration business to just had But on matters. closing an will recognition get expect to in but some we we with issues quarter a We get them delays contracts as relates booked. contracts as catch first the opposed customers timing the get renewal of booked the in up didn't those

going So The well. is on performing underlying that's what there. business

than As Ray line historical the if not with much it's of the performance standalone in said very business. better

half what the of I you're good rate feel growth other we And year. the is that about very we there. RD&A's do what's on So the expect think second point, seeing to that particularly accelerate, happening in then

van that haircut our half numbers Bureau Steve quarter will will get just to 'XX. full that out roll And the we quarter, will mind Dijk go third because fourth have we of as need in revenue into is the that what's in third into deferred here away. quarter keep start calculations, happening pointed the of and as organic the them You to

we're growth healthy into to So the half of in second see figures as the very we year. willing the organic get RD&A

Steve Maire

QX. to of nice strengthened point guess QX different in rate Alex, the midyear. of most about materially FX. Euro a comment make from Euro wasn't the just average versus pretty that's The you a made place but meaningfully And in lift on last one I then sort other really Obviously expecting year, really I'd

So flat relatively it quarter on quarter. was

Alex Kramm

then double LIBOR bond I the yesterday And outlook, the up update an as helpful. but a flows then been leverage the think I to paper. too area up quickly, of was check, will this think anyways. of strength X% yield are I issuance be this it far X%, was we or gave you when you too And And okay. loans and Is so the like since color Okay. colleagues demand funds I and thought what on are with certainly secondly where it's these has still there But rates seeing a variable are away high or coming issuers for still pretty tight that? lot, side? while about any some demand, you said cited point spreads in corporate just just high variable would do think from

Ray McDaniel

the and attractive rate just paper, the reactions see floating depends fixed attractiveness rate. [ebbs rate in attractive. relative even think versus really environment between policy both may remain year Ray, in] rising interest room on are We for market there and the costs is borrowing of conditions on This is to policy rebalancing borrowing in some still to it I a later

broadly So we'll but see environment see we do positive for a continuing. borrowing

Operator

we And Manav Barclays. take will question our Patnaik from with next

Manav Patnaik

of I rest called if think my I question believe BVD Moody's on includes out. FX answered business you organic benefits. you X% had growth Analytics guess do the is you the that but the I I maybe

just to RD&A, we little ERS it pieces understand can expected? X% I you a guess growth, of about it's would in other feels assume I the if X% slower have Any than and maybe help So so timing moving forth? pieces

Ray McDaniel

acceleration And we I like we get bit in came there and timing double-digit the half the X% rate for growth in do to as mind low in year. is we There organically. of little a at the said we bear But of expect in second MA into guided growth QX.

Of includes guidance course FX. our our expectations about

So see where running our performing. where is deviation a as things from are We don't we see think we the guidance expected. I and substantially big business

Manav Patnaik

if it have -- do number guess constant X just And I always X more or a probably But is thoughts single I That's that I be was X. growth. true fair. digit we currency high organic that should

there So if get timing was why that trying in explain so is -- at? that some I to is I was higher suppose,

Ray McDaniel

up the quarter. Well currency in is RD&A organically first constant X%

So solid. again pretty it feels

Manav Patnaik

just just much that issuance you been forward as still you Like of the -- on pull helpful? now side thoughts forwards just how Maybe know a and the but constructive were so some guys do It many follow-up, back see using think on for would how think like word Day. weakness in maybe remains much sounds you a you structured there you the strong then quarter. be like and at Investor years drop. pretty I on was And it just we've backdrop obviously do the forth? pull was

Ray McDaniel

corporations and those with versus and to and in earlier what environment were going XXXX. decisions increase rates narrative utility correct in about being we rates As pull XXXX to out opposed we now for in in be they said will as in year was had expectations little debt and watch of we've XXXX see we the the have maturing dialog acquisition see relying of and you are and momentum, talked where have economic mergers issuance global on get XXXX more a activity XXXX thinking about are where robust That to a so needed refinancing look GDP and refinancing our forward to that XXXX expectations continuing interest growth for XXXX are rates as because to made. their a and

