SPGI - Earnings call transcript Q4 2018

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Operator

Good morning and welcome to S&P Global’s Fourth Quarter 2018 Earnings Conference Call. I would like to inform you that this call is being recorded for broadcast. All participants are in a listen-only mode.

We will open the conference to questions and answers after the presentation, and instructions will follow at that time. To access the webcast and slides, go to investor.spglobal.com. Instructions]. [Operator like now introduce to would Mr. I Senior Global. Merritt, Vice President S&P for Relations Investor of Chip may you Sir, begin.

Chip Merritt

are and Thank XXXX fourth S&P Vice we Presenting call issued Global’s morning. President results. earnings Peterson, Good for Officer. release call. on joining and Chief a this This Steenbergen, news and quarter Ewout CEO; us Financial for Doug Executive President morning, morning’s our with

release operating earnings and at non-GAAP in accordance you from and financial to that comparable contained corporation’s the they exhibits calculated to If of of between perspective need call, measures view downloaded today’s copy enable comparisons financial the measures can earnings to corporation’s the between difference financial information conference and investor.spglobal.com. the release the the reconcile business the In the adjusted information. release a periods, during as performance be investors providing is with and meaningful same schedules, we’re management. make This GAAP. U.S. provided This

to Securities we based of materially Any future results projections, on give in who the Act conditions, Regulation. estimates, and legislation from about a ownership expects descriptions expectations impact me investor these S&P such for has matters Securities meaning on call should to Reform statements XX-Ks, Global forward-looking direct of Private the certain your filed and results periodic XX-Qs, X% in European of company. obtain including historical XXXX, like contain and better information, are I this I contained to In cautionary statements. discussed cautionary our remarks regard, to with differ and Form events. may statements attention of or the risks need actual that would Commission. cause Before reports we are teleconference statements subject within Except may call current the potentially Litigation more statements. anticipated also of the understand other to Exchange forward-looking and the to economic this forward-looking investor current to and uncertainties the U.S. listeners to of the and Any provide in begin, or

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Doug Peterson

Chip. Good and welcome earnings you, Thank to morning today’s call.

rising team and the impacted stimulus. The therefore Global of S&P fourth the volatility, focused XXXX. and markets to our the volatility uncertainty issuance debt causes As were the interest future, numerous, returned since trade during powering global rates, quarter, ratings business. uncertainty negotiations, this for the And market monetary Brexit unwinding and on the

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our XX%. increased by diluted EPS Finally, adjusted

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Ewout Steenbergen

Thank to Doug of the you, all and call. on good you morning

with loss by compensation results. as Let incentive points costs adjusted success to lower as Organic This ongoing fees. me the growth decreased and in an declines well margin. lower to basis improvement issuance ratings start profit corporate, a estate segments. with lower and was our XXX to as to financial productivity our three efforts allocated exceeded a declined compensation expense in productivity professional incentive due fourth improved our in our Adjusted, quarter real led total due X% reduction us in other XX% revenue Adjusted driven efforts. operating

our decline fourth our with stock compensation along XXX we our in increase quarter in based substantially And While $X.XX million reform achieved reform effective that lowered our XXXX, repurchases stock When share we adjusted a a quarter was of shares the the a initiated $X.XX of unusual previous to has U.S. ASR. fourth new issued was resulted tax rate, in it tax in fourth during we assumptions. new the quarter, adjusted quarter, in altered the because lower than regulations X% quarter. low received level tax to the tax This third related finally, XXXX. weighted in the tax activity were average other program in option in XXXX the this declined EPS unusually which outstanding. Because diluted XX% benefits diluted of stock U.S.

As compensation options of decline as the benefits the expect well. to stock-based number employee decline, to continues we tax stock

positive EPS positive modest a XXXX, revenue in foreign $X.XX. negative rates impact on diluted the $X.XX business, adjusted estimate company adjusted operating or in exchange $X.XX of of for on we $XX For ratings the had profit million impact and a a about impact Changes to EPS.

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in and million diluted quarter, intelligence. of year, on number adjustments a this changes restructuring charges, ratings impact to non-GAAP of adjusted operating There a in had For market the $X.XX were full rates profit $XX favorable in foreign EPS. exchange

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segment. GAAP current that contributions our of slide reflects would with to digits introduce markets, mind revenue guidance. in adjusted our Please ForEx business This XXXX I like spot in Now our shows guidance keep lastly, guidance. depicts by slide mid-single our rates. an This every guidance, increase

in Therefore, $XX million to million of of to any Intelligence Kensho plans million, amortization on providing Market Kensho margin to allocated a of tax to $XXX employee revenue XX.X% million. to excludes an a going guidance less and expense $X.XX. of XX.X% compensation are from million related tax we well $XXX expense, deal We of lower range of forward. we profit million, over $XXX benefits adjustments, rate million, and to and record as operating Interest corporate from increase $XXX of $XX a XXXX, benefits diluted excluding revenue stock-based retention to to have discrete $XXX prior Deal-related $X.XX this million because have decided XX.X%, year as which to is amortization XX.X%. $XXX expect EPS,

Chip pending continue addition, back billion approximately issues, questions. productivity your global over will our opportunities. again XXXX. to data, turn In $X.X our range analytics excluding programs million certain economic in look $XXX to deliver of that many expectation of increasing and so we me XXXX, revenue expect performance to financial flow and organic for capital reflects for Despite opportunities in the geographies. to to and guidance unique a we call in billion. that, investments cash continue With this let add will $X.X we solid new expenditures items In we free And are

Chip Merritt

you. Thank

phone instructions Just we’ll [Operator a take Instructions] now couple our for question. Operator, first of our participants.

