Post Earnings Coverage as S&P Global’s Quarterly Sales Increased 18% on Organic Basis; Adjusted EPS Surged 35%

Upcoming AWS Coverage on WEX Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 28, 2017 / Active Wall St. announces its post-earnings coverage on S&P Global Inc. (NYSE: SPGI). The Company reported its first quarter fiscal 2017 results on April 25, 2017. The independent ratings and analytics provider exceeded top- and bottom-line expectations and also increased its revenue and earnings guidance. Register with us now for your free membership at:

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One of S&P Global’s competitors within the Business Services space, WEX Inc. (NYSE: WEX), reported its Q1 2017 financial results before the market opens on April 27, 2017. AWS will be initiating a research report on WEX in the coming days.

Today, AWS is promoting its earnings coverage on SPGI; touching on WEX. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended March 31, 2017, S&P Global reported revenue of $1.45 billion, an increase of 8% compared to revenue of $1.34 billion in Q1 2016. On an organic basis, the Company’s reported quarter revenue increased 18%. S&P Global’s revenue numbers surpassed analysts’ consensus of $1.39 billion.

S&P Global’s operating profit margin improved by 640 basis points to 45% and the adjusted operating profit margin improved by 630 basis points to 47%. This improvement was due to the sale of lower margin businesses, strong organic revenue growth, and productivity initiatives.

For Q1 2017, S&P Global’s net income increased 35% to $399 million and diluted earnings per share grew 39% to $1.53. The Company adjusted net income increased 32% to $422 million and adjusted diluted earnings per share increased 35% to $1.62. S&P Global’s earnings outperformed Wall Street’s expectations of $1.40 per share.

Segment Results

For Q1 2017, S&P Global’s Ratings revenue surged 29% to $714 million. Transaction revenue increased 65% to $373 million largely as a result of a substantial increase in high-yield bond and bank loan ratings as well as improved contract terms. Non-transaction revenue increased 4% to $341 million due to higher surveillance fees, entity fees, intersegment royalties from Market Intelligence, and CRISIL.

The Ratings’ segment operating profit increased 43% to $376 million, while operating profit margin improved 530 basis points to 53%. Adjusted operating profit increased 50% to $379 million with an adjusted operating profit margin that improved 750 basis points to 53%, driven by increased revenue.

During Q1 2017, S&P Global’s Market and Commodities Intelligence unit’s revenue decreased 10% to $593 million due to the divestitures of J.D. Power, the SPSE/CMA pricing businesses, and Equity and Fund Research in the fall of 2016 and QuantHouse earlier in 2017. Excluding revenue from these divestitures and the recent acquisitions of PIRA and RigData, organic revenue grew 7%. Quarterly operating profit increased 2% to $186 million and the operating profit margin improved 370 basis points to 31%.

The segment’s Market Intelligence revenue decreased 1% to $402 million due to divestitures. Excluding divestitures, organic revenue increased 9% with gains in Desktop, Risk Services, and Enterprise Solutions. Platts’ revenue increased 10% to $191 million aided by the acquisitions of PIRA and RigData. Excluding these acquisitions, Platts’ revenue grew 4% due to modest growth in both subscriptions and Global Trading Services.

S&P Global’s S&P Dow Jones Indices’ Q1 2017 revenue increased 14% to $171 million on a y-o-y basis primarily due to growth in asset-linked fees. S&P Dow Jones Indices recorded a 39% increase in average ETF AUM associated with the Company’s indices driving a 26% increase in asset-linked fees. Quarter ending ETF AUM associated with the Company’s indices reached a new record of $1,116 billion, surpassing the $828 billion on March 31, 2016, and the prior quarter ending record of $1,023 billion set on December 31, 2016.

The segment’s operating profit increased 14% to $115 million and the operating profit margin increased 30 basis points to 67%. Adjusted operating profit increased 14% to $116 million and the adjusted operating profit margin increased 20 basis points to 68%.

Balance Sheet and Cash Flow

As of March 31, 2017, S&P Global cash and cash equivalents were $2.4 billion, of which approximately $1.8 billion was held outside the US. In the first three months of 2017, cash provided by operating activities was $353 million. The Company’s free cash flow was $306 million for the reported quarter, an increase of $170 million from the year ago same period, driven by increased net income and reduced litigation settlement payments. Free cash flow, excluding the after-tax payments associated with legal settlements, was $307 million.

During Q1 2017, S&P Global returned $307 million to shareholders through a combination of $106 million in dividends and $201 million in share repurchases for 1.5 million shares. The Company has authorization from the Board of Directors to repurchase up to an additional 24.2 million shares.

On April 26, 2017, S&P Global’s Board of Directors approved a regular quarterly cash dividend on the Corporation’s common stock. The dividend of $0.41 is payable on June 12, 2017, to shareholders of record on May 26, 2017. The annualized dividend rate is $1.64 per share. The Company has paid a dividend each year since 1937 and is one of the select 25 companies in the S&P 500® that has increased its dividend annually for at least the last 44 years.

Outlook

S&P Global is increasing its reported revenue guidance from flat growth to low single-digit growth. On a GAAP basis, for FY17, the Company increased its diluted EPS from $5.65 to $5.90 to $5.72 to $5.92. Adjusted diluted EPS was expected to be $5.90 to $6.15 and has been increased to $6.00 to $6.20.

Stock Performance

At the close of trading session on Thursday, April 27, 2017, S&P Global’s share price finished yesterday’s trading session at $135.09, marginally up 0.64%. A total volume of 839.38 thousand shares exchanged hands. The stock has surged 11.88% and 26.74% in the last three months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have surged 26.01%. The stock is trading at a PE ratio of 16.99 and has a dividend yield of 1.21%.

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