Operator

Foresi Our comes next line from Joseph question with Fitzgerald. of the Cantor

Joseph Foresi

timing delays if on it? what and renewal more in be you you RD&A the wondering was could how caused a little bit rectified or I specific

Mark Almeida

gotten Moody's we -- seen we're but done progress the simple It's subscription work really do book -- on frankly timely Analytics Analytics them it's The signed a think to them getting getting program the when historically we've rigorous some done we'd like. and before and our with quite across been in that quiet acquired this practices van Moody's way at in pretty renewal with that the contracts Bureau the and level businesses. get we around have gotten we discipline as But as in haven't basis. we we've making haven't it Dijk getting not as

just massive what But have to. was booked. So operational their I we a very bit note the in a should but so business in experience, amount of It's I in I little short any and we revenue It's really kind of matter. affect expect once quarter. our get historical fully to get first numbers those order it catch the will said really steady not with referring does out as that's business holding the don't problems underlying attrition the they is an see at up business. that sorted

Joseph Foresi

are on just a you margins cost guidance, the change there go due least revenue a expecting the was and to mentioned Is earnings back outlook why guidance at And the lower not of raise little to or you the bit that side to things? to structure earlier? the

Steve Maire

have in some we going rest widened we top the rates lapping environment we year. where are -- cautious outlook bit. that the but least are moving an line up in we are spreads are modestly, I of at robust And have a the comps It's for to be out being hope on

say year. is you a top a think might cautious for we're opportunity approach So the what prudent rest but of line taking the to I the

Ray McDaniel

an help are expense the obviously not what $XX point on QX we between in And Joe to modeling XXX it with about you expecting from call. have just is with add, starting last to in QX, increase just update ramp $XX million to the line and the million talked I'd right actually is your still to we so which give

So we year. the growth we as still are through move expecting

on we guidance thoughtful margins. our why are of part the about being that's So

Operator

from our with Peter next question Piper Jaffray. Appert And comes

Peter Appert

sure I of third as and recognized to Mark on spike Hope I quarter? understand to fairly understating BVD all it's with correct fully it and incurred, say deferred make meaningful are want fourth revenue and might perhaps the Is profitability. therefore right. margins in we the you costs currently have to your the impact deferring in anticipate that of revenue the margin some

Mark Almeida

perfectly understand you Yes, that Peter.

only than is the with of bit amount forget make it bigger I tweak you of to terms the just have more a the what you words used maybe -- exactly think now but what said might I would what I in I said yes, we not we accounting top are are But we expense absolutely, margin all absorbing P&L. when hair are but and of with stop the of recording these additional will the line see adjustments. cutting we recording we the all on revenue that

Peter Appert

that quarter it of income have deferred million is revenue. of then XX a for operating Would margin higher? imply -- otherwise in the if a the you more formally bit terms been this Is that possible and example XX% would to quantify business, first Mark in

Mark Almeida

yes. the did right, math You

Peter Appert

Okay.

Mark Almeida

just Peter haircut otherwise top would there's revenue clarify, and be expense would differed have the with to additional no to that, million taxes $XX but added associated it. on line there the

of all recognizing are expenses. the We

Steve Maire

And reminder QX that The to also everyone have how to we and last taken just majority year. that a in works. QX

XX the recognized north And that that in, very QX quarter 'XX in next of then remainder and X of is taken, roughly about all little was [indiscernible]. 'XX in XX XX we XXXX. taken is it XX and projecting again, the was in so was left So this a this the quarter QX of

Operator

will next we our Markets. BMO Silber Capital Jeffrey And from with take question

Jeffrey Silber

if I CFO search. can an wondering get we the on update was

Ray McDaniel

excellent we've some it's Sure, candidates. ongoing, seen

inside hope out close we an both near Moody's good have to still I We candidates external as be search in are in process. search to conducting it's the but and the well. future able

Jeffrey Silber

me put if you on you you beforehand? remind that saying And expectation Okay. are when searching, can time are a you

Ray McDaniel

make that done it I'd get the we possible Well have want sure to today I but like best to candidate.

working So going just going deadline I'm I'm put keep it. at to on not to a it,

Jeffrey Silber

question. for some quick lower that. we one rate our going rate highlighted forward you I tax And know the quarter, items. was of just I understand. the numbers the be for I this What would appreciate using tax models?

