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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-33812

 

MSCI INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

13-4038723

(State or other jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

 

 

 

7 World Trade Center

250 Greenwich Street, 49th Floor

New York, New York

 

10007

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (212804-3900

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.01 per share

 

MSCI

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of July 19, 2022, there were 80,502,940 shares of the registrant’s common stock, par value $0.01, outstanding.

 

 

 


 

 

FOR THE QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

Part I – Financial Information

 

 

Item 1.

 

Financial Statements

 

4

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

39

Item 4.

 

Controls and Procedures

 

40

 

 

 

 

 

 

 

Part II – Other Information

 

 

Item 1.

 

Legal Proceedings

 

41

Item 1A.

 

Risk Factors

 

41

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

Item 6.

 

Exhibits

 

42

 

2


 

 

AVAILABLE INFORMATION

Our corporate headquarters is located at 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York, 10007, and our telephone number is (212) 804-3900. We maintain a website on the internet at www.msci.com. The contents of our website are not a part of or incorporated by reference in this Quarterly Report on Form 10-Q.

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). The SEC maintains a website that contains reports, proxy and information statements and other information that we file electronically with the SEC at www.sec.gov. We also make available free of charge, on or through our website, these reports, proxy statements and other information as soon as reasonably practicable following the time they are electronically filed with or furnished to the SEC. To access these, click on the “SEC Filings” link found on our Investor Relations homepage (http://ir.msci.com).

We also use our Investor Relations homepage, Corporate Responsibility homepage and corporate Twitter account (@MSCI_Inc) as channels of distribution of Company information. The information we post through these channels may be deemed material.

Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the “Email Alert Subscription” section of our Investor Relations homepage at http://ir.msci.com/alerts.cfm. The contents of our website, including our Investor Relations homepage, Corporate Responsibility homepage and social media channels are not, however, a part of or incorporated by reference in this Quarterly Report on Form 10-Q.

FORWARD-LOOKING STATEMENTS

We have included in this Quarterly Report on Form 10-Q, and from time to time may make in our public filings, press releases or other public statements, certain statements that constitute forward-looking statements. In addition, our management may make forward-looking statements to analysts, investors, representatives of the media and others. These forward-looking statements are not historical facts and represent only MSCI’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and beyond our control.

In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” or the negative of these terms or other comparable terminology.  Statements concerning our financial position, business strategy and plans or objectives for future operations are forward-looking statements. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and that could materially affect our actual results, levels of activity, performance or achievements. Such risks and uncertainties include those set forth under “Risk Factors” in Part I, Item 1A of the 2021 Annual Report on Form 10-K filed with the SEC on February 11, 2022. Other factors that could materially affect actual results, levels of activity, performance or achievements can be found in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC. The forward-looking statements in this report speak only as of the time they are made and do not necessarily reflect our outlook at any other point in time. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or for any other reason. Therefore, readers should carefully review the risk factors set forth in other reports or documents we file from time to time with the SEC.

3


 

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except per share and share data)

 

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

842,300

 

 

$

1,421,449

 

Accounts receivable, net of allowances

 

 

586,815

 

 

 

664,511

 

Prepaid income taxes

 

 

15,900

 

 

 

5,951

 

Prepaid and other assets

 

 

44,066

 

 

 

51,499

 

Total current assets

 

 

1,489,081

 

 

 

2,143,410

 

Property, equipment and leasehold improvements, net

 

 

59,390

 

 

 

66,715

 

Right of use assets

 

 

128,122

 

 

 

144,584

 

Goodwill

 

 

2,231,154

 

 

 

2,236,386

 

Intangible assets, net

 

 

576,362

 

 

 

593,341

 

Equity method investment

 

 

216,554

 

 

 

218,763

 

Deferred tax assets

 

 

64,216

 

 

 

40,119

 

Other non-current assets

 

 

68,473

 

 

 

63,385

 

Total assets

 

$

4,833,352

 

 

$

5,506,703

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

9,295

 

 

$

13,448

 

Income taxes payable

 

 

38,615

 

 

 

59,635

 

Accrued compensation and related benefits

 

 

106,797

 

 

 

207,640

 

Current portion of long-term debt

 

 

6,532

 

 

 

 

Other accrued liabilities

 

 

151,021

 

 

 

145,302

 

Deferred revenue

 

 

808,020

 

 

 

824,912

 

Total current liabilities

 

 

1,120,280

 

 

 

1,250,937

 

Long-term debt

 

 

4,505,338

 

 

 

4,161,422

 

Long-term operating lease liabilities

 

 

132,494

 

 

 

150,029

 

Deferred tax liabilities

 

 

3,841

 

 

 

3,650

 

Other non-current liabilities

 

 

97,845

 

 

 

104,132

 

Total liabilities

 

 

5,859,798

 

 

 

5,670,170

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (see Note 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock (par value $0.01, 100,000,000 shares authorized; no shares issued)

 

 

 

 

 

 

Common stock (par value $0.01; 750,000,000 common shares authorized; 133,604,132

   and 133,162,178 common shares issued and 80,496,258 and 82,439,449 common

   shares outstanding at June 30, 2022 and December 31, 2021, respectively)

 

 

1,336

 

 

 

1,332

 

Treasury shares, at cost (53,107,874 and 50,722,729 common shares held at June 30, 2022

   and December 31, 2021, respectively)

 

 

(5,699,069

)

 

 

(4,540,144

)

Additional paid in capital

 

 

1,492,334

 

 

 

1,457,623

 

Retained earnings

 

 

3,243,654

 

 

 

2,976,517

 

Accumulated other comprehensive loss

 

 

(64,701

)

 

 

(58,795

)

Total shareholders’ equity (deficit)

 

 