Operator

comes from question Morgan This you. Thank Toni Kaplan from Stanley.

You question. may ask your

Toni Kaplan

morning. XQ, sources. down not was surprisingly given levels the according our Thank better January Good to just issuance modestly you. issuance was weak this still but double-digits Transaction than and revenue maybe quarter

you’re more a we how you progressed bit give color us can on So, the thinking about as the year? Thanks. through environment credit

Doug Peterson

Doug. This Thank you. Toni. Hi, is

particular year very people prior in high during In the there were with in but we of all, going particular, from December covenants markets. last about was type a ended out year, fourth First the the year up differently the years. during comparables you that weak solid thinking where quarter a had started yield as know shift of market year, the the to

largest as We indicative impact to We back the think you and know the necessarily the started entire January the not from had is that reform bringing market. year. the gone also tax their cash that of cash holders not had from

As weak you know, pretty typically January is a month.

the and of to second One in was things January rebounding. see week, started in the important that third the the markets is in January actually fourth half of

You saw the back to market. more people coming

maturities. see now, with We in we for spreads investment know market, came that about year the issuers a takes forecast as high X.X%. account right have forecast overall, pipeline And down issuance, banks coming saw for yield into You our in with we you from the but entire down the will and issuance projected be have which speak that in the we total that

structured be be the bit up prior X%. of little or X%. about going to a down year flat, basically that public sector it call and of about going So corporate that’s the down finance over down services to Financial is X.X%, finance, think in We flat. about

look the year. categories different and if is this calculated this how plans we’ve our what for is So used to across you we’ve build into

Toni Kaplan

in I of probably And if the And cash you margins know I and And margins to can know additional Market maybe on said an you in for when there’s what’s you weak get environment. then, some that rate expanded in you. Thank more onetime ongoing? what its pieces this Intelligence Thanks Intelligence, representative could area that. is our margins, but were I Q then, color you run full Great. for that flex quarter. guess and a Market year significantly

Ewout Steenbergen

This Good morning is Ewout. Toni.

So Market by strong then hand on other healthy improvement seen very margin small Intelligence in was decline the on the one by and hand, the you’ve expenses. in revenue driven as growth,

directions, small up, compensation there at of compensation underlying look going decline, a was Compensation, you couple and showing the expense lower an expenses. opposite were therefore base modest were components items but in decline in accruals. the that then If in offset there incentive movements, was decline, in the

then methods. net a quarter, sales, under zero. the up capitalization So We royalties, as sales the driving as sales close in higher new also cost to intersegments saw was of acquisition strong but was the strong accounting to sales well fourth the of costs revenue strong leads

then the year, Intelligence. offsetting. expenses Market the a down, most are down of that FX Panjiva expenses bit were Allocations allocations on acquisitions We driving up. were so but and were during notably, were also saw down, corporate a impact So those having positive RateWatch

quarter. all of improvement net small lot So moving and a to good therefore of recur decline in in these items margins, don’t net, in expenses pieces, but but a every we expect

So therefore, margin a for better Market guidance Intelligence the full year is going forward.

Toni Kaplan

Thank you.

Operator

comes you. question Barclays. This Patnaik from Thank Manav from

You may your question. ask

Manav Patnaik

morning. Good Thank you.

know the here or to of you those far. there we the of assume trends next kind business. also top year, the impact give of you businesses, for kind guidance guidance, know seen Just you is on for anything but others, XXXX each the Ratings and the assuming call gave specific I FX out for what’s framework line don’t so us can the like to on we’ve just that

Ewout Steenbergen

morning, Good Manav. is This Ewout.

market our First, assume rates. spot we current in ForEx guidance

So assumption. that the is is underlying what

If for explain you guidance guidance line of breaking whole, as look know out you as segments. what at each company respect you the we’re is a the our to of assumptions for the with to some can underneath. top not I But

we first in segments. year. on account XXXX, of then we to certain Doug from market during as increases shares So assumption in price markets less more if issuance flat you small about the we is price or and the have are mentioned, new think into And using this have also some take January then that our Ratings of based adjustments already list

have the we is underlying Ratings. for that under plan assumption our So for XXXX

businesses. We subscription two have

you exchange up, annualized that every see think the Intelligence. down, that growth indices the we have derivate a Market So around. stock markets come year. way increasing making businesses you traded are on I are, based those for the contract volumes will If then is we seen know fee natural Platts we’re with hedge respect And other good to and progress and indices, in business. And as value there our going

our growth growth have the So also each to that. indices account said digit expect business. by modeling for company take to segments you contributions we But the prepared in a we revenue mid-single to whole have as our the that your and into achieve of as reflect in remarks, of

Manav Patnaik

Got And you. then, Thank it. guess just thinking China. about I

Market how sounds there opportunity was I was those other address for new about like Rating some the present? wondering briefly know the that opportunity it is Platts, could you guess, time, you think struck areas should I about we if just by something Intelligence talked but Kensho You’ve I doing

Doug Peterson

that Well, one. Chinese still a that take the financial as centric know you first me all big are of Let markets market. very

the Ratings In numbers. fact, of to for analysis lot just the work of to and you with as doing share were the we a business, understand macro opportunity the market of a couple did

foreign by believe into projects. become to and the compared corporate the basic market governments’ and independent change and shift not For become the foreign they are the of that the to way bonds held is looked be which there demand We over there what in more market other start for bonds are China, more as mutual held will management our and banking etcetera. bond markets a more markets important is investors market. they sophisticated more Only wealth more XX% in we China of and instance structure spread market is, a actually X% And bond as analytics. by time at Chinese Chinese is XX% of that the developed. by funds in banks becomes thesis bond themselves are commercial as between true commercial bonds, banks are market going local markets the is the quite And what’s issuers low But the investors.

