{"id":519731,"date":"2021-07-29T07:13:11","date_gmt":"2021-07-29T11:13:11","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/sp-global-revenue-increased-8-in-the-second-quarter-compared-to-exceptional-2q-2020\/"},"modified":"2021-07-29T07:13:11","modified_gmt":"2021-07-29T11:13:11","slug":"sp-global-revenue-increased-8-in-the-second-quarter-compared-to-exceptional-2q-2020","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/sp-global-revenue-increased-8-in-the-second-quarter-compared-to-exceptional-2q-2020\/","title":{"rendered":"S&P Global Revenue Increased 8% in the Second Quarter, Compared to Exceptional 2Q 2020"},"content":{"rendered":"
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Diluted EPS Increased 1% to $3.30; Adjusted Diluted EPS Increased 6% to $3.62<\/h2>\n

Operating Profit Margin Decreased 210 Basis Points to 54.8%<\/h2>\n

Adjusted Operating Profit Margin Decreased 40 Basis Points to 58.3%<\/h2>\n

Company is Not Providing GAAP Guidance and Increases Adjusted Guidance<\/h2>\n

Momentum for Pending Merger with IHS Markit Continues to Build<\/h2>\n

PR Newswire<\/p>\n<\/p><\/div>\n

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\n NEW YORK<\/span>, July 29, 2021<\/span> \/PRNewswire\/ —\u00a0S&P Global (NYSE: SPGI) today reported second quarter 2021 results with revenue of $2,106 million<\/span>, an increase of 8% compared to the same period last year with every segment delivering revenue growth.\u00a0 Net income increased 1% to $798 million<\/span>.\u00a0 Diluted earnings per share increased 1% to $3.30<\/span> primarily due to revenue growth partially offset by increased compensation-related expenses.<\/p>\n

Adjusted net income increased 6% to $875 million<\/span> and adjusted diluted earnings per share increased 6% to $3.62<\/span>. The largest adjustments in the second quarter of 2021 were for costs related to the pending merger with IHS Markit and deal-related amortization related to previous acquisitions.\u00a0 <\/p>\n

“A year ago we reported exceptional second-quarter results as investment-grade companies capitalized on the opportunity to secure liquidity in the bond market and we cut back on spending to deal with incredible uncertainty.\u00a0 It is remarkable that the financial results that we report today surpassed those of a year ago,” said Douglas L. Peterson<\/span>, President and Chief Executive Officer of S&P Global.\u00a0 “While the pandemic is far from over, markets are normalizing, economies are generally reopening, employment is rising, and GDP is recovering.\u00a0 All these factors bode well for S&P Global as we continue to provide our clients with an ever increasing array of ratings, benchmarks, data and analytics.”<\/p>\n

\n Merger Update:<\/b>\u00a0 S&P Global and IHS Markit continue to progress with merger integration planning. In addition, work with global regulators remains underway and we anticipate closing the transaction in the fourth quarter of 2021.<\/p>\n

\n Profit Margin:<\/b> The Company’s operating profit margin decreased 210 basis points to 54.8% primarily due to a challenging expense comparison to the second quarter of 2020 and increased compensation-related expenses, and costs related to the pending merger with IHS Markit in 2021.\u00a0 Adjusted operating profit margin decreased 40 basis points to 58.3% primarily due to a challenging expense comparison to the second quarter of 2020 and increased compensation-related expenses in 2021. <\/p>\n

\n Return of Capital:<\/b>\u00a0 During the second quarter, the Company returned $185 million<\/span> to shareholders in dividends.\u00a0 There were no share repurchases during the quarter due to the pending merger with IHS Markit.<\/p>\n

\n Ratings:\u00a0 <\/b>Revenue increased 7% to $1,073 million<\/span> in the second quarter of 2021.\u00a0 Transaction revenue decreased 1% to $615 million<\/span> with a substantial decline in investment-grade bond issuance mostly offset by an increase in bank loan rating activity, structured finance and high-yield bond issuance.\u00a0 Non-transaction revenue increased 19%\u00a0to $458 million<\/span> due to new-entity ratings, fees associated with surveillance, and Rating Evaluation Service activity. <\/p>\n