Steve Maire

It we exactly a was to that. expect quite commented on last lower bit call and the

XX first the of related that quarter. to towards comp We obviously million [weighted] of tax said accounting the stock we was excess have the it for benefit year and roughly estimates

was about first of it quarter, fact XX In XX%, XX fairly or it out. so million was evenly the in spread remaining taken there's

one piece So that was that the impacting rate. tax was

benefit a that the uncertain that statute alternate in reserve on expiration of into item limitations that quarter we really but have positions certain first an received wouldn't you was for. tax the tax there visibility to that have from we Another

brought that the So we so reversed those ETR. down further out,

out we likely quarters indicate So to in our going XX forward XX% to the to for QX so obviously XX.X% haven't than to guidance math changed slightly order would XX% have to it's Jeff, that in XX higher be that of the guidance. XX% XX% remaining the to average to going

Operator

And with we will take Research Huber our next Partners. question Craig Huber

Craig Huber

you would -- will would know just of the in outlook I down year the that the at here? talked willing for Ray, think thoughts issuance your loan I to in your talking side, bank it the out investment for down X% bank the U.S. this for be about rest here further on play and flat environment? year how What you here is

Ray McDaniel

flat Rob There As that. than direction more for for up for business of issuance good we're bank of be on expecting had you loan our would better at provide European slightly the will should a terms in a saw slightly loans let expectations little a down. bit we bank full-year But and we little was first what which quarter. line to are overall lot which looking in be the of color a strength loans bank I revenue

Europe again in we've know is on to anything if to think And increase seen. we So that wanted bank loans point I the to we and I you add coverage there our have Rob that. would that strength opportunities don't in

Bob Fauber

right and bank think we're loan market. Ray very seeing I we That's a active

we north we active has issuers talking for We're growth year spectrum. than a that in XX% I have outlook loan The come the more through lot last issuers yield believe. first We're the the we're credit about I year rated mind think full-year coming the a bank when keep of issuance of are market. the to where also high global bank low something market. market a seeing loan a in bit are time issuance seeing off was of been lot very just

bids And there. flattish volumes are nice our investors in flattish is these M&A loans loans. got issuance Ray favor where very the for growth volumes prior As got we Europe, quarter. that loan more in loan institutional record bank bit CLO Europe, strong in originators a of said, revenue activity. worked chase. in the supporting we kind generally saw also while just this some Europe, refi there year at The activity Leverage and a to there compared mix issuance And in quarter saw have on again good have we very

issuers and there. that's for funding So keeping costs the driving tight spreads down

Ray McDaniel

and to then high rated the profiling comment grade will risk credit don't less rates default to attractive market there access. continue loan have they the deep And is borrowers if these some of low as entities. I'd bank if that add an some could one rate Rob's is may makes the thing decline. they on enter believe a default equation not speculative but volatility We potential is year names those through There that in increase with

Craig Huber

two Then could. ask to I ones just quick also if quickly I'd like

rate of growth purposes? BDV adjustment the then And whole to how it also put growth much X.X% underlying would that being of aside directly the Was the revenue tie it ratings For division, roughly you into coming what how please? accounting much mandate? revenue new was the up half from for from to there,

Ray McDaniel

going But check we than I number to right Craig. be going but less think to no. don't that a have majority, for you that. it's it's not be I away on the can

Mark Almeida

we consistent showed historical in its at a Dijk, would've a but with for of what numbers On we're we disclosing basis standalone Bureau the to is say Dijk suffice terms on performing growth that not rate. van acquisition you van announced rate the when Craig precise its very Bureau

Craig Huber

Mark how historical was its roughly… what XX% X%, so

Mark Almeida

around It in high X%. the single-digits was lying

Craig Huber

to pretty close you are suggest you So then? that

Mark Almeida

Yes, absolutely.