the is other that to where to And data investors. we this that, and we’ve analytics looking will information, which from information ratings. also that, publicly private at any in the along services, from provide And for demand of IQ, data more as one the over obviously that, but of about and are think especially market a market to products So, time service markets. that traded. like there for types Chinese And demand that pretty is more And with companies data investors, started mentioning out. because Market just first international quickly able going the be develop don’t Intelligence comes and we’re SNL products, not just be we’ve at just offering rolling is have the domestic is not the started Cap it products

We have a team the on ground.

of team. One the of market Chinese a actually also which this the launch is elements quite is exciting other is, as of the us we’re that doing for we’re --

it doing has it has staff. S&P and We’re agency its its Global, as the though Rating own even license, own

We’re and also going and people policies, legal team. in with resources one and human hiring our one compliance effort, it to comes when

market. leverage to a the whole to necessary analytic important. data we going become be are of and more on they products, to But, be be more connected, and our go in want the to we which able thesis so as and financial sophisticated, the on actually is overall there’s going more set market were as ground the becomes can we ground So our that sources to floor market

Operator

Thank Hamzah you. from Mazari Capital. Macquarie from This question comes

You may question. ask your

Hamzah Mazari

Good Good. morning.

yield, wondering the color on so seeing same Europe was high bank while what there? loan You sort business talked maybe trend about secular between to leverage Ratings and remind a the in the thesis shift Could of then your the that a us from disintermediation, margin you loans difference yield in high if back U.S. is in ratings has and whether European you’re reversed because any

Doug Peterson

is this Hamzah, Doug. Thanks

to it’s not to impact, is about European major be pricing, the But was And in -- ECB to markets quite development slowdown ultimate we issuance. of markets and European of last the the the not the all down a was see two European in for that two continuing Europe, the sense provide moving lot back thought is were you you what develop. the the January, continuing weeks difference continue going slowed which and different the there pricing, are had fast. one in actually the a the market, have markets. capital between there’s a Europe, to loan leverage of has came in last last life, the liquidity was a the between it’s we products. First to the markets market. the lot on But there same, until There of was actually back basically material leverage in the of quarter up issuance In

capital about about more quickly towards than continue prior capital in we run, do compared is So, a in as market the just that we’re more that’s it’s direction. to obviously see quite still markets move market will comes long to China. the just entities asset and -- but at the talked what European managers. of it that pension not Europe U.S. think and funds like but seeing insurance participation level out, traditional companies much But continued developed we we move the one of it starting markets capital when in questions

Hamzah Mazari

of any on costs how in come comments And you segment talked highlighted Ratings revenue leverage a segment? to that come revenue revenue and just do sort On that come drop if back? structurally on XX% Or question. a XX that bips does in back, being quickly much follow-up thoughts margins up costs on any back how Okay. various Just back segment higher? If Ratings you come see operating about reasons.

Ewout Steenbergen

couple A Ewout. thoughts is are that this Hamza, helpful. morning of Good hopefully

is the on work and [Indiscernible] effective the work, processes, to order spread to business to life get the with way. analysts, think efficient the active in model, very Ratings its take that programs to technologies more to away operations, the its added of hand, and models, one technologies value more of lower of its the new introducing On updating some a make new done replace that working is redesign in its how to on systems, about

we Ratings operating to for continue. expect leverage So,

charge we saw Ratings as for another took well. You that restructuring

in continue benefits are improvements programs the Ratings in organization. those overall see So, to where productivity the will we in

element incentive that from during compensation. to accruals. we had take other into The benefit account compensation the quarter you incentive And some the have expense is

to following. the is that how way the year, full the For dimensionalize

you good some other Company Ratings as in a first in the So, businesses as year had had XXXX, will very recall.

very So payout. we had good

So then year course see lower. reduction levels. we every particularly quarter, will a And just XXX% a of of in reset was the performance accrual year fourth the this to a the

pay a you reflection of outs XXX% now So from lower have level. that

come you So for and back XXXX that of A level, reset over up XXX% incentive course year-over-year a million, which the expense level bit half came the year-over-year accruals half came we at to just the little that of in XXX% the majority that look a less Ratings, established XXXX. of the than approximately that was little if reduction accruals. overall from of to lower $XXX that in from reduction, will was

that same in XXXX XXXX. the from expect increase costs is the automatic programs continued the again, time an improvement So in that that also are in we'll productivity But at of see we Ratings. all implementing we

Hamzah Mazari

you. thank helpful, Very

Operator

Thank from UBS. Kramm you. This from question Alex comes

ask may You question. your

Alex Kramm

Yes. Hey, morning good everyone.

about China was in earlier asked about that conversation prepared on the remarks, Just nice some your gave and hoping you data expand can you points.

to that rated already the entities, think you I other ramping tied here, how that people quickly. employees said XX XXX is of entity, but quickly XXX the and come new Like, you pretty in in in the cost parts. that secondarily, companies other end, out so what can are

that So few about few be something talk you. to very are they terms and terms of in or then do you thinking quickly structures, is business ramp, the can about in how basis the of quarters, of rest maybe differently pricing, envision like how in Thank points? pricing the next there just terms the comparable of years thing world, we should