Operating profit increased 5% to $729 million<\/span>.\u00a0 Operating profit margin decreased 100 basis points to 67.9% compared to the second quarter of 2020 as expense growth outpaced revenue growth.\u00a0 Adjusted operating profit increased 5% to $731 million<\/span> and adjusted operating profit margin decreased 100 basis points to 68.1%.<\/p>\n

\n S&P Dow Jones Indices:\u00a0 <\/i><\/b>S&P Dow Jones Indices LLC is a majority-owned subsidiary.\u00a0 The consolidated results are included in S&P Global’s income statement and the portion related to the 27% noncontrolling interest is removed in net income attributable to noncontrolling interests.<\/p>\n

Revenue increased 16% to $278 million<\/span> in the second quarter of 2021 with strong growth in asset-linked fees and data & custom subscriptions. <\/p>\n

Asset-linked fees include fees associated with ETFs, mutual funds, and certain over-the-counter derivatives.\u00a0 Revenue from ETFs is the largest component of asset-linked fees, and average ETF AUM associated with the Company’s indices increased 56% year-over-year.\u00a0 Quarter-ending ETF AUM associated with our indices was $2.4 trillion<\/span>, a 51% increase from the end of the second quarter of 2020.<\/p>\n

Operating profit increased 15% to $196 million<\/span>.\u00a0 Operating profit margin decreased 70 basis points to 70.7% as expense growth outpaced revenue growth. Adjusted operating profit increased 15% to $198 million<\/span>.\u00a0 Adjusted operating profit margin decreased 80 basis points to 71.1%.\u00a0 Operating profit attributable to the Company increased 15% to $144 million<\/span>.\u00a0 Adjusted operating profit attributable to the Company increased 15% to $146 million<\/span>.<\/p>\n

\n Market Intelligence:\u00a0 <\/b>Revenue increased 8% to $555 million<\/span> in the second quarter of 2021 with growth in Credit Risk Solutions, Data Management Solutions, and Desktop.\u00a0 Operating profit increased 13% to $180 million<\/span> and operating profit margin improved 160 basis points to 32.4% as new product launches began to contribute to revenue.\u00a0 Adjusted operating profit increased 11% to $196 million<\/span> and adjusted operating profit margin improved 100 basis points to 35.4%.<\/p>\n

\n Platts:<\/b>\u00a0 Revenue increased 9% to $236 million<\/span> in the second quarter of 2021 primarily due to growth in the core subscription business.\u00a0 Operating profit increased 8% to $135 million<\/span> and operating profit margin decreased 30 basis points to 57.0%.\u00a0 Adjusted operating profit increased 8% to $136 million<\/span> and adjusted operating profit margin decreased 40 basis points to 57.9%. <\/p>\n

\n Corporate Unallocated Expense:\u00a0 <\/b>This expense increased from $42 million<\/span> in the prior period to $86 million<\/span> in the second quarter of 2021 primarily due to $50 million<\/span> of expenses related to the pending IHS Markit merger.\u00a0 Adjusted Corporate Unallocated expense increased from $30 million<\/span> in the prior period to $33 million<\/span> primarily due to increased incentives.<\/p>\n

\n Provision for Income Taxes:\u00a0 <\/b>The Company’s effective tax rate increased to 25.1% in the second quarter of 2021 compared to 21.7% in the same period last year due to an increase in taxes on foreign operations, certain non-deductible IHS Markit merger costs, and the successful resolution of tax examinations in the prior year.\u00a0 The Company’s adjusted effective tax rate increased to 23.3% in the second quarter of 2021 compared to 21.7% in the same period last year due to an increase in taxes on foreign operations and the successful resolution of tax examinations in the prior year.\u00a0 The Company’s effective tax rate may fluctuate from quarter to quarter due to the timing of discrete tax adjustments.<\/p>\n

\n Balance Sheet and Cash Flow:<\/b>\u00a0 Cash, cash equivalents, and restricted cash at the end of the second quarter were $5.2 billion<\/span>. In the first six months of 2021, cash provided by operating activities was $1,691 million<\/span>, cash used for investing activities was $33 million<\/span>, and cash used for financing activities was $526 million<\/span>.\u00a0 Free cash flow in the first six months of 2021 was $1,548 million<\/span>, an increase of $41 million<\/span> from the same period in 2020, primarily due to increased net income.\u00a0 Free cash flow excluding costs associated with the pending merger with IHS Markit was $1,625 million<\/span>, an increase of $118 million<\/span> over the same period in 2020.<\/p>\n