Operator

Wells Warmington And with Fargo. our from comes Bill next question

Bill Warmington

question you structured So finance on the the for first segment.

what You also to CMBS highlight? but was was that? particularly demand also strong, ask if there the broad. really being any demand highlighted pretty CLO to wanted driving was there to pull then forward ask And I and look the about at the

Ray McDaniel

Rob?

Bob Fauber

volumes securitization out broadly we higher you of I number me and right. activity CLOs right. -- that. think Generally We a you're have are Yes, some saw sectors. but U.S. let robust we seen experienced take other called across And

strong because on big touch quarter, refi the activity CLOs we driver spreads. on seen such was to tighter have it for Just very a

a In in I've volume The CMBS 'XX we is and volumes higher easier was Bank robust Europe Europe the strong saw a than We I up quarter were in the UK an benefitting the hot a of story from the deals a benefiting Netherlands ABS the XXXX of particularly European on and conclusion obviously really risk February refi would in we investor note demand. first earlier volumes scheme in very loan very of saw -- and uptick England's the of higher total an U.S. in for RMBS structured. part was similar in of that's UK, quarter for said little proportion chief formation helped banks. as which retention. funding market. that that but QX for of supported funding term a source saw with also also comp bit as had volumes any We and using also by new structured by our credit, CLO market bigger very in deals percent CLO in a leverage

of the If little you a as bit did to the pull well. beginning of XXXX, easier of QX forward of back an comp in implementation so think the risk XXXX, all way some of retention it's we because see

Mark Almeida

this you'll line just credit for do RMBS structure the lines we up call 'XX XX%, the and also on XX%, the 'XX calls quarter-over-quarter up QX up and business to see I our the of would always to add of after the XX%. components ABS IR rating of agency CLO revenue is QX as we on that after And will post earnings breakdown website

strength based across So the pretty classes. all asset much broad

Bill Warmington

you about need it for question, tech need? as to continue find artificial my whether war intelligence the you I you to talent intensifying and talent, to and be And are that companies looking machine to across about I see able get any get to there are leverage follow-up to seems changes you ensure are ask that you then thinking you wanted services you making the for well learning. ask And to wanted that IT talent whether verticals the

Ray McDaniel

the I we terms in whether robotic is, talented is it's feel how think to of people offering. A very whether process professionals automation this on, we in attract we is are or Well attractive lot in speaking, our businesses. working opportunity able IT it's embedded IT it function attractive an what broadly that the product of centralized have do would or development,

competition for the that correct best is You're lot there of a people.

So we've got that. to on stay top of

recruit our add that. to financial, of will to we We and maybe like they maybe people continue in those the best organization to adjust retain make people want paying it content. to terms attention almost do you to Mark best that But sure and we're they job today any adjustments would.

Mark Almeida

we of got source world. operations talent. many place are the seeing there the attract a kind centers a other we and in But talent for of recruiting Francisco challenging San some different around available major add other we've City find operation to be the just York you of got it's in a the quite if Yes, also is locations world. in are terrific New talent many operational big We've and I that, that in there lot centers. we of are Certainly what different want. And would to in example many around we able and is our Omaha around world

footprint respect. us that So broad have that in helps really I the based think having we

Operator

will And next take Tim with question & McHugh Company. William from our we Blair

Tim McHugh

incentive us outlook in and any you the expecting how what are comp, numbers accrued can update that to quarter year now? just guess you much versus for I one, One change on the full you

Steve Maire

Tim, sure provide that. happy to Yes,

comp XX% XX% and from first for quarter, So of that the million, was last quarter XX incentive year was first down sequentially.

raised to the guidance had the the business. of we pretty As 'XX you back take performance know we of in significantly that given up half as

the you on do depending but starting a know think Going way business how likely as sort performs, XXish forward is depending the to that I will that guidance, probably probably with on think best the of would change But is I about. say number what we point.