Doug Peterson

bit the Okay. Thanks plan. to give Alex. of up you Well a little ramp just more

of out of you rated. China and by in As we mover core the level the that first a over analysts, those into of more the now able that as a different issuers analysts. the we there’s start domestic is to But, where And likely financial then, the S&P about the transactions S&P those from working of markets. offshore. to around and go as everywhere we the else. were a expect the be we've expertise able come highly hiring, to we analysts We you from pricing speakers markets rated that’s to to XXXX to of of all out you but of ramp native to well will to as possible and bringing quickly as from the that the XX can candidates to going have you Global people. rating we many don’t how the as Of of get advantage at market to get were the this, need first, think, we others XXX us, are rate to looking hire similar the XX started that They agencies. are a XX level I in hired going have pricing rest we large give employees are because projections other market I who the And was time those and entity, over of I knowledge very already Mandarin that similar globe. We’ve because go being can’t. to be It’s time at meet out world. the from we’re about a us issues that attract with and close there them world, plans very the employees that already out up we’re offices. demand Global works are want in develop any of are XX enter across about pricing developed those XXX qualified parts heard, other that with the kind tell have in are comes on other and pool already Right an markets, the set of if really that can in. transferred

the pricing actually As a cost issuance. on Bond cost low is amortized of actual for you compared very bond know, ratings to

away, different four at we And saw bonds We as can able didn’t We've to And quarter. and on kinds that over one term. -- long the over we’re can our something China This we prepared pricing. come this. there’s years term different this so you developed and to the for This to the Berisford, that that’s develop time, thinking long just very about myself bond understand for been build John of strong the that of ensuring think rate, to way been of really in commitment markets. we you it we've team a strong why relationships about we we working look we that been on with that the Ewout, visiting business think that where over to kind level approached XXX about we is same years. build will with have to is institutions know; when for. corporates way we’ve the as foundation think markets, the categories a the of we building is a remarks, long-term really area you the with the out right ground. this and approved rating we because that We financial core that have are relationships have do the issuers. really as the that’s in start the We have and

Alex Kramm

super coming about another the always And perspective, big that if it, back on the obviously and to the look bigger like things takes team highlight what things think but couple prior maybe about Excellent, know worried And maybe market. better of business hearing been think worse. from the you increasingly going I think difficult getting Thank are about at increasingly you has that issuance I it also or lower are but sheet. and quarter last lot do said you area But people you you. about think it’s But, forecast, few an they’re do And know about question. and helpful more was think the know I what’s deleveraging then, to you talking a picture we’re you where of secondly, then thinking that as a quarters, that could strength, it is forecast about deleverage CFOs if loans a every puts to balance you forecast. -- and you color. does a know I if

I are you. and takes watching of Thank you would what kind the guess, for? puts So, be out

Doug Peterson

Yes.

it’s go including of in the go and kinds me of market. of kinds aspects they leveraged seen rate. of corporations of a or market the the that borrowers that rate, the attraction that -- leverage So gone leverage were there’s of a and in some covenants the lenders versus And market. saw December, me loan market in fixed to get. the the that quite financial, market high. as of loan on let of thoughts investors start healthy. probably of to gotten a and that They’ve a various give the We you that with correction let of to have people you The lot the myself market Leverage the can component other reasons, the has aspects think The market. loan attraction that to had the could floating in have bond of presented, market market few the either that. And the the on the we based going increasingly kinds been for numbers

leverage saw deals some over X, eight times. going You even X in sometimes

market. investors some going in And so far, market amounts. opened but total lot terms has not in covenants back so leverage a of in much been leverage of since to even correction so there’s the much though There’s the more up,

going moderation of the going factors And specifically forward. more the down X.X% did X.X%. which December going we forecasts. driving And X.X%, bit it so our on October since in that XXXX and see -- of be that October little our we that a A we’ve forecast about January see same outlook, up our of the it to be was our when about outlook, mentioned that you seen one as expected up we the now outlook forecast first will we actually our and December

another requirements the of go going from institutions we the changes. X% go up to the we just main X.X%. been those X% expected. a based related we’re as originally So on growing sentiment the what and expected only and expected the between services we the financial of the bit saw of issuing see are and on lot expect corporates, prior we had speaking difference be pipelines going with drop beginning give did just them the the them and to areas there that But much we’ve now end little balance reserve to is it dropped the financial you year. we of one that to some up of by forecast -- And that about not originally And down some the them a largest We we the the based now is to market by as from sheets shift about participants. some their seen year that be on of had are to

this back that. to capital that’s drove goes So capital at overall the as the difference themselves. And policies policies Fed as that banks of the probably policies, largest well

necessarily it come weeks we closed. the the of of middle bit .The the were actually that last financial were again little a XX So the couple come a in after pretty year it’s back corporates, but being January markets open last of days saw has for year, with the back, more lot leverage healthy leverage level from our back, they same then outlook not and the institutions market of in

Alex Kramm

again. thanks Excellent,

Operator

Thank McHugh from question Blair William & This Tim comes from you. Company.

question. ask You may your

Tim McHugh

about in I business. the characterize you’re hundred how incremental talked I you Thanks. somewhat the investing guess ask of wanted would that just investments. to about always million you

investment different So for is trying what to is you up or than of level what this that’s years guess I focus the to stepped you -- a the other are highlight us year. just