\n Outlook:\u00a0 <\/b>The Company is not providing 2021 GAAP guidance because given the inherent uncertainty around the merger, management cannot reliably predict all of the necessary components of GAAP measures.\u00a0 The Company is providing adjusted guidance on a stand-alone basis that excludes anticipated merger expenses, the potential revenue and expense impact from consolidating IHS Markit following the merger, and amortization of intangibles related to acquisitions.\u00a0 2021 reported revenue is expected to increase high single-digits.\u00a0 Adjusted diluted EPS guidance has been increased by $0.40<\/span> to a new range of $12.95<\/span> to $13.15<\/span>. \u00a0Guidance for free cash flow excluding certain items has also been increased to a new range of $3.5 billion<\/span> to $3.6 billion<\/span>.<\/p>\n

\n Comparison of Adjusted Information to U.S. GAAP Information:<\/b>\u00a0 The Company reports its financial results in accordance with accounting principles generally accepted in the United States<\/span> (“GAAP”). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G under the Securities Exchange Act of 1934. These measures are: adjusted diluted earnings per share, adjusted net income, adjusted operating profit and margin, organic revenue, adjusted Corporate Unallocated expense, adjusted effective tax rates, adjusted diluted EPS guidance, free cash flow, and free cash flow excluding certain items. The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP on Exhibits 5 and 7. Reconciliations of certain forward-looking non-GAAP financial measures to comparable GAAP measures are not available due to the challenges and impracticability with estimating some of the items. The Company is not able to provide reconciliations of such forward-looking non-GAAP financial measures because certain items required for such reconciliations are outside of the Company’s control and\/or cannot be reasonably predicted. Because of those challenges, reconciliations of such forward-looking non-GAAP financial measures are not available without unreasonable effort.<\/p>\n

The Company’s non-GAAP measures include adjustments that reflect how management views our businesses. The Company believes these non-GAAP financial measures provide useful supplemental information that, in the case of non-GAAP financial measures other than free cash flow and free cash flow excluding certain items, enables investors to better compare the Company’s performance across periods, and management also uses these measures internally to assess the operating performance of its business, to assess performance for employee compensation purposes and to decide how to allocate resources. The Company believes that the presentation of free cash flow and free cash flow excluding certain items allows investors to evaluate the cash generated from our underlying operations in a manner similar to the method used by management and that such measures are useful in evaluating the cash available to us to prepay debt, make strategic acquisitions and investments, and repurchase stock. However, investors should not consider any of these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports.<\/p>\n

\n Conference Call\/Webcast Details:<\/b>\u00a0 The Company’s senior management will review the second quarter 2021 earnings results on a conference call scheduled for today, July 29<\/span>, at 8:30 a.m. EDT<\/span>.\u00a0 Additional information presented on the conference call may be made available on the Company’s Investor Relations Website at http:\/\/investor.spglobal.com<\/a>. <\/p>\n

The Webcast will be available live and in replay at http:\/\/investor.spglobal.com\/Quarterly-Earnings<\/a>.\u00a0 (Please copy and paste URL into Web browser.)<\/p>\n

Telephone access is available. U.S. participants may call (888) 603-9623; international participants may call +1 (630) 395-0220 (long-distance charges will apply). The passcode is “S&P Global” and the conference leader is Douglas Peterson<\/span>. A recorded telephone replay will be available approximately two hours after the meeting concludes and will remain available until August 29, 2021<\/span>. U.S. participants may call (800) 947-2123; international participants may call +1 (203) 369-3956 (long-distance charges will apply). No passcode is required.<\/p>\n

\n Forward-Looking Statements:\u00a0 <\/b>This press release contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995.\u00a0 These statements, including statements about COVID-19 and the merger (the “Merger”) between a subsidiary of the Company and IHS Markit Ltd. (“IHS Markit”), which express management’s current views concerning future events, trends, contingencies or results, appear at various places in this report and use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “strategy,” “target” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would.” For example, management may use forward-looking statements when addressing topics such as: the outcome of contingencies; future actions by regulators; changes in the Company’s business strategies and methods of generating revenue; the development and performance of the Company’s services and products; the expected impact of acquisitions and dispositions; the Company’s effective tax rates; and the Company’s cost structure, dividend policy, cash flows or liquidity.<\/p>\n

Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements include, among other things:<\/p>\n