Tim McHugh

basis is have slower. on happening on? I there there something I pace growth. product XX services the was you trailing I a actually then elaborate month a you product surprised but been of like deemphasizing, And guess anything ERS sale little the sales that can about Was was sales little get

Ray McDaniel

I mean product its been market in that we pretty have put as well Tim, I I performing received. much recently the very of we new think launches have a got think that we number expected. to

have quite origination that comply being is well. received. well standard new we is to market product very accounting product customers the the doing new Our in seasonal help our with loan The

a very pipeline nice there. building have We

products, bit drill are see we've so And really sales you where our these which are emphasis. that will into that we -- if double-digit a we growth continued renewable little is numbers for you more putting got

we of think quarters got double-digit or in growth now least I renewable have sales. six at five product

are line think going told So very as things in with I much our have expectations there we you.

should a be about time. happening year some very are things and this nicely a us fairly that work ERS soft good feel longer we to But play very XXXX in through for out over business period of transition. that as expect We for we the

Operator

question Vincent from And with our next Autonomous. Hung comes

Vincent Hung

think services? Because S&P was at of from non-transaction that XX%. if give rating revenue us can't And said assessment it much was comes I How what year-over-year? the it you up

Ray McDaniel

don't in I very of not truth. from rating assessment the growth significant revenue you is the a rate material not Our me. again, have number. front tell to But it's services year-on-year

Vincent Hung

the think the should run excluding organic of rest rate we the at year? the RD&A XX% about for as RD&A as BVD, right looking be core we On

Ray McDaniel

is did XX year. we And this well, mid again, for first our the quarter. guidance RD&A teens in organic XX%

in to accelerate will Bureau Dijk van said it's we help. We to layering expect be going that because as I've

from So -- van basis I Bureau I RD&A XX% expecting are asking me that is am excluding on will an organic question? Dijk, guess you growth the

Vincent Hung

exactly. Yes

Ray McDaniel

Again, see can level. did what I business I guidance at But don't don't business that RD&A similar it that rate Dijk to I give level the expect the Bureau you perform let's granular at we to growth this think continue were be have to we out a really slow. the first that quarter it way, don't put van organically I wouldn't to the -- would in I you be -- to business. expect if would pull

Operator

next comes from Rosenbaum with Our Stifel. question Shlomo

Shlomo Rosenbaum

the growth you into Dijk and some If organic out just constant impact a Bureau of Dijk. was just the both question. currency strip What FX whole van which kind First company? regular van positive the Bureau from of went numbers for then

Steve Maire

line FX revenue was should Corporation from XX% Sure be we top half of out you Shlomo. That van have was Moody's that that due impact -- all get on strip to the so they you said X. for X%, that so down if Bureau and Dijk that to contribution the

Shlomo Rosenbaum

that. thing be MIS to get higher? than you bit out kind the took and it take at what little then be implies it to seems BVD, X seems The out a data is of higher there bit in X trying that That's number I'm little to when

Steve Maire

at That's first math the the least for quarter.

Shlomo Rosenbaum

for between and economy outside the bit and little and ERS Can the U.S. performance you on the comment the for a Professional U.S. Services?

Ray McDaniel

this couple let I'll on start mark add I may comments and it. a of with to

Mark Almeida

think couple I a Yes on going of there. things

Also sales customer's business strong accounting pretty FX last to some with X -- were our First of is adoption IFRS some had work significant outside U.S. the in impacting outside in had associated benefit year related we we obviously doing very that the the we standard. which particularly the ERS growth U.S.

U.S. us very which think U.S. is results. year good So the up some in sales that to revenue relative now U.S. outside the -- last I non-U.S. showing gave the growth

Shlomo Rosenbaum

And Professional Services?