Just to the trying of what context you’re that. with seeing understand

Doug Peterson

businesses, always also of specific our systems, we designs of Yes, you in in investing areas show to we you new course relevant organization. To in broader are to balance just perspective, are bit the you marks transparent and Tim. we’re as usual investing. to little processes, our in morning, make business give keep to and the highlight trying where a and Good this

investments. usual specifically highlight as investments new and here business new of products level What are of markets. in we is lot a always is initiatives, to new trying there So,

that is to Chinese we $XX XXXX, opportunity a the everyone like in investment. long-term. go it And showed will $XX hopefully to very $XX lot with those out Ratings new As the China. those approximately million mid- areas in and that number of I sense XXXX at investments think And million. a will would And benefit of for by agree large in and to of makes lot were that for see you me up million of this level the Company the make the Company that

initiatives. self-funding we So are obviously those

for one on company. then going the You we the and reinvesting productivity see programs on, margins also the up has And that savings capturing everyone hand, still see going have operating the and where leverage it. you

that another self-funding indication those are we initiatives. So

And business So you they the that in investments company revenue new expect this forward helpful making company do large activities. a current have for growth it’s is hope clarity. we going overall where the get on our feel initiatives the future of to top

Tim McHugh

Okay. up. then, to That's follow helpful. And want just

think deals about some timing renewal thought there was elaborate I just said you enterprise the issue. a I what made you think for it I -- the Market it that longer was I in cycles quick of guess about was you can Intelligence. comment when guess, cash on was? And talking flow, you're you

you that do think why necessarily? So

Doug Peterson

we’re Sure, Intelligence going move contracts. you to to customers enterprise happening through as the is Market wide all Tim. know What is process

contracts, be about and contracts, needs those where the there a needs be is those we changing administrative the are this cash new to So new an invoices. to of purely new need language on collection process be then signed contracts to discussions then new issued, you the have invoices

of So from terms cash through the going in days right two collection. now, about timelines fifty this XX change process days in have shifted to

a the purely in is this process. So delay

catch XXXX. that off We expect to during up

XXXX, we see therefore over XX% a up number to generated So XXXX. guidance free flow you flow for XX% free cash in is the cash which

Tim McHugh

about negotiation Okay, so the is comment the of about necessarily sale delay the on, collection or the the that, agreement. more not process

Doug Peterson

signing, and It’s processing, itself. the process through on. contract, administrative renewal invoicing going so whole of new process documentation, legal Just purely

Tim McHugh

you. Thank Okay.

Operator

Jeff Thank you. Silber BMO comes from Markets. question from This Capital

may your question. You ask

Jeff Silber

just I Thanks ask so couple a know I of it’s late. quick much. ones.

what Rating the you give for us about compared price was Can year. increases, outlook that the mentioned beginning to the and when that a some order you instituted at the the roughly segment, years? You of framework how prior talking

Doug Peterson

issued been is has that X.XX. price list The

up was from X.XX. that approximately see You

customer, increase the would of That differentiation course there’s X% about by is the year-over-year. be headline type a and number. But headline, So, lot price arrangements so list of of that of on. just type

Jeff Silber

in what was And increase the headline XXXX?

Doug Peterson

More or same. less the

usual increase is see that the years. the few So past over that we

Jeff Silber

you know But quarterly more Is loaded. there end back quarters to the you again, point anything give Okay. you Great, don’t beside for and guidance. Ratings XXXX? I being for know potentially want out

Doug Peterson

No point moment. there’s can out we nothing that at else this

Jeff Silber

much. Great. Thanks so

Operator

Research from Thank Huber from Partners. Craig you. This question Huber comes

You may ask question. your

Craig Huber

China a you, get just second. Doug to Thank to I for back want

could market, a up see think the play in numbers? being little do a from term out? up to market obviously, bump material roughly you it’s Ratings first here get the maybe that analyst here any we demand a you boost play on impact Here about there basis. in you’ve or in actually in two with could or upfront coming or in mentioned XX from you it’s pick big in revenue are I time switched just this market you How Ratings there, your perspective just X% it of quickly global that your or a hired take more revenue positive roughly can just years, -- we’ll profits standpoint do years revenues analysts long any mean, and will over the pent say, expect but a on is off big the

Doug Peterson

total over will at everything this is the a bit looking Of will that, going we're how -- statistics about couple you give this progress. just $XX to do to more give of our about market, much -- the as expectation We'll China couple we trillion you often including I'd corporate. market. quarter-by-quarter. about to about But and in is is Overall more trillion. like $XX.X lending little that a What numbers how figure start we My take is, play out. it

which of less half more of bit little trillion outstanding corporates. that loans. $X -- bonds of about are the corporate market it's So bonds more trillion of than And or are is $X

bond we got about So relationships that go that XXX $X going first are to to. the trillion as market, think we that we XXXX corporate think issuers. we’ve have tap about We companies can that

will the but where using company the as market, foreign We issuers market small that’s panda know area to the market the from foreign it’s bring that very is well Chinese S&P right now, issuers going into go as that that’s expertise also, into to bond go rating. as specific is we another do think Chinese you as the interest one

to want any over the don’t revenues I you So projections time. or give on numbers

is connected. this as more see capital market, of I’ve which to a a more going global we said, As market much to transform

X% mentioned of are foreign I in the As earlier, it’s that only bonds by China held investors.

we So see growing. that

back come let you so to on progress. And us give to updates you our

come fast to really move this is going So once can understand see we volume we’re the starting how in to through door.

Craig Huber

think within the this -- high-yield? then your with global you call for if U.S. this year those loan grade second. mentioned, segment how And playing And you maybe guess for I’d part zero three down in how just country? bank for expecting curious play investment could issuance you be that, for issuance might segments of I Doug, that out basis X% see then just out a on to it, and also maybe debt issuance debt thoughts, you

Doug Peterson

we that’s be very ago. reform their and sheets. financial our projections growth X.X% other are as also which are of are couple the that have sheets, and projecting, expected two than it’s I the that’s that ones And the most said And services. months tax And the I or less mostly what is what we’re U.S. balance because the U.S. smaller what that’s three a more corporates rich sheets of then balance mentioned that’s are significant – which on that as probably companies U.S. institutions most ago, partially had down level that Well, the significant mostly or the U.S. which for cash the That’s the and pieces projecting issuance minutes to financial the is, the the are balance they have less four will

can that team I analysis So based done. our on give that you that’s color the has the

Craig Huber

Thank you.