(1,026,446

)

 

 

(163,467

)

Total liabilities and shareholders’ equity (deficit)

 

$

4,833,352

 

 

$

5,506,703

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited)

4


 

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

Operating revenues

 

$

551,806

 

 

$

498,180

 

 

$

1,111,751

 

 

$

976,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization)

 

 

100,768

 

 

 

87,327

 

 

 

203,539

 

 

 

173,107

 

Selling and marketing

 

 

61,073

 

 

 

58,191

 

 

 

127,126

 

 

 

114,658

 

Research and development

 

 

23,916

 

 

 

27,531

 

 

 

52,238

 

 

 

52,393

 

General and administrative

 

 

36,724

 

 

 

30,182

 

 

 

82,291

 

 

 

64,910

 

Amortization of intangible assets

 

 

22,179

 

 

 

30,396

 

 

 

43,899

 

 

 

45,464

 

Depreciation and amortization of property, equipment and

   leasehold improvements

 

 

6,765

 

 

 

7,020

 

 

 

13,299

 

 

 

14,163

 

Total operating expenses

 

 

251,425

 

 

 

240,647

 

 

 

522,392

 

 

 

464,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

300,381

 

 

 

257,533

 

 

 

589,359

 

 

 

511,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(924

)

 

 

(347

)

 

 

(1,222

)

 

 

(733

)

Interest expense

 

 

41,085

 

 

 

39,557

 

 

 

81,799

 

 

 

77,141

 

Other expense (income)

 

 

188

 

 

 

22,628

 

 

 

(193

)

 

 

23,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income), net

 

 

40,349

 

 

 

61,838

 

 

 

80,384

 

 

 

100,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

260,032

 

 

 

195,695

 

 

 

508,975

 

 

 

411,723

 

Provision for income taxes

 

 

49,445

 

 

 

30,272

 

 

 

69,965

 

 

 

49,481

 

Net income

 

$

210,587

 

 

$

165,423

 

 

$

439,010

 

 

$

362,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.60

 

 

$

2.01

 

 

$

5.40

 

 

$

4.39

 

Diluted

 

$

2.59

 

 

$

1.99

 

 

$

5.37

 

 

$

4.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

80,923

 

 

 

82,454

 

 

 

81,255

 

 

 

82,546

 

Diluted

 

 

81,295

 

 

 

83,295

 

 

 

81,789

 

 

 

83,393

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited)

5


 

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

Net income

 

$

210,587

 

 

$

165,423

 

 

$

439,010

 

 

$

362,242

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(11,796

)

 

 

879

 

 

 

(14,746

)

 

 

(826

)

Income tax effect

 

 

1,606

 

 

 

(35

)

 

 

2,468

 

 

 

577

 

Foreign currency translation adjustments, net

 

 

(10,190

)

 

 

844

 

 

 

(12,278

)

 

 

(249

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension and other post-retirement adjustments

 

 

7,376

 

 

 

(59

)

 

 

7,486

 

 

 

197

 

Income tax effect

 

 

(1,070

)

 

 

22

 

 

 

(1,114

)

 

 

(98

)

Pension and other post-retirement adjustments, net

 

 

6,306

 

 

 

(37

)

 

 

6,372

 

 

 

99

 

Other comprehensive (loss) income, net of tax

 

 

(3,884

)

 

 

807

 

 

 

(5,906

)

 

 

(150

)

Comprehensive income

 

$

206,703

 

 

$

166,230

 

 

$

433,104

 

 

$

362,092

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited)

6


 

MSCI INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Treasury

 

 

Paid in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Total

 

 

 

(unaudited)

 

Balance at December 31, 2021

 

$

1,332

 

 

$

(4,540,144

)

 

$

1,457,623

 

 

$

2,976,517

 

 

$

(58,795

)

 

$

(163,467

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

228,423

 

 

 

 

 

 

 

228,423

 

Dividends declared ($1.04 per common share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(87,280

)

 

 

 

 

 

 

(87,280

)

Dividends paid in shares

 

 

 

 

 

 

 

 

 

 

77

 

 

 

 

 

 

 

 

 

 

 

77

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,022

)

 

 

(2,022

)

Common stock issued

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Shares withheld for tax withholding and exercises

 

 

 

 

 

 

(105,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(105,000

)

Compensation payable in common stock

 

 

 

 

 

 

 

 

 

 

22,754

 

 

 

 

 

 

 

 

 

 

 

22,754

 

Common stock repurchased and held in treasury

 

 

 

 

 

 

(772,657

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(772,657

)

Common stock issued to Directors and

  (held in)/released from treasury

 

 

 

 

 

 

(21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2022

 

 

1,336

 

 

 

(5,417,822

)

 

 

1,480,454

 

 

 

3,117,660

 

 

 

(60,817

)

 

 

(879,189

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

210,587

 

 

 

 

 

 

 

210,587

 

Dividends declared ($1.04 per common share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(84,593

)

 

 

 

 

 

 

(84,593

)

Dividends paid in shares

 

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

22

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,884

)

 

 

(3,884

)

Common stock issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for tax withholding and exercises

 

 

 

 

 

 

(3,862

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,862

)

Compensation payable in common stock

 

 

 

 

 

 

 

 

 

 

11,858

 

 

 

 

 

 

 

 

 

 

 

11,858

 

Common stock repurchased and held in treasury

 

 

 

 

 

 

(276,994

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(276,994

)

Common stock issued to Directors and

  (held in)/released from treasury

 

 

 

 

 

 

(391

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(391

)

Balance at June 30, 2022

 

$

1,336

 

 

$

(5,699,069

)

 

$

1,492,334

 

 

$

3,243,654

 

 

$

(64,701

)