Mark Almeida

within the two bit than the heavily they Professional Again our a both little of oriented outside customers more in similar for tend a U.S. be story businesses but U.S. Services in to

base So the is outside U.S. of a base bigger such and with the improved the business those of performing of a outside that customers extent seeing that to I of we've think nature just are U.S. better got the bigger most those and businesses businesses we're it's work of just the growth to

Operator

next And question take our Patrick from Raymond with O'Shaughnessy we James. will

Patrick O'Shaughnessy

be think is issuing this Finance far roughly on far And billion reform after the reading issuance overseas so haven't of that was so But XX market on your years. U.S. the thus other largest synthetic in holders last revenues I that XXXX? bond impact day it What's cash of obviously weighing to XX doesn't so I tapped of seem or year repatriation tax far? couple bond been the Corporate

Ray McDaniel

it a given Rob they but is This markets follows hordes number of up had that concentrated earlier, made that very is terms cash their cash. comment on have a at not the repatriated providing that to the overseas want feel tap in brief it least headwind, may and firms large modest of debt

So than in being provides with at just lot -- you business numbers you it And so it cash headwind fact companies back. if our to spec the add think a have overseas grade sector those look the of I dollars that more a to that not might of the business much bring are would our in of typically is.

at serious a headwind it's a So not point. this again one

Operator

And we will with Alex next UBS. take Kramm from our question

Alex Kramm

the already. things persisted. think little rate you a gets the had give had the XQ. has updated bit volatility how term? guess. bump would answered of the I side, quarter outlook a have But about commentary of got seasonal follow-up terms of you from of said term mean interested One, tax here be first on you But with MIS a guidance typically mean in near little couple near has second actually bit I'm that volatility, but of the some -- but quarter a I the I really I I on more a while this don't know the the

just be an coming I'd wondering you environment? and second just are uncertain of delayed some XQ were stronger time. if developing or pretty maybe they So seasonality, given just probably quarter the is you feel than I the too see seasonally real like I'm things pipeline guess it should quarter second the say in

will great. any be So color

Ray McDaniel

me Let that Alex. try

little in seeing kind and happening. are So kind about what's bit terms we to I'm of of what a pipeline the going talk market and

we big we in also deals have note in we through through of say general but seeing stages in I'd our a that are the I'd pipelines think backlog kind service. we of rating look earlier I are M&A bit healthy. worked M&A the seeing that and had year that assessment preliminary the good

first of time pipeline good very a got also have We mandates.

us visibility. that So gives some

We of on in the spreads in paper. also yield a the after just we yield talked saw saw funds. about billion high in And outflows a inflows the high flows, the tapping X That lot said year note terms see was low side We are XXXX. kind since that are market, largest I so lot CLO market, of fund tight strong continue we rated spec of remain bid week side mid-December of loan inflows strong. be and to have to earlier as back for week. rate the issues a in very starting I'd very seeing some we on last inflows the

We had nine inflows. have of now consecutive weeks

are side in So the good here think investment quarter. steady we I we think seeing activity expect issuance expect and the we on grade we are out second I blackouts, coming of

Alex Kramm

in you as M&A voice] the the hasn't taking in? are environment are or deals pretty a the anything are as BVD come think that just that up ask look areas appetite curious to is know at? maybe is I also a there about Ray, a but there's not I for And interested you lastly, I like world mean look bid integrating you [expense think there good and just what really maybe really out I you still then right at topic. now just busy

Ray McDaniel

are they good are expense, so point. things very a Well starting always to

M&A corporate Moody's, We lot. function. have at We function at an a development active look

trigger often. you very don't we the know, pull As

that the environment on is it's the back looking same to quarter. it in to to that say and right in say us step time There going are any interest nothing other things got are is rich a would but for are we the at This there either be So in now. I of to thing causing is answer we've unusual pull would or M&A act us too that us to trigger. moment

we're being So disciplined.

will fair a is price. see we attractive if and looking at are We offered something

Operator

no to Mr. there McDaniel, I'd for turn time. And are you questions like further back Ray or the remarks. at any it this closing conference appears to additional

Ray McDaniel

to speaking in with we I for call you joining everyone summer. Okay. Just the want forward today's again to and look thank Thanks.

Operator

This concludes Moody's call. first quarter XXXX earnings

following revenue First the As Earnings under MIS this company will of the a Quarter breakdown IR the the XXXX Moody's immediately reminder, section call, post homepage.

will this Thank PM Time Additionally, you. on a Eastern IR replay of call Moody's be available after website. X:XX

Moody's (MCO) 28 Apr 182018 Q1 Earnings call transcript