Operator

Thank Foresi from you. comes Fitzgerald. Cantor from This question Joseph

You may ask question. your

Joseph Foresi

know Ratings on give market region? get a better is from Do of I’m a can a just accounting little what maybe of a the sufficient Is works like question first having My of more that you understanding Hi. perspective? standards are just you you trying exposed? bit Do in -- how us feel the to there? you sense China. risks you’re of risk there

Doug Peterson

the for question. Well, thanks Joseph

on And cropped we’ve that As the we’ve for had This this I that already the also quarter. up is in gone isn’t mentioned, ratings business XX a years. into something issued rating over those Chinese something the as ground for of mentioned rated. as on at looking bonds are the corporations on earlier, issuance have last in been we market, And with China, years who offshore been we’ve ground just analysts that XXX already of Chinese sum I we’ve or dim have offshore. that

are that know their by XXX funds. going there we least They auditing at So global in firms. raise been have financials. They’ve offshore that to audited already transparency is companies

how in that are and is we the But financial so institutions issuing which and raising for And a rated standards. you’re is Ratings in how roll bonds what corporations already already out very do is of at us group there developing. points, global market, are and are -- clearly a important core do China we business

the we there Both an through we acquisition of conditions. scales markets, go where Mexico linked to based not Mexico global with how Rating to We markets they’re that scales, local other CRISIL market. into gone India where that are Rating experience knowledge are into local do are or on we scales, have and and our issue market which years using India with we’ve did like ago many

agency. or one and laws. that independently that a all potentially so default conditions Rating any a conditions able rolling the local of the it us are a the for What it’s is managed market Rating with the be closely are kind agency of that why We’ve ratings agency the of independent in understand an want that to we’re been are agency China go they What the ensure of could regulators a have that understand what critical they that are scaled reasons, issue? that issued of we’re important conditions independent companies out. local And with Rating to to opinion our the independently be going to meet out are and is Rating roll the analysts we’ve we that conditions well-trained. this is right kind we working workouts? of to with of It’s understand are And got that as payment model, that locally bankruptcy

ability regimes in the issue? we at companies? we and are the right if the developed around you understood, understand professional there’s we’ve of the is rating we’ve been Do very Do kind four the globe right get Do other what environment, kinds of of have payment a So understanding from kind environments for the risks. disclosure regulatory looked being that’s which we what way a think etcetera. have to are

you and are or of So we some analysis, we many, in manage. many with that we’ve mentioned over years think this that to things mitigate of of those building ways years risks a have many relationships good gone many that

Joseph Foresi

clearly of then focus, and but building Got the I to know in just trying the I’m foundation, wondering of starting that stage focus how early way gears, a any going could of it’s you’re I’m you’re data. quantify just I’m on and increase I to to impact a switch to get But sort to to think the something future. it. on anecdotes of start and your sense And an important quantifying clearly more agree the thinking side Kensho you it’s be about is the you any internally would provide. part that, Thanks. know

Doug Peterson

give that. let on a thoughts of you Yes, me couple

Ideally, at incorporate. datasets. can and could proprietary but only sets unique, therefore found that other that data it are and more on platform, and sets more also be our data we license looking we be are First,

mentioned linked our database. to it’s mast very we data those prepared As assets that important and or the with during remarks, sets data existing are

within that of platform, our rich on is that more will because between of the future. the data, design and having on data all same the between an based perspective to different The data put put our Kensho the search lot we as data efficient whole. important on the it’s architecture, a a enterprise to thinking new so elements because lot in based individuals, the the take Therefore, data now factory we an investments intake data with that the it is sets to benefits a the important tools same platform. only if are use to we on and overall firm, valuable which technology Hence, commodity of more are we have about data, working intake data data, it the of are and doing within entities, of on that with for today only is search the other the Kensho a other Moreover, have of our the there link the data Omnisearch. automatic that find we already So is data a between we’re be organization, on a definitions, customers engine. more data and right make lot in

the core company growth of growth, the core to this ultimately, businesses, by future. So be data driver being main to in revenue for commercial business developed core to is of this the the our in propositions are and our area. But will we investments our strategy, lot make that a

Joseph Foresi

Thank you.

Operator

question This from Nomura Dolev you. Dan comes from Thank Securities.

ask your question. may You

Dan Dolev

my for taking you thank Hey question.

embedded and Just from million in main guiding between you’re a the and Kensho guidance the $XX allocated million the housekeeping for item, XXXX? that what $XX is XXXX for to difference expenses retention. the Is expense

Doug Peterson

to Market in you folded more Market the unallocated, relationships Kensho look into doing contracts Intelligence And if are the Intelligence with identify are the customers revenue the separately revenue. overall and being moving same the difficult future. revenue it’s is reason more we No, more what Kensho why customers, to the that is with are therefore Kensho or to we doing at Kensho

with Market integrated of being revenue it’s why that’s So Intelligence.

at you revenue. happened those funding were of $XX Kensho then expenses is the purely to look expenses. unallocated a million Kensho you if have foundation million nine million which expenses period. expenses, for So included unallocated That Kensho But excluding were over realize that and month year, last $XX Kensho $XXX XXXX, XX expenses

the Kensho are So year we having now XXXX. course full expenses of for

you of to company. look million those based continue those we’ll see $XXX ultimately at are within -- productivity reduction we introducing nice on range million all $XXX that a then XXXX is expenses to if elements, unallocated the So to which in the in programs

Dan Dolev

were I $XX number, so not in adjusted XXXX. helpful. retention That’s the They excluded plan, the were they number? Kensho in -- believe just million the right, non-GAAP I from the

Doug Peterson

If that the Kensho at are included expenses a acquisitions. consideration the from on based Kensho equity the And have that you performance basis. part being for are we look of have then as Kensho expenses, we expenses access rollover

number over have on non-GAAP compensation employees So, and Everything and market is what being we what is based And is the on rollover for market the purely Kensho. be expenses. accounting That included done at down above will over looked is that's you should an related everything we is levels equity retention coming basis reason the is is market of the is that what as that just methods. stripped normalized out Kensho accelerated that accounting which level being time. see

every on the that year quickly, basis. are you very see non-GAAP out So number expenses pulled that down being Kensho coming for a excess

Dan Dolev

see you. a just Got Thank some I overall it. headcount. is my over headcount the follow-up year on growth the nice in year. on then And

think have it headcount the the decline. you about to Say corporate looks increased If sort in segments reading of different headcount dramatically. like the Yes.

up of like? if like be you how ratings as terms of of didn't to expecting roughly that to would a the well that's question? If in of Would normalize look corporate headcount that sort you go you had centers allocated excellence into sort

Doug Peterson

a great really That's question.

be going headcount. So in movements always some to is there

go do we acquisitions will when course up. of headcount So

on but in example of acquisition. So intelligence based new MI headcount up Kensho for But went for up content that based in the is example, the and sets corporate also acquisitions RateWatch, introducing. that's Panjiva, is market headcount on also

of we divisions to headcount headcount in are are certain on market for up the mean productivity existing datasets have go the corporate. introduced. being then that might from centers sets in a and a Corporate in headcount on will because reductions based shift data new when we excellence it of activities intelligence centralizing overtime additions So bit headcount might

other shift. and are is that be could for for eliminated an an activities in going that in in the be ultimately on Also surfaces sourcing ratings, engineering forward. we So an activities be but example IT certain will that when ratings increase offset will external headcount

a a a or that's a company. much shift expenses realize in headcount as so numbers expenses that in but is decline So will in that shift not actually we

Ewout Steenbergen

thing. add to one just And

and aspires John's make we're trying looking to analysts. number to to One each to to the there. trying the of real to that to with try more looking with thing we're more that is more not of efficient more and more ratings same do But technology credits all in year be he the able deploy. reduce try the We're handle to

Dan Dolev

Makes sense. much. Thank so you

Doug Peterson

Dan. Thanks,

Operator

Thank you. This question comes from George Tong from Goldman Sachs.

your question. You may ask

George Tong

Hi thanks. Good morning.

in this you weighed of ratings And see part performing on revenues Your that non-transaction non-transaction revenues there because the Were took year? quarter? business non-transaction revenues back comps. tougher how a do step items next specific in

Ewout Steenbergen

Hey, George, on good FX impact negative morning. revenue. had non-transaction a

If flat. you strip that more was or element out it less

M&A Services. non-transaction much elements revenue other the by debt that that always That’s environment. go Rating quarter. by impacted driven The could or down up was Evaluation We've out called very

we’ll a the to quarters But higher ratings business And lower. at a a we revenues. where look stable the continue non-transaction little that to rest little a future. source or steady in we very very be overall expect revenue have So as source for the will of be revenues

George Tong

That’s it. helpful. Got

your your in you the Can achieve remainder and savings You’ve your Day you the savings of reductions principal million XXXX $XXX intermediate pacing to will be term. million forward? what out Analyst of cost cost over achieved of the about when through drivers planned in end year expect savings $XX cost of talk the going

Ewout Steenbergen

first million and encouraged we our $XX $XX We by during have of that the progress annual year, are XXXX. million very the in run rate results for in made

on we in you are pace opportunities and areas the find where same those continue main our targets have functions. will the what We towards our seen

create So as for the across our models operating both center. in well enterprise we the businesses the to are functions as trying new in corporate

our looking in at opportunities infrastructure are area. We digital

costs. to For we estate data example, are outsourcing moving and real some other consolidation our the cetera, centers of taking of care of cloud, arrangements et

have and next of driving estate We are we those are over significantly excess reducing levers And the down all real in real the years. continue expenses. we few estate company will with

and are we let by those at target. know once have to progress course, encouraged announced target But are moment new you will all point making this with Of achieved programs. very that we this you a we at of the we

George Tong

you. Thank Very helpful.

Operator

Fargo. from Wells take Warmington final Bill now will question from our We

You your may ask question.

Bill Warmington

here morning, it The final right. is. Actually Good two everyone. question

mentioned the the opportunity that DNB is in private on you’re China associated increasingly credit BBD it the we Kensho, that That’s area Crunchbase, Can frame UK. and into databases company and the So sounds entity space. for commercial you space linking like in moving us? typically you doing work and first you’re with Kensho, information with

Doug Peterson

Kensho an This results the the of collaboration. of very some is with we where pleased area are first

Crunchbase. And have benefit only done other the we it’s linking following; But opportunity. We entity in to with been company have expense-reduction data same talked you the on algorithms about a meantime, the of developed is not sets. private the that the have

will to of And the lot time a of in of linking past, employees to course, that. do on could with entity we Of and teams of but lot the achieve data quality Is name work it that spelled done same So take a another the to Is the lot by a is asking subholding? data. linking the a different jurisdiction? entity, work in is correct sure slightly has to make Is same it a way, and accurate. be of different abbreviation? it entity linking a lot that at slightly right

it but almost to so of that opportunities, products forward. quality data you So significantly by to large new the the the about with on achieve a think market based fact bring can errors speed we of could and to but revenue that the bring sets achieve never in products Why? we the speed market are algorithms, benefit now course, new is impossible ingestion efficiency to past. going in end opportunity. can higher because in that of of larger algorithms. the Certain fraction find doing And we we any sets, therefore market of increase now less in time we this is algorithms never products Because by in a to data can think can do the introduce our we of of out that we could we by humans, And the can now the past. quality in the

again, achieve. have we opportunity at So are the efficiency And opportunity. as results in than this look very the pleased far been we we so with always revenue able an to end, a larger

Bill Warmington

as And The XXXX, then, for the the I level for share $X.XX guidance built I built in assume million that in know ask the million to you're But was leave million the would that announced well final into return. second that of guidance. going repurchases to about $XXX $XXX built to into EPS that you then today. $X.XX as about $XXX that million million $XXX and would about ASR? just you excess dividends number? wanted question. if in assume $XXX ASR cash Is

Ewout Steenbergen

precise question. of give that you a Yes. very give answer you cannot components. let the some Obviously me on But we

generation with We flow respect for guidance have provided this of free year. cash

You know number. to of least return committed that we’re that XX% at

You are dividend the this level aware of will do payout we year.

then not So repurchases in we valuable If strategically to share more to sense those not We the in most achieved. right very if as remainder be it’s that look the can have difficult commitment make have organic and are achieve investments this organic we first than we returns on because much but XX% That in that opportunities is those always as will we are will seen. be always those opportunities, what long we number think depends going to are too the can available year. the is not opportunities we exceed assume or market. that the return to

Bill you, looking in those helps So, you for and that components with probably terms the of are think are question. I what

Bill Warmington

you Thank much. very

Chip Merritt

we Bill, some great but questions operator do queue. have you said more asked the in of pile the one

Let’s see is there's there. out still if -- if anyone

Peter Appert

I Hi. Peter on? Appert. Am

Doug Peterson

Peter. on, You’re

Peter Appert

Okay.

quick share So, just the was have much in Doug, in a on business. trends thought for interested Bill market Warmington. I you ratings

flag red Thanks. that from half some cost second it at cutting little if share just on know the of little Maybe does part the hurting is -- of a first don't wondering year we the all the about that’s thoughts bit that? in you for your revenue a you? some your but perhaps relatively, initiatives obviously perspective, number of lagged suggest are a bit competitors, Your a

Doug Peterson

been when on of to the Yes. look we market the have continue -- ratings business call. Well, get to weaknesses. that you’ve very a And to first see there’s market we areas a thank share. where of the comes or strong Peter at couple It’s globally share you, all, when able we it

CLOs. in is them of One

As a couple businesses there’s bonds we’re really you active covered know that other at like of not all. in

have So our some we put the if there’s any place in on areas where penetration it’s additional will all at area. we finance looking structured seen concentration that

Peter Appert

so Thanks great. much. Okay

Doug Peterson

you a Do question? have second

Peter Appert

Market on Actually migration. I the do. Intelligence,

Doug Peterson

Bill’s [Indiscernible] question.

Chip Merritt

Bill's Is this way better than question?

Peter Appert

contracts, how good we terms Probably far Bill's, not enterprise as that? in way along the segment? he’s had mean, has profitability the to in migration And Intelligence, than Okay. are I. of as intellectual implications how Market measurable I that for more

Doug Peterson

last the over quarter made is from Cap wide have enterprise we XX% XX% moving progress to the to agreements. Peter, customers IQ moving

X% long nice a now seeing up. What is the call step what we So tail. we're

next ultimately are making period large to to or to this level a year the we to customers. so. customers in for changes But progress XXX% have planning those We're smaller agreements. our not call We to over anymore the XXX% over percent continue future. out group drive enterprise-wide make numbers continue We’ll on next a really the those will of of now

think, progress. the And over customers I with this for us number deal year. we'll remainder basically final good last the of of So

Peter Appert

Thank you.

Doug Peterson

how call thanks, -- are everyone about joining prospects company Well, about I’m a can future. our the this morning. Great. hear you enthusiastic for the the we company for sure

look lot line productivity. you top have As see a can at growth to and of initiatives our we our

of learning to and have kind international our you manage And want towards growth. but important particular questions also the importantly artificial for and to And all on operations impact data around for about thank in I the our about committed intelligence and heard of We’re China our operations. technology very machine to plans to of that for continue can some you us. productivity, also

we're great the that forward. enthusiastic have forward keep power thank forward continue global the we'll future We’re thank forward in as you about as the very bringing much. how on you Board well new more our I XXXX. markets opportunity success our very to updates show they want that go workforce that, to and to you allocating look framework growing. and going again, commitment of to team, as in top in all have the And I on you to going we where to And even capital of management we and of our we we're Directors, the Thank want China we'll

Operator

be available session the That is today wish from concludes call. two will for have site downloading Global's of of month now in we hours. replay telephone QA maintained will and participating of The for A for today. be On twelve good S&P investor.spglobal.com. months day. and available you for about from replay including morning’s on a S&P this this by A Web version behalf from presenter thank you slides PDF the Global, call one

S&P Global (SPGI) 7 Feb 192018 Q4 Earnings call transcript